Faculty
Francesco Rullani*; Evis Sinani+; Bersant Hobdari+; Kristina Vaarst Andersen*; Christine Isakson*

Course Coordinator
Francesco Rullani

The course Principles of Economics I is part of a wider course composed also by Principles of Economics II to be run in the Spring semester. The two parts together offer a wide perspective on the main economic issues, and are built in order to provide students with the instruments to identify, analyze, make sense and ultimately form opinions on the economic facts they observe in nowadays society. The whole course is designed to acquaint students with the basic tools used to analyze economic reality (e.g. statistics) as well as with the fundamental actors (from firms to countries) and mechanisms (from demand and supply to international markets) populating economic systems.

The course develops along a set of steps (modules) thought to facilitate the acquisition of the concepts emerging during the lectures. Students will move from concepts one can easily familiarize with, such as firms, to more abstract subjects, such as international trade, passing through all the intermediary levels (the markets and the national economy). This way, students will be able to build every subsequent section on the previous one, and easily absorb higher-level ideas simply moving the attention from actors (organizations or countries) to their interactions (market structure or international markets).

Principles of Economics I (Fall)

The first module, teaching statistical tools ranging from descriptive statistics to hypothesis testing and basic regression analysis, sets the stage for the subsequent lectures. The purpose of the module is twofold. On the one hand, students will learn how phenomena are represented and measured in economics, how they are analyzed and what kind of conclusions economic research can lead to. Students will also learn how to perform those analyses. This in turn means that each student will learn how to use the software tools needed to run those studies (e.g. Microsoft Excel) and will be provided with the necessary framing to be able to form her or his own opinions on the results in terms of reliability, soundness and interpretation. On the other hand, this first module will also implicitly propose to the students the perspective that one needs to apply when dealing with economic phenomena. This in turn will set the shared mindset needed for the sequent lectures.

The module is completed by six classes where students will be guided in finding their own solutions to the exercises. The aim of these classes is making each student able to use in practice what she or he has learnt in theory during the lectures.

The second module is meant to be the students’ point of entry into proper economic discourse. In order to ease the effort in the visualization of the initial notions, this module is centered around the concept of the organization, an in particular around the idea of the firm. Students will be then able to grasp the intuitive meaning of the discussions referring to concrete such “objects”, and thus enter smoothly into the economic research arena.

The theory of the firm is the first background concept developed in the module. From the initial discussion of organizations in general, the lectures will gradually move towards the main mechanisms composing the inner structure of those specific organizations that are firms. In this context, theories referring to the relationship between different actors (e.g. employers and employees) or to the hierarchical organization of production will be analyzed. Students will be eventually offered a strategic perspective in the last part of the module, when presenting theories explaining how firms take their decisions.

The third part of Principles of Economics I moves from the actors (firms) to the their relationship, and investigates the concept of market. As first, the module proposes the basic arguments relative to the connections between demand and supply, and makes the students familiarize with the mechanisms through which prices are set. Subsequently, it connects to the previous module discussing what decisions firms have to take –and how they take them- when producing. Students will learn what “cost functions” are and will be able to discuss the conditions allowing a firm to make a profit or cover a loss. Cost functions will then be used to discuss how firms’ decision become actual behaviors observed in the markets. Monopolistic behaviors and other market structures will be thoroughly discussed, pointing out the features of every structure.

Two exercises classes will be also provided in order to make the students acquire a practical acquaintance with the formal models used to describe the different market structures and their implications. The classes will be crucial to form the students’ capability to apply to real cases the reasoning the models embody.

Upon completion of Principles of Economics I, students will be able to:

Module 1 (STATISTICS, abbrev. STATS)

Module 2 (ORGANIZATIONAL ECONOMICS, abbrev. ORG)

Module 3 (INDUSTRIAL ECONOMICS, abbrev. IND EC)

This part of the course will be composed 13 lectures and by 6 classes, all of them lasting 2 hours. During classes students will be divided into groups in order to increase the level of interaction with the teacher and among them. Exam date will be announced

The exam for this part of the course is composed by two home assignments relative to the first (statistics) and the second and third (organization & market structure) modules, respectively. The home assignments will be composed by exercises to be performed by the students using the tools and theories studied during classes. Passing both assignments is a requirement to complete Principles of Economics I.

Amir D. Aczel & Jayavel Sounderpandian, "Business Statistics", Mcgraw Hill, Abridged 5th Edition [abbrev.: AS]

Sytse Douma & Hein Schreuder, "Economic approaches to organizations", Prentice Hall, 4TH Edition. [abbrev.: DS]

David Begg, Stanley Fischer & Rudiger Dornbusch, "Economics", Mcgraw Hill, 9th Edition