MICROECONOMICS - 2

Microeconomics studies how individuals, firms, the government, and other organizations make choices given the alternatives available to them and how such choices interact in the market to determine prices and allocate resources. The main objective of the course is to make students familiar with the economic way of thinking. We will cover the basic concepts and tools of microeconomics and emphasize how they can be used to understand a broad range of real world problems. We will analyze firms’ behaviour and consumers’ behavior, market equilibria, principles of game theory and the role of the government in the economy.

Intended learning outcomes
1. Knowledge and comprehension:
1.1. Students will analyze how families and firms take economic decisions and interact in different market structures to determine the equilibrium price and quantity;
1.2. Students will be able to understand the consequences in terms of efficiency of policy interventions in markets;
1.3. Students will be able to identify the main characteristics of different market structures and implications for firms' behavior.

2. Ability to apply knowledge and comprehension:
2.1. Students will be able to apply the demand and supply model to determine changes in the market equilibrium conditions;
2.2. Students will be able to analyze individual choices of consumers and workers as well as firms' choices, by using marginal analysis and the concept of opportunity cost;
2.3. Students will evaluate how the equilibrium welfare properties vary after policy interventions and across different market structures;
2.4. Students will learn how to apply tools from game theory to understand strategic interaction among individuals, among firms, as well as across a wide variety of situations where there is economic/business interaction.

3. Judging capacity:
3.1. Students will be able to Interpret in economic terms prices and well functioning of markets;
3.2. Students will understand how to use use economic models to conceptualize complex phenomena and provide economic insights;
3.3. Students will draw conclusions on economic events by using the analytical approach.

The student must have knowledge of mathematical concepts such as derivatives, functional analysis and graphical representation, solution of n-order equations and linear systems.

Topics covered in Microeconomics-1:

Introduction to the Study of Microeconomics
1. Preliminaries: what are we going to study in microeconomics?
2. Demand and Supply and the concept of elasticity

Theory of Firm
3. Inputs, technology and production
4. Costs
5. Profit Maximization

Consumer Theory
6. Preferences
7. Constraints, choices and demand
8. Comparative statics, demand and welfare
9. An application to the labor supply
10. Choice involving time

Topics covered in Microeconomics-2:

Competitive Markets
11. Price-taking firm and supply curve
12. Market demand and market supply of a competitive market
13. Equilibrium of a competitive market and efficiency

Market Interventions
14. Taxes and subsidies
15. Import tariffs and quotas

Monopoly and Pricing Policies
16. Monopoly
17. Pricing Policies

Game Theory
18. Simultaneous and sequential games and the concept of Nash equilibrium

Oligopoly
19. Oligopoly a la Bertrand, Cournot and Stackelberg; Collusion

Asymmetric information
20. Adverse selection; Moral hazard

Textbooks:

Bernheim, B. D., and Whinston, M. D., 2008, Microeconomics McGraw-Hill/Irwin, Inc. New York, NY.

Additional references:

Varian, Hal R., 2014, Intermediate Microeconomics with Calculus, W.W. Norton, New York, NY.

Besanko, D., and Braeutigam, R. R.,2014, Microeconomics, 5th Edition, International Student Version, John Wiley & Sons, Chichester, WestSussex, UK.

Perloff, Jeffrey, 2014, Microeconomics with Calculus, 3rd ed., Global Edition, Pearson, Upper Saddle River, NJ.


Additional teaching material will be available on the course website at: http://moodle.unive.it/course/view.php?id=490 .

The evaluation is by a written exam. More details will be given at the start of the course.

Lectures and practice sessions.

written