© John Petroff


Fundamentals of Economics II



This course is a review of major topics of microeconomics. It deals primarily with the behavior of participants in various types of markets. Goals, attitudes and actions of users and providers of resources are studied. Emphasis is placed on potential harm of certain strategies and on corrective government policies. The concepts of the course are extended to the international trade and finance context.


After completing this course, a student should have a good understanding of
- the forces affecting prices and quantities traded
- what to do to optimize one's market position in four types of markets
- how government policies related to markets are formulated
- what is the impact of foreign trade and finance on domestic economy
- how firms make profits and how this motivates them to sell goods, produce these goods and buy resources
- the general premises of business behavior underlying all business disciplines
- what motivates individuals to supply resources to producers, and how resources are priced
- the functioning of the labor market and the role of unions

Organization of chapters:

The sequence of topics is the one most commonly found in regular textbooks.

Chapter 1: Demand and Supply
Chapter 2: Elasticity
Chapter 3: Production costs
Chapter 4: Perfect Competition
Chapter 5: Pure Monopoly
Chapter 6: Monopolistic Competition
Chapter 7: Oligopoly
Chapter 8: Economic Resources
Chapter 9: Wages
Chapter 10: Rent, Interest and Profit
Chapter 11: Antitrust Legislation
Chapter 12: Urban Economics
Chapter 13: Income Redistribution
Chapter 14: Labor Economics
Chapter 15: International Trade
Chapter 16: International Finance

The list of chapters always appears on the left side of the screen so that one can quickly move from chapter to chapter when necessary.

Design of the content:

The course is written for a rapid review of material that was previously studied. The text is short, but every word counts. The content is not designed for approaching the subject matter for the first time: it can be used only as a study guide for an introductory course in economics which must otherwise have a complete text.

Studying approach:

One would normally read the text starting from chapter 1 and move on to each subsequent chapter as the material builds on concepts presented in previous chapters. One is urged to take careful notes as explained in studying recommendations.

After reading the text, the student is urged to use the review quizzes present at the end of each chapter. The quizzes test the knowledge of each concept in the chapter with the ability to link back to the chapter if it is not clear why the correct answer is what it is.


Taking the comprehensive test available at the end of the course should give a good assessment of the overall knowledge of course content. Because this content is fundamental for business studies a grade of 70 correct answers out of 100 is the very minimum that any student should achieve. If one does not achieve close to that, it is strongly recommended that a full text introductory course be used to clarify concept misunderstood from this review course. For a complete introductory course, the provided comprehensive test is not sufficient for student evaluation. Written assignments should be required.

One should note that the comprehensive test does not allow linking back to the underlying text. Although the questions and the answers in all tests are randomized to avoid memorizing correct answers (rather than underlying concepts), this comprehensive test is inferior to review quizzes for learning purposes. The comprehensive test is only designed for a quick overall evaluation. Moreover, because the test taking is not proctored and the student can use his/her notes, the reliability of the grade has some limitations.

The comprehensive test can be taken several times, and only the last result will count. Nevertheless, you are advised to take the comprehensive test seriously if you plan to use its results for further studies. The grade of the comprehensive test is entered into the public record if you register for the course.

See typical grade composition.

Registration and enrollment recommended:

We recommend that you register as a PEOI student, and enroll in fundamental courses as well as professional courses if you plan to study the content of these fundamental courses. By registering and enrolling you will have two major useful outcomes. First, once you sign in, the time and grade in each chapter will be recorded in a personal record seen only by you and your instructor (if you choose to have an instructor). This record will show your progress in the course and your instructor can offer suggestions for improvement (if necessary). Second, the combined result of your quizzes and comprehensive test will be entered in the public record and give you the ability to use this grade as proof of knowledge of the course content.

To register simply fill out the registration form which is accessible through the Registration menu. There is no fee. The information is kept strictly confidential.

To enroll for this course (if you did not select it when you first registered), choose Accounting I as the course in which you want to enroll in student enrollment.

Questions or comments:

Your comments, corrections and suggestions are most welcome: please email them to peoi.org or you may contact us directly.


Go to Chapter 1: Introduction