Toronto PPG1002 Microeconomics for Policy Analysis

… one of the Specimen Courses in Economic Analysis

Click for syllabus

Course description

This is a course in microeconomic theory for students in the MPP programme at the School of Public Policy and Governance. One objective of the course is to provide you with a foundation in microeconomic analysis and to demonstrate how it can be used to develop and evaluate public policy. Another objective is to increase your economic literacy and comfort with economic arguments. The course is designed to be accessible to all students, including those with no previous exposure to economics. What is a prerequisite for this course is your knowledge of high school mathematics; especially algebra and your ability to work with graphs and fractions.


Michael Baker (Fall 2016)


By permission of the instructor.

Syllabus link on Atlas (Fall 2016)

Alignment between class topics and Atlas core normed topics
PPG1002 Class Topic
Closest Normed Topic
1 Introduction – Why Economics The Study of Economics
2 Preferences and Utility Consumer Theory and Elasticity of Demand and Supply
3 Choice Consumer Theory and Elasticity of Demand and Supply
4 Demand and Slutsky Equation Consumer Theory and Elasticity of Demand and Supply
5 Buying, Selling and Consumer Surplus Consumer Theory and Elasticity of Demand and Supply
6 Market Demand and Technology Producer Theory and Competition
7 Profit Maximization Producer Theory and Competition
8 Cost Minimization, Cost Curves, and Firm Supply Producer Theory and Competition
9 Industry Supply and Equilibrium Supply, Demand, and Equilibrium
10 Exchange Supply, Demand, and Equilibrium
11 Monopoly Monopoly and Price Discrimination
12 Externalities, Public Goods, and Welfare Externalities

Public Goods and Commons Problems

The PPG1002 syllabus addresses 7 of the 12 Atlas topics in the Atlas subject of Economic Analysis. The five Atlas topics that are not addressed in detail are:

Additional description from the Syllabus


Varian, Hal R., Intermediate Microeconomics, A Modern Approach, Ninth Edition, New York: W.W. Norton and Company, 2014

Problem sets and tutorials

There will be four problem sets assigned over the course of the term. These are intended to provide an opportunity to practice using the concepts discussed in class and some exposure to the types of questions that will appear on the tests. While these problem sets are meant to draw on material that we have already covered in class, because the progress of lectures is hard to predict in some instances they may require that you read ahead in the textbook.

The questions on the problem sets are taken from quizzes, midterms and final examinations in previous years. Therefore they provide an indication of what to expect on the tests this year.

My strong recommendation is that you work on the problem set questions (and review class material) in groups. This may be the most effective thing you can do to improve your comprehension of the material.

They key to getting the most out of the problem sets is to try to answer the questions first on your own – before you meet with your study group and, especially, before you come to tutorial.

Tutorials will be used to review the answers to the problem sets and for review/make up classes. Tutorials are the way answers to the problem set questions are distributed, so it is important that you come to tutorials having attempted to answer them.


Student evaluation will be based on three quizzes each worth 20 percent of your final grade each, and a final examination worth 40 percent. Some of the questions (approximately one-half) on the quizzes and final examination will be similar to those in the problem sets. Other questions (approximately one-half) will ask you to define some of the key economic terms we have discussed in class and explain their relevance to public policy. These latter questions are intended to assess your familiarity with the language of economics and economists.

Quiz #1, 60 minutes, first hour of class Wednesday, September 28, 2016

Quiz #2, 60 minutes, first hour of class Wednesday, October 26, 2016

Quiz #3, 60 minutes, first hour of class Wednesday, November 16, 2016

Final: To be scheduled during exam week.

In the event you miss a quiz, the weight will be reallocated to the final exam. For example, the final will be worth 60 percent for those missing one quiz. Please note that if you miss a quiz I will require a note from your doctor.

Course policies

All students must arrive on time and be prepared to participate in class discussion.

The use of computers, iPhones, iPods, iPads, Blackberries and all other computer devices in class is strongly discouraged. This recommendation is based on recent research that computers are distracting and hinder learning even when computers are used solely to take notes So this is an evidence based policy!

Extra help

The Department of Economics offers an Economics Study Centre to assist undergraduate students. You may find the time scheduled for Intermediate Microeconomics (ECO 200, 204, 206) helpful. The Centre’s hours are listed at: The Department also maintains a roster of graduate students who are available for hire as tutors. The list can be found at:

Keeping up

Each year students remark that this class moves along fairly quickly. The curriculum of the MPP program requires that we cover the material listed below in the class schedule as preparation for the second year core course, PPG 2002H, Topics in Applied Economics for Public Policy and for the “Capstone Course.” Good suggestions, from students who have taken this course, to help you keep up include a) read the textbook, b) attend all classes and tutorials, c) complete readings before coming to class and complete problem set questions before going to tutorial, and d) make lists of definitions from the text as the course proceeds and summarize your notes immediately after class.

Thinking about public policy like an economist

There are many websites and blogs that provide an economic view of current policy issues.

Within the Canadian context you should check out:

Worthwhile Canadian Initiative:

Other sites worth investigating include:


Marginal Revolution:

The Globe and Mail and the National Post regularly feature economists writing on current public policy issues. A number of independent “think tanks” provide an analysis of economic policy, ranging the political spectrum from the Canadian Centre for Policy Alternatives through the Fraser Institute.

Finally some Canadian economists, spanning the country, blog on policy issues including Stephen Gordon at Université Laval, Kevin Milligan at UBC, Jack Mintz at the University of Calgary, and Tammy Schirle at Wilfrid Laurier University.

Course topics and readings

All chapter references are to Varian’s textbook. The course is divided into 4 units:

1) Consumer Theory: Chapters 1, 2, 3, 4, 5, 6, 8, 9, 14, 15

2) The Theory of the Firm: Chapters 19, 20, 21, 22, 23, 24

3) Equilibrium in a Perfectly Competitive Economy: Chapters 16 and 32

4) Market Failures and Social Welfare: Chapters 25, 26, 35, 37, 34

Week 1: Introduction – Why Economics

Chapter 1: The Market

Chapter 2: The Budget Constraint

Week 2: Preferences and Utility

Chapter 3: Preferences

Chapter 4: Utility

Week 3: Choice (and Quiz #1)

Chapter 5: Choice

Week 4: Demand and Slutsky Equation

Chapter 6: Demand

Chapter 8: Slutsky Equation

Week 5: Buying, Selling and Consumer Surplus

Chapter 9: Buying and Selling

Chapter 14: Consumer Surplus

Week 6: Market Demand and Technology

Chapter 15: Market Demand

Chapter 19: Technology

Week 7: Profit Maximization (and Quiz #2)

Chapter 20: Profit Maximization

Week 8: Cost Minimization, Cost Curves, and Firm Supply

Chapter 21: Cost Minimization

Chapter 22: Cost Curves

Chapter 23: Firm Supply

Week 9: Industry Supply and Equilibrium

Chapter 24: Industry Supply

Chapter 16: Equilibrium

Week 10: Exchange (and Quiz #3)

Chapter 32: Exchange

Week 11: Monopoly

Chapter 25: Monopoly

Chapter 26: Monopoly Behaviour

Week 12: Externalities, Public Goods, and Welfare

Chapter 35: Externalities

Chapter 37: Public Goods

Chapter 34: Welfare

Page created by: Ian Clark, last modified 9 March 2017.