Principles of Microeconomics

University of Toronto St. George

An introduction to economic analysis and its applications: price determination, market structure, decision making by individuals and firms, public policy. NOTE: extensive use of graphical and quantitative analysis.

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Kieran Furlong

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Kieran Furlong

ECO101H1 Syllabus for Kieran Furlong — Winter 2019

University of Toronto
Department of Economics
- 1 -
ECO101H1 S L5101: Principles of Economics
Winter, 2019
Convocation Hall: Wednesdays, 6-9PM
Kieran Furlong:
Office Hours: Wednesdays 1 3PM in SS2119
TEXTBOOK: Microeconomics (3rd Canadian Edition), Paul Krugman et al, 2018
MC Test
Multiple Choice
Friday,February 1
9:00 10:00 AM
16% of Grade
Friday, March 15
9:00 11:00 AM
34% of Grade
Final Exam
Final Exam Period (April 6-30)
50% of Grade
The test, midterm, and final exam are cumulative; i.e., they cover all the material from the
beginning of the course. They are on Friday mornings to accommodate the size of the class;
students must contact me in the first two weeks of class if they have a conflict. Students who
miss the test or midterm must email me a scanned copy of a medical document within one week
of the exam to write a make-up from 10:00 AM 12:00 Noon on Friday, March 29, which covers
the same material as the midterm even if you only missed the test. Note that this make-up is after
the drop-date and that you don’t get your exam back, though you may look at it.
The test has 30 multiple choice questions. The midterm and the final have multiple choice and
written diagrams, calculations, and explanations questions.
I recommend the textbook (any edition will do) but sell a package of Lecture Notes and Problem
Sets with solutions at cost ($10) in class. These problem sets are not graded but provide
exercises necessary to clarify the economic models presented in the lectures and tested on exams.
Teaching Assistants provide tutorials every week to clarify the problem sets and also hold office
hours for individual consultation on problems. I will post the schedule and you can attend
whenever you wish, though you will soon find that some times are better for you than others.
You must use only writing implements (pens, rulers, etc.) and non-programmable
calculators (no other electronic devices), begin the exam with everyone else, and stop exactly
when time is up. Any transgression is an academic offense and subject to sanction. You must fill
in the scantrons (multiple choice) in pencil. I prefer that you write the written part of the midterm
in pen but this can be awkward. However, I will only look at complaints on exams written in pen.
Make sure that you correctly fill in your ID on the scantron and exam paper or lose 1 mark.
We will hand the tests/midterms back one week after the exam. Miss that and you won’t be
able to get your exam since I won’t have them during office hours. I will post the answers
scheme to the exams on Quercus at that point. Please go through the answers carefully to see if
the TAs (or I) made any mistake in marking since I will only accept requests for remarking
during my office hours and the class breaks during the following week (i.e., second week after
ECO101H1 S, L5101: Winter, 2019
- 2 -
the exam) but only if you have consulted my marking scheme. It is very important to understand
your mistakes since the final exam covers much of this material again
Introduction and Basic Definitions: Ch. 1
Production Possibilities Curves. Ch. 2
Problem Set: Production Possibilities
Demand: Ch. 3
Shifts in Demand; Supply, Ch. 3
Problem Set: Demand and Supply
Equilibrium Price and Quantity. Ch. 3 and Appendix
Government Price Controls. Ch. 5
Problem Set: Market Equilibrium and Price Controls
Elasticity Ch. 6 and Appendix
Elasticity and Tax: Ch. 7
Problem Set: Elasticity and Per Unit Taxes
EX200, 300, 310, and 320, BA1160 according to surname
Consumer Choice: Budget Lines. Ch. 10 and appendix
Consumer Choice: Indifference Curves. . Ch. 10 and appendix
Consumer Equilibrium and Derivation of Demand. Ch. 10 and appendix
Problem Set: Consumer Choice
The Firm and Short-run Product. Ch. 11
Labour Demand
Problem Set: Derivation of Demand
Short-run Cost. Ch. 11
Short-run Competitive Equilibrium: Ch. 12
Problem Set: Short-run Cost
Short-run Comp. Equilibrium: Ch. 12
Problem Set: Short-run Competitive Equilibrium
Changes in Short-run Competitive Equilibrium: Ch. 12
Long-run Cost. Ch. 11
Competitive Long-Run Equilibrium. Ch. 12
Problem Set: Short-run Competitive Equilibrium
EX100, 200, 300, and 310 according to surname
Changes in Competitive Long-Run Equilibrium. Ch. 12
Monopoly: Marginal Revenue and Profit Maximization. Ch. 13
Problem Set: Long-run Competitive Equilibrium
Natural Monopolies and Cartels: Ch. 13
Efficiency. Ch.4
Problem Set: Monopoly
Externalities. Ch. 16
Gains from Trade. Ch. 8
Comparative Advantage.
Problem Set: Efficiency

Robert Gazzale

ECO101H1 Syllabus for Robert Gazzale — Fall 2018

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Section L5101 (A&S) / L2501 (Engineers)
W. G. Wolfson
Location: MS 2158
The former “full year” ECO 100Y course, Introduction to Economics, has been
discontinued. It has been replaced by two half-courses:
1. ECO 101H Principles of Microeconomics (Fall 2018); and
2. ECO 102H Principles of Macroeconomics (Winter 2019).
This Course Outline relates to the Microeconomics ECO 101H half-course for the
Fall of 2018.
You may come across various documents from ECO 100Y; be aware that there are
differences between the content and requirements of 100 vs 101 + 102!
About the Course
This is an introductory course in basic microeconomic principles. We will focus on the
behaviour of individual "economic agents" (consumers and producers) and deal with
concepts such as supply and demand, theory of the firm, competition and monopoly. The
roles and impacts of government are analyzed throughout.
This course is designed to expose you to the facts, theories and models of the discipline
of Economics. It is also designed to develop your analytical skills, to help you to think
for yourself, and to learn to apply the principles and techniques of Economics to new
problems and situations. Tests are challenging, but within the grasp of those who work
hard to refine their Economics’ reasoning skills.
Course Objectives
1. Help you learn how to think like an economist and thereby analyze various
scenarios, including personal ones, through that lens
2. Introduce you to basic microeconomic principles and models, and how they can
be applied to public policy issues
3. Develop your problem-solving skills, using course concepts
4. Prepare you for higher-level ECO courses, should you wish to enrol in them
September 4, 2018
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Your final grade is based on both your final examination mark and your term mark.
Your term grade is determined as the weighted average of 2 term tests, totaling 58%,
plus 1% allocated to a “Warm-up Exercise” at the beginning of the semester, and 1%
allocated to a “Follow-upat the end of the term (details below).
Here is the breakdown of your total grade:
Warm-up” September 1%
Test 1 (T1) October 22%
Test 2 (T2) November 36%
“Follow-up” December 1%
Term Grade 60%
Final Exam December 40%
TOTAL 100%
Warm-Up Exercise
The “Warm-upis an online exercise scheduled for the first weeks of the Fall term.
( The exercise involves answering questions about
personality traits or goals and should take about 45 to 90 minutes. Its purpose is to learn
more about how to help promote academic and personal success your success! There
will be a follow-up survey too. More information to follow soon.
Term Tests
Term tests are scheduled for Friday evening as follows:
T1 on Friday October 19th at 7:00pm (60 minute test)
T2 on Friday November 23rd at 7:00pm (90 minute test)
Another Important Notice:
These tests are being held out of normal lecture hours, on Friday evening, which
may create a conflict for some students.
If you have a conflict, you MUST so inform me by end of day, Monday October 1 to
make alternate arrangements for the same day. These arrangements need to be
settled by Friday October 5th. Otherwise, you will be required to sit the test at the
announced day and time.
Solutions to tests will be discussed in tutorials only.
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An appeal of a test grade must be typed (on paper, not an email) and provided to me
together with a full copy of your test. You must identify which question you believe was
marked incorrectly, and provide an explanation of why you think your answer deserves
additional marks. The question/answer you point out, plus others, will be reviewed. To
use a term that is used in ECO 200, the Expected Valueof a re-mark request is not
necessarily positive!
The appeal must be handed in within two weeks
of the date on which graded tests are
provided to you.
You can give me your appeal document at subsequent lectures or leave
it for me at the Reception Desk, Department of Economics, Gluskin House, 150 St.
George St. If the latter, notify me by email that you have done so.
It is wise to attend a tutorial where solutions are discussed before submitting a grading
Missed Tests
Do your best not to miss a test. It is in your best interests to sit tests, so you can obtain
an assessment of your ability to do ECO problems.
However, if this is unavoidable due to illness, family trauma or work commitments, you
must provide the appropriate documentation to me within 1 week. Medical notes must
state that you were too ill to write the test. You must use the U of T Verification of
Student Illness or Injury Form found at
The Make-Up Test will occur in December for all students who missed either T1 or T2.
It will be comprehensive i.e. it will cover materials from both tests, not just a single test
Final Examination and Final Grade
The final examination in Exam Week is scheduled for all sections of this course at the
same time. (Note: The exam will likely be held morning or afternoon.) The exam
consists of two parts: one part that is common to all sections (i.e., all students do this
part) and one part that contains questions only for the L5101/L2501 section. The final
exam covers the entire course materials.
Two weeks for T1 is ok; one week for T2, as the term ends quickly after the second test.
The current plan is to provide online access to your graded test via the Crowdmark website.
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You must obtain a grade of 63% in ECO 101 to be eligible to take higher-level ECO
courses required for a Major degree.
Based on past experience, your professor can attest
that not every student attains that level; indeed, many more than he would like do not
make the grade.
Students sometimes compare their test results to that of students they know in other
sections of ECO 101, and then look to the average grade in various sections, which may
be higher or lower than the average for our section. Some students become concerned
about the differences, concluding that they will be disadvantaged.
Here is an official statement about final grades that assures all of you that they will be
fairly awarded across sections:
Historically, the average grade across all sections of Economics 101 is C+.
The average grade in each section will vary to reflect the relative performance of
students in that section on the common part of the final examination.
The average grade for a section whose students perform above average on the
common component of the final examination will be higher than the overall
average grade for Economics 101, and conversely.
The average grade on each term test will, inevitably, vary across sections.
However, it merits emphasis that students in a section where the average grade
on a term test is low are NOT disadvantaged on this account. The average FINAL
grade awarded in each section will reflect the performance of that student's
section on the common part of the final examination.
Lectures and Tutorials
Lectures will take place on every Monday (except, of course, for holidays and break
periods) in Medical Sciences Auditorium (MS2158). Lectures can be lengthy, as we
meet only once per week. It takes considerable discipline to stay focused the entire time
(and that applies both to you and to me!).
Lecture Assignments (LAs) will be available on the Quercus course website in advance
of classes. These are essentially an outline of the lectures. The LAs also provide
references to the key pages in the text. You should review the LAs and the associated
text readings prior to the lecture. Note that one Lecture Assignment may span more / less
than a single class. Note also that the solutions to LAs are provided through the lectures;
there are no web postings.
In addition, you must obtain a 63% grade in ECO 102 to gain entry. In some ECO and other programs,
the requirement is even higher. For instance, to enroll in ECO 206 (Micro) and ECO208 (Macro), courses
required for an ECO Specialist degree, a minimum grade of 70% in both ECO 101 and ECO 102 is
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You should bring a copy of the relevant Lecture Assignment(s) to class, (or have it on
your laptop, or perhaps your phone)
, as a guide to the outline of the lecture. Some
students take lecture notes directly on the LA document. If you choose to do this, you
might want to create more “white space” to provide room for notes. Alternatively, some
students take notes separately. You should find a note-taking methodology that works
best for you. One of the challenges in lectures is to avoid mere copying without
expending any intellectual effort to understand the contents.
In addition to the lecture, there will be tutorials on Monday afternoons and other days in
the week too (to be announced; you get to select which tutorial to attend). Problem Sets
will be provided in advance, to be taken up during the tutorial session. (Note: Attending
tutorials without having attempted the problems in advance is a short-sighted strategy).
There will also be Handout Problems in some tutorials that you will do “on the spot”.
These are available only to those who attend tutorials. Doing these and other problems is
essential in learning how to use economic constructs.
This Fall, there is a break period for the week of November 5. There will be no Monday
class or tutorials that week. Also, no class or tutorials for the Thanksgiving week of
October 8th. Note that this missed Monday class will be made up in December on
Thursday December 6th.
Sources of Assistance
If you are having difficulties, do not delay in seeking assistance. There are a number of
sources of both informal and formal help:
Ask a fellow student.
Form a study group.
Go to an ECO 101 Aid Centre (location and hours to be announced soon on the
BB course website).
Post questions on Piazza for an online dialogue with fellow students with
oversight from one of the Teaching Assistants assigned to this section of the
course (information to be announced soon on Quercus).
Try the Department of Economics Study Centre, a peer tutoring service; for
more information, go to
If you cannot get satisfaction any of those ways, please see me before or after class or e-
mail me. I always stay after lectures until all questions are answered, so do not hesitate
to come forward with your enquiries.
This is the only approved use of electronics in class.
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Ongoing Learning Disability or Accommodation Requirement
Students with diverse learning styles and needs are welcome in this course.
If you have an ongoing disability issue or accommodation need, you should register with
Accessibility Services (AS) ( at the beginning of the academic
year. Without registration, you will not be able to verify your situation with your
instructors, and instructors will not be advised about your accommodation needs.
AS will then assess your medical situation, develop an accommodation plan with you,
and support you in requesting accommodation for your course work. Remember that the
process of accommodation is private: AS will not share details of your condition with any
instructor, and your instructors will not reveal that you are registered with AS.
Text, Study Guide and Publisher Website
The text for this course is Economics, 9th Edition by authors Parkin and Bade.
The choice of text purchase has become trickier, now that there are the two half courses,
as the publisher offers a Micro text, a Macro text and a combined full text!
Further there are options for what you acquire: a hard copy of the text or an e-text
instead. If you acquire a new text or e-text, you gain access to the publisher’s website at which essentially serves as a Study Guide (not required.)
If you buy a used textbook, you can purchase access to the website separately. The
Bookstore will have information on your choices.
However, it gets even more complicated now! If you buy the combined text, you will be
ok if you enroll in my section of ECO 102 in the Winter. BUT, if you enroll in another
section, there will likely be another Macro text used. On the other hand, there is a used
text market, if you decide not to keep your text in your professional library.
Call all this a Choice Under Uncertainty, a topic covered in second year
Microeconomics! In other words, consider your options carefully.
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Course Website
There is a course website on U of T’s Qurecus system. Go to, log
in with your UTORID and password, and then click on this course. (There is a combined
website for both sections, L5101 and L2501.)
The website is where you will find all of the Lecture Assignments, Tutorial Problem
Sets,Web Quizzes (MC questions), Sample Past Tests,Announcements, and other
Course Information. I will not be providing any of that to you in hard copy; you are to
obtain these from the website.
There is a Preamble to each of the folders/modules on Q (Lecture Assignments, Web
Quizzes, etc.) on the BB course website. You are urged to read the Preamble before
downloading any of the other items in the folder.
Reminder once again that there are difference between former full-year ECO 100
and this half-course ECO101.
Quercus provides the capacity to post notifications / send emails. Watch for ones from
me ahead of most lectures. The Webmaster will also advise you when the website has
been updated.
Note that a correction to marks will not show on Quercus until the next updating of the
entire Q Grade Centre; this may be a few weeks after the correction has been approved.
Advice to Students
This is not a course in mathematical economics; however, certain basic tools of
arithmetic (e.g. addition, subtraction, multiplication, etc.), geometry (e.g. freehand
diagrams, computation of slope), and algebra (e.g. solving one equation in one unknown)
are used extensively.
You must have these mathematical skills to succeed. The course website has a sample of
math requirements useful for ECO 101 (see the Math Test folder); students who are not
comfortable with these requirements are strongly advised to do remedial work
immediately. See the Appendix to Chapter 1 of the text for some of what will be
Past Final Examinations can be found on the University’s “Old Exams Repository.
It is wise practice to pay attention to emails / notices and to read those related to ECO 101. In the past,
not all students have done so, alas!
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Note for future reference: If you plan to go on in the study of Economics, you can expect
an even higher dose of mathematics …somewhat higher in ECO 200 and ECO 202
(Micro and Macro) and considerably higher in ECO 206 and ECO 208 (Micro and Macro
for those seeking a specialist degree).
Be aware that considerable effort is required to obtain good results in ECO 101, and
that minimal effort will not likely lead to a passing grade.
Here are some further suggestions from previous students:
“Establish a pattern of working hard right from the start.[Eitan P.]
“You can get the results if you invest in the effort.[Ashley K.]
“Do not procrastinate you must not fall behind.[Ben H.]
“The more you work at it, the more interesting it gets.[Asuma B.]
“Economics cannot be learned overnight. Cramming before a test or paying for
last-minute review sessions is no substitute for working hard all semester long.
(James M.)
Here is an interesting comment from a former ECO 100 student, at the time that he was
awarded an Economics Scholarship Award at the end of his second year:
“The more I studied ECO 100, the more I liked it.
And here is an email I received after the first test a few years ago:
I must say this is new for me, and I'll be honest I grossly underestimated your course.
The first couple lectures me
and my friends noticed it was all the stuff we had just finished doing
in High School Eco, thus, some of us started to skip, others like me showed up with my computer
and sat in the back on the second floor trolling the internet when I should have been paying
The first test was a wakeup call without a doubt. I took the blow standing up. The same day we
got it back I went out got a notebook for the class, and all the other supplies a regular student
Every lecture since this test has not been spent on the second floor trolling the internet, rather on
the first floor close to the front, taking down notes with good old hand writing.
One thing, for sure, the 3 hour lectures ... they pass by A LOT faster when you are paying
attention and taking notes. [M.L.]
This is a bad news-good news component to the above email. The “bad” of course is that
this student did not take the advice in this Course Outline to work hard from the very first
class. The “good” is that students can recover from an early setback, but it takes a major
change in attitudes and behaviours.
I have copied the email as it was sent to me. I hope you recognize the grammatical errors in this message.
This is the first one.
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Fee-For-Service Providers
There are entrepreneurs who offer services to ECO 101 students the week before tests.
They typically promise “perfect understanding” through a few hours of intensive study
for a fee. Caveat emptor!
These entrepreneurs also sell copies of past tests. FYI, you can find samples of past tests
(at no cost!) on the course website, with correct answers.
NOTE: These service providers are not associated with the University, and are not
endorsed by the University or by me.
Finally, I encourage you to consider the following message taken from a poster sponsored
by ASSU (The Arts and Science Student Union):
Having anxiety before a test is normal.
Companies that offer paid review sessions know this and prey on your anxiety.
Free support is available. Make use of your free resources.
Copyright Considerations
Reproducing or distributing course materials (lecture handouts/solutions, tutorial
problems/solutions, tests/test solutions, exams etc.) to course sharing websites like
OneClass or Course Hero violates UofT policy: "The unauthorised use of any
form of device to … reproduce lectures, course notes or teaching materials
provided by instructors is covered by the Canadian Copyright Act and is
prohibited” and is contrary to the Code of Behaviour on Academic Matters.
Course materials are provided for the exclusive use of enrolled students. If a
student puts any course materials into the public domain, sells or gives the
materials to a person or company that is using them to earn money, UofT will
support me in asserting and pursuing my rights and copyrights.
Be aware that some private sector fee-for-service providers who distribute past
tests are also violating copyright.
I provide a wealth of materials to you, including sample tests and solutions, for
free. There are also many free help resources provided to you. If you pay, you are
wasting your money. Not a smart choice.
Mostly ECO 100 versions.
As noted above, free resources include Aid Centres, online Piazza, the Department of Economics Study
Centre, fellow students and your prof.
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Academic Integrity
All students, faculty and staff are expected to follow the University’s guidelines
and policies on academic integrity.
For students, this means following the standards of academic honesty when
writing assignments, citing and using source material appropriately, collaborating
with fellow students, and writing tests and exams. Ensure that the work you
submit for grading represents your own honest efforts.
Speak to me or your TA for advice on anything that you find unclear.
Consult the Code of Behaviour on Academic Matters for a complete outline of the
University’s policy and expectations.
Consider yourself warned: DO NOT CHEAT! See
Note that the only electronic device permitted at tests and the final exam in ECO
200 is a non-programmable, non-graphing calculator.
The Academic Code says
that mere possession (not use) of any other device while writing a test or
examination is an academic offence; leave these other devices e.g., cell phones,
iPads, berries, etc. in your bag at the side of the room. [Recent change in rules:
you can leave your cell phone/other valuables under your desk in a re-sealable
plastic bag.]
When picking up tests, it is an academic offence to deliberately take another
student’s test.
You must stop writing when time is up for tests and examinations. Not doing so is
an academic offence and exposes you to academic sanctions.
Electronics Policy
The story above includes a comment about inappropriate use of electronics in lectures.
Be aware that texting in class will not be tolerated. It is a distraction to others … and a
distraction for you too! Furthermore, I view it as highly disrespectful. There will be a
separate document posted on Quercus with an Electronics Policy. Read it and follow it!
Be sure your calculator meets the standard.
May not be applicable. The plan for 18/19 is online access to your marked test.
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Email Protocols
Please do not email with a question that you can answer if you just access the BB course
website. My role is not to be your personal search engine! Examples of these kinds of
questions I have received in the past are:
Are there tutorials this week?
Where do I write the test?
What materials will be covered on the test?
Which problem set will be covered in tutorials this week?
There are some professors who will not answer email questions like those, as the student
has a way to obtain the information without imposing on the prof to provide it directly. I
will be following a “one strike and you are out policy”. I will answer a first request, with
a reminder that the information can be found on the website. A second question of this
type from the same student will not be answered!
Needless to say, it is quite proper to email me if an item has not been posted on the
website in a timely way e.g., a problem set for an upcoming tutorial, information about an
upcoming test, and so on. Indeed, I rely on you to do so, and I will correct any oversights
as soon as possible.
Summary of Important Dates
Monday September 10 First Lecture In MS2158
Monday October 8 Thanksgiving No Lecture
Friday October 19 Test #1
Monday November 5 Fall Break No Lecture
Friday November 23 Test #2
Week of December 3 Make-Up Test Date TBD
Thursday December 6 “Make Up Monday Lecture Last Lecture!
December 8-21 Exam Period Final Examination Date TBD
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A Dozen Helpful Hints!
1. Do not take seriously any of the messages in this Course Outline.
2. Skip lectures.
3. Do practice problems rarely, if at all.
4. Avoid tutorials and other prep sessions provided by your prof.
5. Do not get help via the free resources when you need it.
6. Use the textbook as a doorstop only.
7. Cram for tests and the exam.
8. Pay entrepreneurs to save you at the last minute.
9. Do not review your marked test.
10. Find an excuse not to work hard.
11. Rarely consider how ECO 101 concepts apply to your daily life.
12. Take a full-time course load and add to that many hours of paid employment.
If you do not challenge yourself to do the best you can do,
your results are not likely to be the best they can be!
Here is a quote from a previous student,
after receiving a stellar grade on Test#1:
“The more you work at it, the more you understand it.
The more you understand it, the more you enjoy it.”
She might have added this:
“The more you enjoy it, the better your grade will be!”
Or attend lectures, but snooze your way through them with minimal intellectual effort. Example: don’t
try the in-class handouts; just wait for the answers and copy them.
Electronic equivalent: pay for the eTextbook but never access it.
Dislike of the prof, the lecture room, the evening lecture time, the lecture duration, the size of the class,
or some other feature of the course.
Or do not apply!
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ECO 101H: Fall 2018
This is a tentative listing.
Alterations, if any, will be announced as the semester unfolds!
Basic Concepts 1, 2
Supply, Demand, Elasticity 3, 4, 5, 6
Theory of Consumer Behaviour 8, 9
Theory of the Firm 11
Perfect Competition 12
Monopoly 13
Monopolistic Competition
Issues / Role of Government 16, 17
Other Topics as announced.
Important Notes:
The Lecture Assignments identify the critical pages in each chapter.
Lectures do not always follow the flow of the text. Some lectures exceed what the text provides.
There can be differences in nomenclature between the text and lectures.
A Final Comment re Mental Health and Well-being
As a student, you may experience a range of challenges that can interfere with learning,
such as strained relationships, increased anxiety, substance use, feeling down, difficulty
concentrating and/or lack of motivation. These factors may affect your academic
performance and/or reduce your ability to participate fully in daily activities.
All of us benefit from support and guidance during times of struggle. There are many
helpful resources available through your college Registrar or through Student Life
( ).
An important part of the University experience is learning how and when to ask for help.
Please take the time as early as possible to inform yourself of available resources and do
not hesitate to seek assistance from me or your Teaching Assistant to help learn what
supports are available.
If time permits.

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