ECONOMICS III

HANDBOOK
INCORPORATING THE MAJORS IN:
▪ Economic Science (ECON3005/3007/3010)
▪ Economic Theory (ECON3009)
▪ Applied Development Economics (ECON3012)

Academic Year 2020

1. PREAMBLE
First and foremost, congratulations on successfully completing Economics Level II and
welcome to an invigorating Economics III programme offered by the Economics Division of the
new School of Economics and Finance (SEF) at Wits University. We hope that this handbook
provides answers to most of your questions, but we encourage you to consult our support staff
(Economics III Administrator) and academic staff (Economics III Programme Coordinator and
Lecturers) for assistance and advice as well as the various Economics Division websites, SAKAI
(Wits-e) in particular, for an array of valuable information.
Wits’ sound Economics I programme introduced basic economic concepts, theory, models,
thought, issues and policy. Our rigorous Economics II programme further developed your
thinking at the micro and macro levels, and in an open economy context – international
economics. Furthermore, our Economics II programme introduced students to the application of
quantitative tools to economic analysis – mathematical and statistical tools.
The rationalised structure of our Economics III programme ensures that students gain
“depth” (a sound grasp of fewer economics topics of particular interest to the student) rather than
“breadth” (superficial knowledge of a wide range of economics issues). SEF offers three majors
in Economics, viz., Economic Science, Economic Theory and Applied Development Economics.
Very briefly, the Science major is a ‘locked-in’ programme consisting of five compulsory
courses; viz., microeconomics, macroeconomics, mathematical economics, econometrics, and
international economics (international trade and international finance). The Economic Theory
major is comprised of four compulsory courses, viz., microeconomics, macroeconomics,
mathematical economics, econometrics plus an elective. Applied Development Economics
consists of four compulsory courses, viz., microeconomics, macroeconomics, econometrics,
South African development issues, plus an elective. A student may not take a double/triple major
in economics, i.e. Economic Science III, Economic Theory III and Applied Development
Economics III.
Programme Objectives and Postgraduate Studies: One of the objectives of the final year in
undergraduate economics is to extend your knowledge of economics, and to train you to apply
this knowledge to practical and policy issues, the foundation from which you will develop your
analytical and research skills. A good pass in in the Applied Development Economics major
(currently an average of 65% or above) is the MINIMUM entrance requirement into Honours
in Applied Development Economics (ADE). The MINIMUM entrance requirements for
Honours in Economics/Economic Science is an average of 65% or above in Economic
Science/Theory III. This established postgraduate programme is considered one of the TOP
Economics Honours Programmes in the country as it consists of a tough combination of
rigorous courses that prepare students for their future careers as Economists and related
professions predominantly in business (financial institutions and markets, and conglomerates,
in particular), government, state-owned enterprises, NGOs, international intergovernmental
organisations, labour unions and academia, to mention a few.
Why is the demand for professionals with formal postgraduate economics training growing
rapidly? The study of economics provides a foundation for careers in many fields within and
outside commerce, and is central in understanding a wide range of issues; including amongst
others, business, markets, domestic and international trade (in goods, services, factors of
production and financial capital), government policies (economic and social policies – health,
education, welfare, etc.), globalisation, development, and the environment. This programme,
and our economics postgraduate programmes at large, is not only designed for students intending
to become economists and analysts, but also appeals to students in other disciplines that require
a solid background in economics. The Economics Division of the School of Economics and
Finance is one of the most experienced and influential in the country, has produced not only
many of the prominent economists and analysts in South Africa, but also graduates and
postgraduates employed in leading domestic and international institutions, and not surprising,
our economics programmes are internationally recognised.

“WITS GIVES YOU THE EDGE”

Semester I

Economics III MICROECONOMICS:

1. Scope of Course
This course examines the functioning of markets at the microeconomic level. It is a
continuation from Economics II in content in that it continues to investigate how markets
work, both in a partial equilibrium and a general equilibrium context. The first part of the
course builds on the demand side of a market by considering consumer welfare and
exchange without production. This is followed by the analysis of the supply side of market.
It approaches the topic in both of two ways, treating production as a dual problem to that
of cost. We then derive the individual firm’s supply curves; and aggregate these to derive
industry supply. Up to this point we use a partial equilibrium framework. Supply-side
analysis is then reconciled with what you have learned about demand. This allows us to
consider a general equilibrium framework with production. However, both short and long
run supply can be understood as abstracting from reality in a specific way. Imperfect
competition is then considered as one of several departures from the conditions of
competitive exchange.
2. Topics to be covered Chapter
1. Consumer’s surplus 14
2. Exchange 32
3. Technology and production 19
4. Profit maximisation 20
5. Cost minimisation 21
6. Cost curves 22
7. Firm supply 23
8. Industry supply 24
9. Monopoly 25
10. Monopoly behaviour 26
11. Oligopoly and Game Theory 28-29
3. Outcomes
By the end of this course a student will:
▪ Be able to analyse competitive equilibrium in many markets simultaneously
▪ Have a strong analytical understanding of supply-side theory
▪ Be proficient in the standard techniques applied in microeconomic analysis
▪ Be able to analyse decisions involving strategy as applied to oligopoly firms
4. Textbooks
Primary:
Intermediate Microeconomics: A Modern Approach, Varian, H.R., 9th ed. Norton.
Supplementary:
Microeconomics, Bernheim, B. D. and Michael Whinston, 1st or 2nd ed., McGraw-Hill.
 Microeconomics, Goolsbee, A, Steven Levitt, and Chad Syverson, International ed.,
MacMillan Higher Education
5. Student Resources
To be notified
6. Lecturer Information
Name: Lyndal Keeton (Dr)
Office: NCB200
Tel: 717-8065
Email: [email protected]
7. Assessment of Performance
The final mark will be calculated on the following basis:
Tutorial Test 1 5%
Formal Test 1: 20%
Formal Test 2: 20%
Assignment 1(essay): 10%
Final Examination: 45%
The pass mark for this course is 50% of the overall weighted marks.
8. Pre-requisite(s)
Microeconomics II and Mathematical Economics II
9. Satisfactory Performance Requirement
Attend at least 90% of tutorials, attempt all assessments, and pre-final exam year mark of
at least 50%