Why is Principles of Microeconomics a required course for the MPP & MIDP degree?
When you enter our program, you will begin your required courses in Economics during your first semester. Our first Economics course, PPOL 506 (Intermediate Microeconomics), presumes basic familiarity with concepts that are covered in Principles of Microeconomics.
For example, we will assume that you understand the role of scarcity and the concept of opportunity cost. Just as importantly, a Principles of Microeconomics class exposes you to the “economic way of thinking.”
In our experience, students who have not taken a Principles of Microeconomics class are at a disadvantage in PPOL 506. Further, some of the analytical skills that you learn in a Principles of Microeconomics class can also be useful in other courses.
Must I have completed a Principles of Microeconomics class before applying for the MPP & MIDP?
The short answer is no.
We will evaluate your application in its entirety. If your application is strong along other dimensions, then you could be accepted into our program with the understanding that you will need to complete a Principles of Microeconomics class for a grade from an accredited university before you enroll.
You should not be dissuaded from applying because you have not completed this class but should also realize the importance of the class in preparing for our curriculum.
What if I completed a Principles of Microeconomics class a long time ago?
For the purposes of your application, you will be considered as having met the requirement if you have taken a Principles of Microeconomics class that appears on your transcript.
MPP Faculty Director Barbara Schone has prepared a "Microeconomics Refresher Course" (http://connect.mheducation.com/class/b-schone-copy-of-2019-entering-class) which we highly recommend all students review before the fall. Please note that this refresher course DOES NOT replace the Microeconomics admissions stipulation.
You might also want to consider other ways of reviewing Principles of Microeconomics. For example, you could purchase a copy of a Principles of Economics text (used copies and previous editions are often very inexpensive) and review on your own. Alternatively, you could complete a self-study course online (e.g., http://ocw.mit.edu/courses/economics/14-01sc-principles-of-microeconomics-fall-2011/).
In some circumstances, a student may decide to complete a Principles of Microeconomics course as a way of reviewing the material. For example, students who took the class more than five years ago, earned less than a B or who felt they didn’t have a firm grasp of the material should seriously consider taking a class for credit before entering the program. In our experience, self-study and/or taking a noncredit refresher course are not sufficient means for learning the material.
Key Microeconomic Concepts to know before entering the MPP or MIDP Program
Students undertaking the MPP or MIDP degree at the McCourt School are required to have taken a Microeconomics course. Below are the key concepts each applicant should have a firm understanding of before entering.
Review the Key Concepts
(Source: some information drawn from Frank, Robert. Microeconomics and Behavior, 5th edition, 2003)
1. The Notions of Scarcity, Costs versus Benefits, and the Role of Incentives
Each of these concepts will be analyzed in greater depth in the Intermediate Microeconomics class. Before starting the class, you should be familiar with the following three basic ideas related to economic behavior:
- Scarcity: having more of one thing means having less of something else;
- Costs and Benefits: an action should be undertaken up to the point where the marginal benefit equals the marginal cost;
- Incentives: understanding an individual's behavior requires knowing something about the incentives they face.
2. The Fundamentals of Demand and Supply, Market Equilibrium, and Efficiency
The idea of demand and supply serves as our point of departure for understanding the behavior of economic agents and the factors that influence their behavior. Entering students should understand the basic ideas of demand and supply curves, distinguishing between movements along demand and supply curves versus shifts in demand and supply curves; the notion of market equilibrium (where the market clears or comes to rest); and the concepts of efficiency and consumer and producer surplus.
Elasticity refers to how the quantity demanded (or supplied) of a good changes as the price of the good changes, as the price of other goods change, or as income changes.
Elasticity is a measure of sensitivity. For example, if we are interested in understanding how a change in the tax on cigarettes affects smoking, we must know something about how sensitive the quantity demanded of cigarettes is to a change in price. Students should be able to conceptually understand this change and be able to calculate elasticities.
4. The Basics of Firm Behavior: Profit Maximization and Production
Underlying the supply curve is the idea that firms make decisions on how much to produce based on profit maximization.
- Basics of profit maximization in perfectly competitive markets and the distinction between economic versus accounting profit.
- Conditions that underlie perfect competition: standardized products, price-taking firms, no barriers to entry and perfect information
- Equilibrium under perfect competition
- Short-run Equilibrium: Short-run supply and demand curves intersect and determine short-run market price. Firms maximize profit, though profit may be positive or negative.
- Long-run: Industry supply curve intersects the market demand curve. Entry and exit drive profit to zero. No further incentive to exit or enter the industry.
The presence of a single firm in an industry alters the outcome of the perfectly competitive model and outcomes are no longer efficient. This condition is reanalyzed in MSPP’s Intermediate Microeconomics.
Almost any Principles of Microeconomics textbook should be appropriate for reviewing the key Microeconomics concepts. You do not need the most recent edition. Some specific suggestions are:
- Gregory Mankiw, Principles of Microeconomics
- Robert Frank and Ben Bernanke, Principles of Microeconomics
- Karl Case and Ray Fair, Principles of Microeconomics
You also may find it helpful to read popular books about applying economics to behavior. Examples include:
These books are suggestions, not required. They may help you understand how economics can be used to study the world around you. These and other authors also write blogs or columns in newspapers or online sources.
- Steven Levitt and Stephen Dubner, Freakonomics or Superfreakonomics
- Steven Landsburg, Armchair Economist or any of Landsburg’s other books
- Tim Harford, The Undercover Economist