Course Description:
Microeconomics is a fundamental course designed to provide students with a comprehensive understanding of the principles governing individual economic agents’ behavior and their interactions within markets. This course explores the foundational concepts of supply and demand, market structures, and the role of government intervention in shaping economic outcomes.
Throughout this course, students will delve into the intricacies of how consumers, firms, and government entities make decisions in the face of scarcity and how these decisions collectively shape the allocation of resources in society.
Course Objectives:
- Understanding Supply and Demand: Students will gain a firm grasp of the core principles of supply and demand, including the determinants of both individual and market-level supply and demand curves. They will analyze how changes in these factors influence equilibrium prices and quantities.
- Market Structures: Students will explore the various market structures, ranging from perfect competition to monopoly. By analyzing the characteristics and behaviors of firms in each market structure, students will understand the implications for pricing, output, and overall market efficiency.
- Consumer Behavior: This section of the course focuses on consumer decision-making processes, including utility maximization, budget constraints, and the concept of consumer surplus. Students will examine the effects of price changes and income changes on consumer choices.
- Producer Behavior: Students will investigate the decision-making process of firms, such as cost analysis, profit maximization, and the effects of changes in input prices on production decisions.
- Market Efficiency and Welfare: The course will discuss the efficiency of market outcomes and the potential market failures, such as externalities and public goods. Students will examine the role of government intervention to correct market failures and promote overall societal welfare.
- Government Intervention: Students will explore various forms of government intervention, including price controls, taxes, subsidies, and regulations. They will critically assess the intended and unintended consequences of these policies on market efficiency and individual welfare.
- Game Theory and Strategic Behavior: An introduction to game theory will provide students with insights into strategic interactions among economic agents, such as duopolies and oligopolies. They will learn how to analyze and predict behavior in these competitive settings.
- Economics of Information: This section will focus on the impact of asymmetric information on market outcomes, exploring adverse selection and moral hazard problems and how they can be mitigated.
- Labor Markets: Students will examine the determination of wages and employment levels, the implications of labor unions, and the role of government in labor market regulation.
- International Trade: The course will conclude with an overview of international trade and its effects on domestic economies, including gains from trade, tariffs, and trade policies.
By the end of the course, students will have gained a strong understanding of microeconomic principles and their applications in real-world scenarios. They will be equipped to analyze economic situations, make informed decisions, and comprehend the role of government in shaping market outcomes for the betterment of society.
Introduction and basic concepts
1
Scarcity
2
Scarcity and rivalry
3
Four factors of production
4
Economic models
5
Normative and positive statements
6
Property rights in a market system
7
Markets and property rights
8
Production possibilities curve
9
Opportunity cost
10
Increasing opportunity cost
11
PPCs for increasing, decreasing and constant opportunity cost
12
Comparative advantage, specialization, and gains from trade
13
Comparative advantage and absolute advantage
14
Opportunity cost and comparative advantage using an output table
15
Terms of trade and the gains from trade
16
Input approach to determining comparative advantage
17
When there aren't gains from trade
18
Comparative advantage worked example
Supply, demand and market equilibrium
1
Law of demand
2
Market demand as the sum of individual demand
3
Substitution and income effects and the law of demand
4
Price of related products and demand
5
Change in expected future prices and demand
6
Changes in income, population, or preferences
7
Normal and inferior goods
8
Inferior goods clarification
9
Law of supply
10
Change in supply versus change in quantity supplied
11
Factors affecting supply
12
Market equilibrium
13
Changes in market equilibrium
14
Changes in equilibrium price and quantity when supply and demand change
Elasticity
1
Introduction to price elasticity of demand
2
Price elasticity of demand using the midpoint method
3
More on elasticity of demand
4
Determinants of price elasticity of demand
5
Determinants of elasticity example
6
Perfect inelasticity and perfect elasticity of demand
7
Constant unit elasticity
8
Total revenue and elasticity
9
More on total revenue and elasticity
10
Elasticity and strange percent changes
11
Introduction to price elasticity of supply
12
Elasticity of supply using a different method
13
Price elasticity of supply determinants
14
Income elasticity of demand
15
Cross-price elasticity of demand
Consumer and producer surplus, market interventions, and international trade
1
Demand curve as marginal benefit curve
2
Consumer surplus introduction
3
Total consumer surplus as area
4
Producer surplus
5
Equilibrium, allocative efficiency and total surplus
6
Rent control and deadweight loss
7
Minimum wage and price floors
8
How price controls reallocate surplus
9
Taxation and dead weight loss
10
Example breaking down tax incidence
11
Percentage tax on hamburgers
12
Taxes and perfectly inelastic demand
13
Taxes and perfectly elastic demand
14
Changing equilibria from trade
15
Trade and tariffs
16
Example on tariffs and trade
Consumer Theory
1
Marginal utility and total utility
2
Visualizing marginal utility MU and total utility TU functions
3
Utility maximization: equalizing marginal utility per dollar
4
Deriving demand curve from tweaking marginal utility per dollar
5
Marginal utility free response example
6
Budget line
7
Indifference curves and marginal rate of substitution
8
Optimal point on budget line
9
Types of indifference curves
Production decisions and economic profit
1
Introduction to production functions
2
Total product, marginal product, and average product
3
Fixed, variable, and marginal cost
4
Marginal cost, average variable cost, and average total cost
5
Graphs of MC, AVC and ATC
6
Marginal revenue and marginal cost
7
Marginal revenue below average total cost
8
How costs change when fixed and variable costs change
9
Graphical impact of cost changes on marginal and average costs
10
Visualizing average costs and marginal costs as slope
11
Long-run average total cost curve
12
Economies and diseconomies of scale
13
Minimum efficient scale and market concentration
14
Economic profit vs accounting profit
15
Depreciation and opportunity cost of capital
16
Long term supply curve and economic profit
17
Profit maximization
18
Profit maximization worked example
19
Shutting down or exiting industry based on price
20
Long-run economic profit for perfectly competitive firms
21
Long run supply when industry costs aren't constant
22
Example on perfect competition
Forms of competition
1
Introduction to perfect competition
2
Economic profit for firms in perfectly competitive markets
3
Long-run economic profit for perfectly competitive firms
4
Long-run supply curve in constant cost perfectly competitive markets
5
Long run supply when industry costs aren't constant
6
Example on perfect competition
7
Perfect and imperfect competition
8
Types of competition and marginal revenue
9
Marginal revenue and marginal cost in imperfect competition
10
Monopolies vs. perfect competition
11
Economic profit for a monopoly
12
Monopolist optimizing price: Total revenue
13
Monopolist optimizing price: Marginal revenue
14
Monopolist optimizing price: Dead weight loss
15
Review of revenue and cost graphs for a monopoly
16
Optional calculus proof to show that MR has twice slope of demand
17
Price discrimination
18
Monopoly price discrimination
19
Oligopolies and monopolistic competition
20
Monopolistic competition and economic profit
21
Long run economic profit for monopolistic competition
22
Oligopolies, duopolies, collusion, and cartels
23
Prisoners' dilemma and Nash equilibrium
24
More on Nash equilibrium
25
Why parties to cartels cheat
26
Game theory of cheating firms
Factor markets
1
A firm's marginal product revenue curve
2
How many people to hire given the MPR curve
3
Introduction to labor markets
4
Labor-leisure tradeoff and the labor supply curve
5
Adding demand curves
6
Changes in labor supply
7
Shifts in the demand for labor
8
Cost minimizing choice of inputs
9
Factor markets worked example
10
A monopsonistic market for labour
11
Monopsony employers and minimum wages
Market failure and the role of government
1
Allocative efficiency and marginal benefit
2
Negative externalities
3
Positive externalities
4
Taxes for factoring in negative externalities
5
Tragedy of the commons
6
Rival and excludable goods
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