AIC100 - Micro Foundations of Real Estate Economics

Outline info
Last revision date 2018-11-20 14:53:33.423
Last review date 2018-11-20 14:53:33.424

Subject Title
Micro Foundations of Real Estate Economics

Subject Description
This subject introduces the basic principles of microeconomics and applies these concepts to current real estate issues. Topics covered include opportunity costs, supply and demand, elasticity, market equilibrium, efficiency and equity, the role of the government, consumer choice, externalities, imperfect competition, and monopolies.

Credit Status
This is a credit subject applicable towards the Appraisal Institute of Canada's CRA and AACI designations, as well as University of British Columbia's(UBC) Diploma in Urban Land Economics. Successful completion of the AIC course components of the program also earns students 50-60 degree credits toward the Bachelor of Business in Real Estate Program (BBRE) offered by the University of British Columbia (UBC) and Thompson Rivers University (TRU).

Learning Outcomes
Upon successful completion of this subject the student will be able to:

1. Explain the relevance and importance of economics in business and, in particular, in real estate.

2. Describe the difference between microeconomics and macroeconomics.

3. Identify key economic terms and concepts: opportunity cost, specialization, supply and demand, marginalism, the invisible hand, and market failures.

4. Demonstrate an understanding of how economic analysis examines real life concepts in an abstract, mathematical manner.

5. Explain the fundamental concept of scarcity in economics.

6. Explain the following standard mechanics of demand and supply analysis:
- demand and supply curves
- equilibrium
- shortages and surpluses
- ceteris paribus assumption
- shifts in demand and supply curves
- substitutes and complements

7. Define elasticity and how it applies to different situations in business and real estate.

8. Explain income elasticity and cross elasticity of demand.

9. Demonstrate how indifference curves represent consumer preferences, and how budget constraints affect consumer choice.

10. Describe the difference between costs in the short-run versus the long-run.

11. Describe the difference between fixed, variable, and marginal costs.

12. Explain perfect competition and the derivation of the supply curve.

13. Describe how the height of the supply curve reflects marginal cost (MC) to the producer, just as the height of the demand curve reflects marginal benefit (MB) to the consumer.

14. Explain how, in a perfectly competitive market, the consumer equates marginal benefit and price.

15. Describe how the demand curve can be used to measure, through a change in consumer surplus, approximately how consumers are affected by a change in price.

16. Identify the characteristics of a competitive market.

17. Outline what causes competitive firms to enter and exit a market.

18. Determine the market's short-run and long-run supply curves in a perfectly competitive market.

19. Explain the causes and effects of a monopoly market structure.

20. Identify some of the various public policies toward monopoly: competition law, regulation, public ownership, and doing nothing.

21. Describe the implications of price discrimination in a monopolistic environment.

22. Outline the consequences of government policies that impose a ceiling or a floor price on a market.

23. Explain how a tax on goods affects market equilibrium price and quantity.

24. Describe how the burden of a tax is divided between buyers and sellers.

25. Explain the meaning and causes of the deadweight loss of a tax.

Cheating and Plagiarism
Each student should be aware of the College's policy regarding Cheating and Plagiarism. Seneca's Academic Policy will be strictly enforced.

To support academic honesty at Seneca College, all work submitted by students may be reviewed for authenticity and originality, utilizing software tools and third party services. Please visit the Academic Honesty site on for further information regarding cheating and plagiarism policies and procedures.

All students and employees have the right to study and work in an environment that is free from discrimination and/or harassment. Language or activities that defeat this objective violate the College Policy on Discrimination/Harassment and shall not be tolerated. Information and assistance are available from the Student Conduct Office at

Accommodation for Students with Disabilities
The College will provide reasonable accommodation to students with disabilities in order to promote academic success. If you require accommodation, contact the Counselling and Disabilities Services Office at ext. 22900 to initiate the process for documenting, assessing and implementing your individual accommodation needs.


Topic Outline

  • How People Make Decisions
  • How People Interact
  • How the Economy Works as a Whole
  • The Economist as Scientist
  • The Economist as Policy Adviser
  • Why Economists Disagree
  • Markets and Competition
  • Demand
  • Supply
  • Supply and Demand Together
  • The Elasticity of Demand
  • The Elasticity of Supply
  • The Budget Constraint:  What the Consumer Can Afford
  • Preferences:  What the Consumer Wants
  • Optimization:  What the Consumer Chooses
  • Three Applications
  • What are the Costs?
  • Production and Costs
  • The Various Measures of Costs
  • Costs in the Short Run and in the Long Run
  • Consumer Surplus
  • Producer Surplus
  • Market Efficiency
  • What is a Competitive Market?
  • Profit Maximization and the Competitive Firm's Supply Curve
  • The Supply Curve in a Competitive Market
  • Why Monopolies Arise
  • How Monopolies Make Production and Pricing Decisions
  • The Welfare Cost of Monopoly
  • Public Policy Towards Monopolies
  • Price Discrimination
  • The Deadweight Loss of Taxation
  • The Determinants of the Deadweight Loss
  • Deadweight Loss and Tax Revenue as Taxes Vary
  • Externalities and Market Inefficiency
  • Private Solutions to Externalities
  • Public Policies Towards Externalities

Mode of Instruction
Students learn through classroom lectures and hands-on assignments during classroom hours. There are homework assignments. Students must have ready access to a computer with Word for Windows in order to complete homework assignments. Students have access to computers through the Microcomputer Centre or micro labs where applicable.

Prescribed Texts

Title: Principles of Microeconomics
Edition: 7th Canadian Edition
Author: N. Gregory Mankiw, Ronald D Kneebone, Kenneth J. McKenzie
ISBN-10: 0176591974
ISBN-13: 9780176591977
Publisher: Nelson
Note:  Photocopied texts are not permitted.
You may order textbooks directly from UBC, please use the following link and click on the tab "Diploma, AIC Books":

Reference Material

Required Supplies
Notebook or three-ring binder, paper, pens, highlighter, above noted text, calculator.

All students must have access to a personal computer when taking any Appraisal Institute course. You will find that a computer is a necessary tool in preparing and submitting your assignments, viewing your assignment answer guides, and for creating effective study notes to help you prepare for your examination. Students should also ensure that they have a high-quality printer (e.g., an inkjet or a laser) which will provide clear printouts of information from the Real Estate Division website.

All students must arrange for some form of Internet access. All of the Appraisal Institute’s courses offer numerous online course resources. Students should ensure they have Internet access prior to beginning their course work.

Promotion Policy

Grading Policy
A+ 90%  to  100%
A 80%  to  89%
B+ 75%  to  79%
B 70%  to  74%
C+ 65%  to  69%
C 60%  to  64%
D+ 55%  to  59%
D 50%  to  54%
F 0%    to  49% (Not a Pass)
EXC Excellent
SAT Satisfactory
UNSAT Unsatisfactory

For further information, see a copy of the Academic Policy, available online ( or at Seneca's Registrar's Offices.

Modes of Evaluation
Since this is a professional credit course, marking standards reinforce professional practice by demanding legible, neat documents. Material should be grammatically correct as a result of accurate proof-reading, proper spelling and punctuation. Late assignments are penalized at the discretion of the instructor. 

Students must pass the final examination to pass the course.

Absenteeism and Tests

  • Students should be aware that absenteeism will impact on their ability to achieve satisfactory grades.
  • If you are absent for a test or examination due to an emergency (death in the family, motor vehicle accident – not usually a business trip) official documentation must be provided to the Faculty of Continuing Education and Training Program Coordinator’s office, fax number 416-756-4360, prior to the test or examination and no later than the following day.
  • Assignments, tests or examinations missed without official documentation and approval, see previous bullet, result in a grade of zero.
  • A minimum grade of 50% on the final examination and 50% overall in the course is required to obtain a Seneca credit.           
  • Requirements for the UBC Certificate in Real Property Assessment require a minimum grade of 50% on the final examination and a minimum overall grade of 60% in the course.  
  • Requirements for credits with the Institute of Municipal Assessors and the Appraisal Institute of Canada require a minimum grade of 50% on the final examination and a minimum overall grade of 60% in the course.
Grading is based on the following marking scheme: 

Assignments 15%
Project No. 1 15%
Project No. 2 20%
Final Exam 50%

Project 1: Questions on lessons 1-5:  15% of final grade

This project requires the student to apply the course concepts towards several questions and short practical case study scenarios.

Project 2: Questions on lessons 6-11:  20% of final grade

This project requires the student to apply the course concepts towards several questions and short practical case study scenarios.

Please keep this document for future reference.  It will be required if you apply to another educational institution and seek advanced standing.

Academic Program Manager:
Jean-Pierre Patry

Approved by: Jean-pierre Patry