Uni Course Selection Part 1: How "tough" is majoring Economics at undergraduate level?
The above is a sample microeconomics question (mock exam question set by the author/ tutor) on consumer theory at undergraduate level perhaps under microeconomics courses typically in the 2000 series/ range. For post JC students/ interested parties who are not familiar with undergraduate economics courses, the microeconomic concepts illustrated in the above sample mock exam question can be (for Economics major undergrads) tested in undergrad Year 1 Semester 2 or Year 2 Semester 1 microeconomics modules depending on when such courses are selected by undergrads in their Year 1 to Year 2 academic curriculum.
What are the similarities and differences between JC H2 Economics and those at the Uni undergrad level?
1) The core topics concepts in JC H2 Economics such as demand and supply, elasticities, market failures and market structure are still covered at uni level but usually only for entry level broad-based economics modules such as "Introduction to Economics" often taken at Year 1 Semester 1 level for some major uni. For other uni, "Introduction to Economics" may only be necessary for those who scored "C" and below in their H2 Economics, meaning that for those who scored "A" or "B", they are exempted from such modules ("Introduction to Econs") and go straight to the 2,000 series microeconomics modules where they will likely come into contact with the concepts illustrated in the above mock exam question. (The microeconomics consumer theory concepts covered in the above undergrad 2,000 series microeconomics modules mock exam sample question shall be briefly discussed under point 3 below for those who are interested or who might be keen to explore further how Economics major modules are like at undergrad level ...)
2) As mentioned in point 1, the core microeconomics concepts (as well as the core macroeconomics concepts) covered in H2 Economics would be handy and useful especially for Year 1 Semester 1 in some uni where "Intro to Econs" module is compulsory, before Econs major undergrads are allowed to progress to higher level mods. However, beyond the basic "Intro to Econs" module, any further progression in an Econs major degree would entail more and more intensive Math pedagogy in the teaching of the micro and macro concepts. Statistics would also come into play for modules such as Econometrics (usually taken at Year 2) as well as more in depth specialised micro and macro modules taken at Year 3 level onwards such as International Finance, Industrial Economics, Monetary Economics etc. This implies that beside a good grounding in H2 Econs, prospective undergrads interested in Econs major should have strong foundation and interests in Math and Statistics (at least in H2 Math). Uni level Econs, whether for micro or macro modules, is essentially Math centric and quantitative based. As a precursor, this explains why the above sample exam question is chosen for illustration (to be further elaborated below in Point 3).
3) Continuing the theme in Point 2, what it implies is that scoring an "A" or "A+" in "Intro to Econs" in undergrad Year 1 Sem 1 could be a MISLEADING indicator of an undergrad's ability in doing well in Econs centric degree course. As illustrated in the above sample exam question, this is typical of modules taken at Year 1 Sem 2 or even Year 1 Sem 1 for some uni where Econs is the major (right from the start). The following would attempt to decompose the various consumer theory concepts illustrated in the above sample mock exam question:
First, the above algebraic equation is typically known as a Cobb-Douglas utility function and introduces undergrad to concepts NOT covered under demand and supply in H2 Econs known as the consumer preferences and indifference curve. In a nutshell, uni Econs courses entail bringing in (Mathematical) models to deepen undergrads understanding of the real world issues both in micro and macro aspects.
Second, the concept of constraint-optimisation. At H2 level, budget constraint concepts (which play a huge part in real world application especially in individuals' day to day decision making as well as long term government micro and macro policy formulation) are NOT covered to any extent except some cursory mention required in certain answers in H2 Econs exam questions or concepts. Here, constraint-optimisation is the corner stone to unlock the key to answering part (a) in the above sample question which brings us to the next concept implied in the sample question but NOT explicitly mentioned known as the budget line (or constraint). Typically, in such (basic simplified entry level) model, the assumption is that a consumer has income Y and all are spent on m (masks) and s (sanitizer). Simple as it may appear but the concept applies well in analysis of changes when income or prices of different goods (or services) change in the real world. Typically, in such simplified models, a consumer's budget constraint is expressed as follow:
m.Pm + s.Ps = Y --- (1)
Third, to solve for part (a) to obtain the demand functions of m (masks) and s (sanitizer) of the consumer with a Cobb-Douglas utility function as given, another concept has to be used known as MRS (marginal rate of substitution). The MRS of m and s is essentially the ratio of (another concept known as) their marginal utilities (MU). Here this MU concept is covered in H2 Econs (typically as MB - marginal benefits) but the similarity more or less ends there. This is where the Math part (simple calculus) comes in.
MUm = du/dm and MUs = du/ ds
MRS = MUm/ MUs
Next, to solve for the demand function (in Part a), yet another concept known as price ratio or MRT (marginal rate of transformation) has to be used here. From equation (1):
Since it is given Pm is the relative price of surgical masks (with respect to price of santizer), this implies Ps is normalised to 1.
Price Ratio (or MRT) = Pm/ Ps = Pm
By equating MRS to Price ratio and solving for m and s, demand functions for m and s are obtained. (This ends Part a).
4) For Part b, SE and IE stand for substitution effect and income effect respectively. This is where the key difference in H2 Econs vs uni microecons is in the demand theory. Here, for any price change of a good, the change in quantity demanded is decomposed into substitution effect and income effect. (Diagrams would be required for understanding of such concepts but for brevity they are NOT shown here).
5) Lastly, for Part c, CV and EV stand for compensating variation and equivalent variation respectively. Again, these two concepts are new as far as H2 Econs is concerned and essentially meant for government policy application when implementing subsidies or taxes and how households' welfare are affected and the various implications in terms of net effect on final demand and most possibly welfare loss if any and the various tradeoffs in implementing such policies. To some, this may sound "trivial" but it is not (as there are widespread implication on households especially lower income families when certain polices are rolled out for tax revenue purposes and/ or supposedly/ possibly as a Pigouvian tax to minimise negative externalities in the real world POSSIBLY such as the recent Petrol Tax announced in Budget 2021 on 16 Feb 2021).
Obviously, there are much more to it but as a short introduction, this is more or less about it for the above sample exam question and the various micro concepts involved to "crack" the question. Due to the objective of brevity as far as possible, macro is NOT touched on in this post but similar pedagogy in the deepening of Econs concepts and algebraic formulation are brought into many simplified models for problem solving. (The uni Economics Professors will very likely (be able to) do much more "justice" to the appreciation and understanding of profound Econs concepts developed thus far to understand the real world and enable prudent decision making and policy implementation by the various economic agents namely households, firms and the government.)
Hope the above is useful and can serve as a complement to the various talks organised by the various uni in their (virtual) open houses.
For any enquiry, please:
Thank you and All the Best to all prospective undergrads in their applications to the various uni courses.
Comments
Post a Comment