Study Guide

EKN 224 & EKN 244

Department of Economics
Tukkiewerf Building
University of Pretoria

Last Revision: January 2021

© Copyright reserved
© Outeursreg voorbehou
1. INTRODUCTION

This study guide is designed for students who take the undergraduate intermediate
microeconomics courses in the Department of Economics at the University of Pretoria.
Please read through all sections of this document carefully. Intermediate
microeconomics as a whole is presented over the entire year, but is administered as
two individual semester courses. EKN224 will be presented in the first semester and
EKN244 in the second semester. Details of the work to be covered in each semester
are shown in the course outline section. Students who wish to continue with
postgraduate studies in the Department should note that they also need to complete
the intermediate macroeconomics courses presented at the second year level. Please
check your UP e-mail regularly and refer to ClickUP during the course of the year for
updated information, announcements and study material. All administrative enquiries
must be directed to the Department’s reception desk at (012) 420 2413 during office
hours or via email at shannie.maharaj@up.ac.za.The Department’s reception desk is
located at the entrance of the Tukkiewerf Building.

The content of the EKN224 and EKN244 courses cover a broad range of
microeconomic topics, including consumer and firm behaviour and interaction,
questions of scarcity and choice, game theory as a tool for analysing interactions, and
questions of distribution and market failure. Note that a good command of calculus
and statistics will be required to master some parts of the work.

Microeconomics is a useful subject field for people wishing to access a range of

careers, including economics, research, consulting and many more: since we study
the details of consumer and firm interactions, you’ll be able to see microeconomic
principals at work everywhere once you start to look for them. We’re excited to share
more of this interesting and relevant field with you as you work through EKN 224 and
244.
LECTURE TIMES AND VENUES

EKN224 lectures during the first semester are as follows1:

 Dr. Mpoifeng Molefinyane

Monday 10:30-11:20 IT 2-26

Tuesday 13:30-14:20 EMS 4-150
Friday 12:30-13:20 EMS 4-151

Office Hours:
Monday 1200-1300 TW 2-16
Tuesday 1430-1530 TW 2-16

EKN244 lectures during the second semester are as follows:

 Dr. Nicky Nicholls

Monday 09:30-10:20 (Muller Hall)

Tuesday 10:30-11.20 (EMS 4-151)
Thursday 07:30-08:20 (Law 1-54)

Office hours: to be confirmed at the start of the second semester.

Please refer to your timetable booklet for more information concerning recess dates
and lecture days on which other timetables will be followed. Announcements regarding
the schedule of work for upcoming sessions will only be made in class during the
preceding session(s). Contact details for your lecturers may be found on the
Department’s website at http://www.up.ac.za/en/economics/article/39728/staff

1 If we are not allowed onto campus, lectures will be online.

2. CLASS PARTICIPATION

Attending lectures and participating in class is viewed as a must. Dialogue is not only
strongly encouraged, it is critical to your understanding of the material. Remember,
there is no such thing as a stupid question! Vocalising your questions often helps you
to gain clarity on what you do and do not understand. It also provides your lecturer
with important feedback on areas that we need to spend more time on. In order to
make the most of your time during lectures, we ask that you quickly scan through the
material to be covered that day and prepare as best you can for class; this encourages
active listening and creates a more productive learning environment.

3. ASSESSMENT STRUCTURE

The final mark for EKN224 & EKN244 will be composed as follows:

First Semester Test 15%

Second Semester test 15%
Other tutorial tests or assignments 20%
Final examination 50%

Please note that, due to time constraints, the final mark for winter and summer school
courses (if available) will be determined differently. Details will be announced in class
at the start of the particular winter or summer school module.
4. OTHER CRITERIA AND ARRANGEMENTS

 A sub–minimum mark of 40% in the semester is required to gain entry to the final
examination. A sub–minimum mark of 40% in the final examination and a final
mark of 50% are required to pass each course.
 The final examination paper will cover all the prescribed material, lecture notes,
discussions and other topics covered in class, unless announced otherwise.
 Please note that there will be no supplementary examinations granted for these
subjects. Winter and summer school will be available to students who need to
repeat a subject. Students who miss the final exam for a legitimate reason and
qualify for a special exam must consult the Department’s reception desk
regarding the date on which the special exam will be written.

5. EVALUATIONS

Please read this section carefully. There are three scheduled semester tests, of which
you must write two; there will be no other make-up or sick test. Semester test 1 of each
semester is highly recommended, as is semester test 2. The risks of skipping semester
test 1 in favour of test 2 and 3: should you then miss semester test 2 for any reason,
there will be no recourse and your semester mark will be severely compromised. Thus,
we repeat, we strongly suggest that you plan to write semester test 1 and 2 as your
first choice. Assessment may be either paper-based or electronic and the mode of
assessment is at the discretion of the course coordinator in consultation with the HoD.
Students with time table clashes should contact the Department’s reception desk as
soon as possible to find out what options are available to them. Finally, you should not
attempt to write all three semester tests in the hope that we will let your best two scores
count; in such a case we will simply take the scores of your first two tests.

Students who miss semester test 1 must contact the Department’s reception desk as
soon as possible to provide them with a legitimate reason and corresponding
documentation if they wish to continue with the course. Students who miss two of the
three semester tests are advised to deregister and repeat the course during the
summer or winter school period. No special arrangements will be made for students
who miss two semester tests. Students who miss the final examination due to a
legitimate reason should submit the appropriate documentation to Faculty
Administration and consult the Department’s reception desk regarding the date on
which the special exam will be written.

Evaluation dates and venues are available on your online UP Portal. Students who
require additional time or special assistance must please contact the Department’s
reception desk prior to any test to confirm arrangements. Dates and venues for the
final examination will be published by Faculty Administration on your UP Portal at the
end of each semester. Students must regularly check their online UP Portal and
ClickUP for any announcements regarding evaluation dates and venues as they are
subject to change.

6. PRESCRIBED MATERIAL

The following textbook is prescribed for both EKN224 & EKN244:

 The Economy: Economics for a Changing World (this text book is available for
free in an e-book format at www.core-econ.org )

We encourage you to read outside of the prescribed textbook. It is always a good idea
to be up-to-date with the world. The Economist (www.economist.com) has interesting
and relevant articles in both micro- and macroeconomics: you can read a few articles
per week on their website without subscribing. You can try their “Espresso” app, as
well. The Business Day also offers good information about the country, although their
economic analysis, sometimes, is in need of improvement. There is also a “Business
Day E-edition” app that you can download.

EKN 224 will include a look at relevant South African research, where it is plausible to
either discuss or read. There are also a number of decent and not too complicated
readings that describe a number of ideas we will cover here.
EKN 244 will include a look at some interesting ideas in the growing field of behavioural
economics, considering South Africa where plausible and appropriate. Here you can
find some fun light reading that also brings these ideas to life: try Sunstein and Thaler’s
“Nudge” or Thaler’s “Misbehaving: The Making of Behavioural Economics”. Dan
Ariely’s “Predictably Irrational” is also a good read.

You might also be interested in enhancing your understanding of topics covered in

EKN224 and EKN244 by reading relevant chapters from Perloff’s Microeconomics with
Calculus and/or De Villiers & Frank’s Microeconomics and Behaviour.

We will also upload interesting articles or papers relevant to the work being covered
on ClickUP from time to time. In many cases, these will be links or references to
articles or papers, because we cannot make copyright material ‘freely’ available.

7. COURSE OUTLINE

The EKN224 and EKN244 modules combine to cover most major topics in
microeconomics. The courses will include an introduction to consumer and producer
theory, which is the source of supply and demand functions and curves. We will also
look at markets and the interaction between different role players in the economy, as
well as the interactions between firms and consumers. We will look at game theory as
a tool to analyse interactions between different players, and will also look at the labour
market, public policy and market failures. The scope of the final exam for each course
will be determined at the end of each semester and announced in class and on
ClickUP.
EKN 224 (First Semester)

Please note that the following is an outline, based on our expectations related to
coverage. It is, of course, subject to change, and that change may happen “on the fly”.
That is another reason why you must always be in class. Also, pay attention to Click-
UP to see what material has been made available, as that should also be read.

Week 1-2

Unit 3 – Scarcity, work and choice:

We revisit the age old economic problem of scarcity. We have many needs and wants,
but little means to meet them, and therefore we need to make choices. How does this
principle drive the whole economy of South Africa and the world?

Weeks 2-4
Unit 4 - Social interactions:
We will introduce game theory as a tool to analyse interactions between market actors
(firms or individuals); we will also talk about behavioural experiments and social
preferences.

Weeks 4-6
Unit 5 - Property and power: mutual gains and conflict:
We will discuss questions of efficiency and fairness, and will look at how bargaining to
efficient sharing of society’s surplus might take place.

Weeks 6-8
The firm is an amazing thing. Have you ever wondered why we have them? Within a firm,
there is massive coordination of activities, which is rather different than what happens in
a ‘simple’ market. Coordinating those things is a rather complex task, and we will focus
on the economics behind those coordination activities.

Unit 6 – The firm: owners, managers and employees:

Firms are the engines of economic production and profit. We take a look at how firms
operate from an economic point of view. What are the roles of the entrepreneur, the
managers and the workers? The all have differing principles that drive them, but together
they form a machine that produces commodities and services to satisfy their customers.

Weeks 8-10
This unit will be somewhat similar to that in Unit 3, although focusing on the other side of
the market. Again, we will be basing our discussion on ‘certainty’. However, these ideas
underpin our understanding of the world under uncertainty, as well; thus, they remain
completely valid concepts.

Unit 7 – The firm and its customers:

Sam Walton once said: “There is only one boss - the customer - and he can fire everybody
in the company from the chairman on down, simply by spending his money somewhere
else.” We critically review this statement, along with other firm related behaviour.

Weeks 10-12
Unit 2 – Technology, population, and growth

This unit ties together the theory of how individuals make their decisions and how firms
maximize their profit. The unit not only serves as the revision of units three through seven,
but also explains how societies avoided Malthusian trap – the decline of living standards
and due to expanding populations.

Weeks 12-14
Capstone Unit 21 - Innovation, information, and the networked economy

Now that we have learned about different models that explain decision making in the
economy, we will use these ‘tools’ to understand the drivers of innovation (or invention)
and factors that encourage or kill innovation.
EKN 244 (Second Semester)
Week 1-2
Behavioural economics and decision making under uncertainty:
For this section, we will use some other text books, taking bits from Varian’s Intermediate
Microeconomics with Calculus for the behavioural part, and from Perloff’s
Microeconomics with Calculus for the uncertainty part. You don’t need to buy these books:
you can find older editions freely available online for the short parts we’ll use in the course.

We will consider a few key concepts from behavioural economics, since this has become
a large field in microeconomics. Behavioural science is increasingly used to inform policy
all over the world. We will then look briefly at attitudes to risk and how decisions are made
under uncertainty.

Weeks 3-5.5
Unit 8 – Supply and demand: price taking and competitive markets:
Economics is about supply and demand. Firms supply goods and services which are
demanded by customers, such as households, other firms, the government, investors and
the foreign world. We study the interactions between supply and demand and the process
of reaching market equilibrium.

Monopolies and other non-competitive market structures:

The market does not always work. On the contrary, there are many reasons for a
competitive market not to exist. One of them is a lack of competition amongst firms in the
form of monopoly or oligopoly power. We study this phenomenon and try to understand
why this is the rule in firm structure rather than the exception. Here again, we will borrow
from Varian’s book and also from De Villiers and Frank’s Microeconomics and Behaviour.

Weeks 5.5-7.5
Unit 9 – Labour market: wages, profits and unemployment:
Here we will consider topics such as how wages are set, how changes in demand impact
unemployment, and the impact of labour unions.
Weeks 7.5-9.5
Unit 10 – Banks, money and the credit market:
Decisions around money and mechanisms to delay or bring forward consumption (we
probably won’t look at the whole unit, but will focus on the parts relevant to
microeconomics).

Weeks 9.5-11.5
Unit 11 – Rent-seeking, price setting and market dynamics:
We will look at how market organisation influences prices, the role of rent-seeking in oil
prices, and the question of asset market bubbles (among other questions).

Weeks 11.5-14
Unit 12 – Markets, efficiency and public policy:
When does the market fail? Public goods, information asymmetries and insurance
markets. If time allows, we will also briefly consider unit 20, Economics of the
Environment, as an interesting and very relevant application of the market failures we’ll
be discussing in Unit 12.

8. ADDITIONAL NOTES

In addition to completing the intermediate microeconomics (EKN224 & EKN244)

courses described in this study guide, successfully completing the intermediate
macroeconomics (EKN214 & EKN234) courses will also be required for students who
wish to continue with a postgraduate degree in the Department of Economics. Please
consult the Department’s reception desk for complete information regarding the
application process for postgraduate study.

Tutors will be available throughout most of the semester for consultation. Tutor offices
are located through the side entrance of the Tukkiewerf building. Please refer to
ClickUP for more information on tutor availabilities throughout the semester. We will
introduce you to the tutors for each semester in class.
Statement on Anti-Discrimination:

The University of Pretoria is committed to building an inclusive, affirming and

transformed institutional culture, curriculum and campus life. It rejects and condemns
racism, sexism, homophobia, transphobia, xenophobia, ethnic chauvinism, religious
intolerance, unfair discrimination, hate speech, sexual harassment, gender-based
violence and retaliation, and all other forms of discrimination. The University has
committed itself to the eradication of these practices, and in 2019 adopted an Anti-
Discrimination Policy, in order to realise procedural and substantive equality in all
respects. As the lecturer and presenter of this course, I acknowledge the extreme
harm that racism, sexism, xenophobia and other forms of discrimination have inflicted
and continue to inflict on our society and communities. I commit to ensuring that there
is an open dialogue between myself and all the students in the module on curriculum
content and teaching method which may be interpreted as discriminatory or exclusive.
I undertake to ensure that any such concerns are raised without fear of intimidation or
recrimination. Moreover, I resolve to continuously improve the teaching of this course
in a way that allows the inclusion of all the students enrolled for this course, building
their self-confidence and self-efficacy, and supporting the ultimate goal of substantive
equality for all persons. The choices that we make about curriculum content and
pedagogy (what and how we teach) are also choices about what kind of society we
wish to build. In this declaration of intent, I resolve to be part of and give substance to
the University’s anti-discrimination and transformation endeavours.

9. FACULTY STUDENT ADVISORS

The faculty offers student support through the faculty student advisors. The services
offered the Faculty Student Advisors include individual consultations and workshops
dealing with:
 Academic support
 Goal setting & motivation
 Adjustment to university life
 Time management
  Study methods
 Test / Exam preparation
 Stress Management
 Career exploration

Please, feel free to contact them, if you are struggling.

Mr Daniël Ramollo
EMS Faculty Student Advisor
Tel: +27 (0)12 420 6743
danny.ramollo@up.ac.za

Ms Zinhle Sibiya
EMS Faculty Student Advisor
Tel: +27 (0)12 420 /3322
Email: zinhle.sibiya@up.ac.za

Ms Beauty Mabunda
Junior Faculty Student Advisor
Tel: +27 (0)12 420 6992
Email: beauty.mabunda@up.ac.za

10. COMMUNICATION WITH EMS STUDENTS

All emails from the Faculty of Economic and Management Sciences and Department
of Economics will be sent to you at your University of Pretoria student email address.
Announcements relating specifically to this module will be posted on ClickUP. It will
be assumed that any communication sent to your UP email address or posted on
ClickUP will be read by you in a timely manner. The EMS Faculty advises that you
check your email address and ClickUP at least twice a day, ideally in the morning and
again before the close of business.

11. RULES OF CONDUCT FOR EMS STUDENTS

Students in the EMS Faculty are likely move into the business world once they have
completed their studies at the University of Pretoria. As part of delivering well-rounded
students to the job market, it is important that UP students refine certain attributes that
are deemed to be part of the make-up of any successful business person. Where
feasible, a number of these attributes need to be instilled by staff members, by
consistently applying the same administrative and other rules when dealing with
students. As these rules of conduct are deemed to form part of learners’ guides, it is
assumed that all students are aware of these and ignorance will thus not be accepted
as an excuse.

Conduct Rules (GA = graduate attribute expected of EMS students)

 Professional conduct and manners are expected when interacting with your
lecturers in person, by e-mail or by telephone. GA: Communicate well in diverse
social, cultural, geographical and workplace contexts using appropriate
language (oral, written and listening)
 Professional conduct and ethical conduct are expected when liaising with
outside stakeholders related to your academic programme. GA: Have a sense
of social responsibility by behaving ethically and with integrity
 Please respect the consulting hours of lecturers and the time of your fellow
students when consulting with lecturers on a one-on-one basis or in class. GA:
Demonstrate inter-personal skills by interacting constructively
 All correspondence (e-mail or otherwise) with the HODs and lecturers, must be
done in an appropriate format and tone. If not, the correspondence will be
returned unanswered marked “format” or “tone”. Queries will thus not be
 attended to, unless the format and/or tone of the correspondence are at an
acceptable professional standard. GA: Communicate well in diverse social,
cultural, geographical and workplace contexts using appropriate language
(oral, writing and listening)
 Students shall not be late for class, unless there is a valid reason for their being
late. Being late for a lecture indicates a lack of respect for the lecturer and fellow
students. In addition, students who have to leave a lecture period before the
end of the lecture should advise the relevant lecturer before the lecture
commences that they will be leaving early. GA: Functioning autonomously and
confidently as individuals demonstrating time management in own decision-
making
 Students’ mobile phones should be switched off and out of sight during lectures
and tutor sessions, unless these are used as part of the blended learning
interventions. GA: Demonstrate inter-personal skills by interacting
constructively
 Students are discouraged from misusing the procedures associated with sick
notes. Nevertheless, when appropriate, they are expected to hand in a sick note
application form together with the required supporting documentation at the
relevant department. The associated application form must be filled out in its
entirety and if not, sick notes will not be accepted and a zero mark will be
awarded for the relevant test or assignment. GA: Have a sense of social
responsibility by behaving ethically and with integrity
 Sick note application forms and associated documentation must be handed in
within three working days from the date of the test that was missed. Public
holidays, Saturdays, Sundays and official university recess days during a
semester are not counted as working days. Late submissions will not be
accepted and a zero mark will be awarded for the relevant test. GA:
Functioning autonomously and confidently as individuals demonstrating time
management in own decision-making
 To counter unethical behaviour, sick notes received will be validated by
confirming their authenticity with the issuing medical practitioner. If students are
identified as having submitted fraudulent sick notes, they will be handed over
to the university authorities for disciplinary action which could lead to expulsion.
 GA: Have a sense of social responsibility by behaving ethically and with
integrity
 Students are expected to consider the resubmission of tests for additional
marks carefully and are expected to fill out the associated forms in their entirety
and hand these in, accompanied by the relevant test. Questions/answer books
will be remarked in their entirety when handed in and students could
consequently lose marks previously awarded, when the entire question/answer
book is remarked. GA: Functioning autonomously and confidently as
individuals taking responsibility for their own decisions and development
 Fraudulent amendments to tests and examinations will not be tolerated and
students guilty of this will be handed over to the university authorities for
disciplinary action which could lead to expulsion or suspension of credits for a
specific module. GA: Functioning autonomously and confidently as individuals
taking responsibility for their own decisions and development and Have a sense
of social responsibility by behaving ethically and with integrity
 All tests handed in for remarking must be handed in within three working days
of the date on which the tests were made available or handed back in class and
must be accompanied by the associated form. Public holidays, Saturdays,
Sundays and official university recess days during a semester are not counted
as working days. Applications for a remark will not be considered if handed in
after the deadline specified by the lecturers. GA: Functioning autonomously
and confidently as individuals demonstrating time management in own
decision-making
 All assignments must be handed in on time. If not, assignments will not be
marked and students will receive a zero mark for assignments that were handed
in late. GA: Functioning autonomously and confidently as individuals
demonstrating time management in own decision-making

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