This course is designed to equip students with the economic principles which are necessary to analyse a whole range of economic problems.
This course builds on the foundations of economic analysis provided in course Introduction to economics.
- Consumer choice and demand, labour supply
- Choice under uncertainty, the expected utility model
- Producer theory: production and cost functions, firm and industry supply.
- Game theory: normal-form and extensive-form games, Nash equilibrium and subgame perfect equilibrium, repeated games and cooperative equilibria
- Market structure: competition, monopoly and oligopoly.
- General equilibrium and welfare: competitive equilibrium and efficiency
- Pricing in input markets
- Inter-temporal choice: savings and investment choices.
- The economics of information: moral hazard and adverse selection, resulting market failures and the role of contracts and institutions
- Market failures arising from monopoly, externalities and public goods. The role of policy.
If you complete the course successfully, you should be able to:
Be able to define and describe:
- The determinants of consumer choice, including inter-temporal choice and choice under uncertainty
- The behaviour of firms under different market structures
- How firms and households determine factor prices
- Behaviour of agents in static as well as dynamic strategic situations
- The nature of economic interaction under asymmetric information
Be able to analyse and assess:
- Efficiency and welfare optimality of perfectly and imperfectly competitive markets
- The effects of externalities and public goods on efficiency
- The effects of strategic behaviour and asymmetric information on efficiency
- The nature of policies and contracts aimed at improving welfare
Be prepared for further units which require a knowledge of microeconomics.
- Nicholson and Snyder. Intermediate Microeconomics and its Application, 12th ed 2015, Cengage Learning.