(Course Syllabus - Internet Version)
The instructor is available for, and strongly encourages, consultation at mutually convenient times.
Course Description:
This course covers the neoclassical theory of the firm, with contemporary developments in production economics theory integrated into this coverage. It is intended for first-year, graduate-level students.
"Output"
To obtain a thorough understanding of firm theory.
To become familiar with the conceptual framework within which production- and supply-related issues are analyzed.
In other words, the primary objective is to increase depth + breadth of knowledge in production economics theory.
"By-products"
Increased familiarity with the literature in the area (i.e., journals, articles, authors).
Gaining an appreciation for the intricacies of the conceptual as well as the empirical aspects of production economics theory
Comprehending the uses and, perhaps, more importantly, the limitations of the theory.
"Technology"
In order to obtain a good grasp of the theory, a methodical and structured process is necessary, where subsequent concepts build on previous ones, and specific cases pave the way for more general ones. Thus, even though there will be some duplication of material covered elsewhere, the concepts will be examined within a framework that provides the structure for examining how the various concepts are related to each other and to the larger body of knowledge. A lecture format, with occasional opportunities for class discussion , is most conducive to accomplishing this. Lectures will build on the material in the text, but will not duplicate it.
"Inputs"
Text (required): Beattie, B.R. and C.R. Taylor. 1985. The Economics of Production. New York: John Wiley & Sons, Inc. (1st ed. Reprint by Kriger Pub. Co.).
We will cover most of Chapters 1-4, and parts of Ch. 5 & 6, and will rely on supplementary readings as well.
Course Packet (required): A compilation of course handouts. Available from the WVU Copy Center in the Communications Bldg. on the Evansdale Campus
Labor or human capital (including regular attendance, endurance, and perseverance) is also a key input. (If you recall, optimally, an input, xi, should be used until MVPxi = Pxi).
The "Price":
Grades will be determined as follows:
Homework: 20% Research Paper: 20% First Exam: 20% Second Exam: 20% Final Exam: 20%.
ARE 530
PLANNED COURSE OUTLINE
Introduction [11/2 classes]
Components of Microeconomic Theory; Alternative Behavioral Assumptions/Goals of Producers, Theories of the Firm, Views on the Existence of the Firm, and Approaches to Firm Analysis (e.g., the primal vs. the dual approach).
"Technical" Aspects of Production [8 classes]
Properties of Production Functions/Surfaces (one, two, and n- variable-input cases); Returns to Scale (vs. Economies of Size); Technical Change; Technology Adoption; Alternative Functional Forms.
E X A M I
Economic Aspects of Production: the Input Perspective [10 classes]
Value Productivity Functions; Cost Equation; Profit Equation; the Expansion Path; Factor Demand Functions (one and two variable input cases).
Brief Review of: (a) Unconstrained & Constrained Linear and Non-Linear (quadratic) Optimization; and (b) Lagrangean & Kuhn-Tucker Methods.
E X A M II
Economic Aspects of Production: the Output Perspective [21/2 classes]
Derivation of the Cost, Revenue, Profit, and Product Supply Functions.
Multiproduct Production [1 class]
Product Transformation Functions; Optimization in Product Space; Production Jointness; Economies of Scope.
Introduction to Duality Theory [1 class]
Other Topics [handouts; reading assignments]
Selected Hypotheses and Axioms: the Induced Innovation and Marketable Surplus Hypotheses; the Weak Axiom of Cost Minimization; Alternative Supply Response Frameworks: the Partial Adjustment - Adaptive Expectations Framework vs. the Rational Expectations Framework;
Risk and Utility Theory: Response to Risk, Types of Risk-Aversion, and Risk-Increasing vs. Risk-Reducing Inputs.
E X A M III (comprehensive)
Note: Specific references corresponding to each of the above topics are listed in the "Reading Assignments" handout while additional references are provided in a detailed Reference List.