MICROECONOMICS - 1

Microeconomics studies how individuals, firms, the government, and other organizations make choices given the options available to them and how their decisions determine market prices and the allocation of society’s resources. The main objective of the course is to make students familiar with the economical way of thinking. We will cover the basic concepts and analytical tools of microeconomics and show how they can be used to understand a broad range of real-world problems. We will analyze both firms’ and consumers’ behavior, market equilibria, principles of game theory and the role of the government in the economy.

1. Knowledge and understanding:
1.1. understand the decision process of individuals and business firms, and their interactions in various market structures;
1.2. understand the welfare implications of public intervention in markets;
1.3. identify the characteristics of the different market structures and their implications for firms’ behaviour.

2. Ability to apply knowledge and understanding:
2.1. use the supply and demand model to determine changes in market equilibrium;
2.2. analyse the choices of individuals (as consumers and as workers) and firms using marginal analysis and the notion of opportunity cost;
2.3. assess equilibrium welfare and its variations associated to public policies and market structures;
2.4. be able to recognise individual and strategic decision situations.

3. Ability to make judgments:
3.1. interpret market outcome and prices;
3.2. understand the scope, merits and limitations of economic models;
3.3. prepare students for independent economic thinking about economic and policy issues on the basis of an analytical method.

There are not formal prerequisites but a good confidence with the content of the courses “Mathematics I” and “Mathematics II” is required, in particular: functions of many variables, differential calculus, linear approximations, constrained and unconstrained optimization in R^2, linear systems.

The topics covered in Microeconomics-1 include:

Introduction to Microeconomics
1. Analyzing Economic Problems
2. Demand and Supply Analysis

Consumer Theory
3. Consumer Preferences and Utility Functions
4. Consumer Choice
5. The Theory of Demand
6. Applications of Consumer Theory

Theory of the Firm
7. Inputs and Production Functions
8. Costs and Cost Minimization
9. Profit Maximization

The main reference book for the lectures is
• Bernheim D. and M. Whinston, Microeconomics, McGraw-Hill, 2018. ISBN: 978-1307298048 (or other editions)
In the followind text you can find useful exercises (with solutions)
• M. Bonacina and P. De Micco, Microeconomics (Exercise Book), Egea, 2020. ISBN: 978-8823819641 (or other editions)

There is one final grade for the whole 12-credit course. Each student is evaluated with a written test.

Students who regularly attend classes can take two midterms covering the material discussed in the first and in the second module, respectively.

Students who regularly attend classes may also be asked to be evaluated taking into account their solutions of the weekly exercises assigned by the lecturer.

Additional and more detailed information are given at the beginning of the course and published on the moodle page of the course.

Lectures and practice sessions.

For any course-related information, students are referred to the material published on the Moodle page of the course.

The slides of the lectures and the problem sets are uploaded on Moodle on a regular basis. The solutions of the weekly problem sets are discussed during the practice sessions.

Students are strongly encouraged to actively participate in class meetings and regularly work through the weekly problem sets.

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