MICROECONOMICS 1

This course belongs to the core teaching activities of the Master program in "Economics, Finance, and Sustainability" curriculum "Economics - QEM". In line with the educational objectives of the program, this course focuses on the analysis of microeconomic behavior and presents the main conceptual tools necessary for the analysis of microeconomic phenomena. A particular attention will be devoted to the use of formal language and methodological rigor. The course is divided into two parts. The first part presents individual decision making by rational consumers and producers in a static and deterministic setting. The second part extends the individual decision making to a stochastic setting and introduces the analyzes of general equilibrium by studyng the welfare properties of competitive equilibria.

Overall, the course offers both an introduction to consumption and production theory and of their interaction in a general equilibrium. Unlike the university-wide policy that equates 1 ECTS with 3.75 hours of direct instruction, this 7-ECTS course follows a different structure, with 1 ECTS corresponding to 6.43 hours of frontal instruction.

Students are expected to become familiar with advanced microeconomic methods for analysis of consumption and production decisions, choice under uncertainty, and the analysis of competitive markets.

The course is attended by QEM students as wall as by first-year doctoral students who do not have taken a course with similar content and/or level of formality in their previous academic career.

1. Knowledge and competences:
a) sound knowledge of the theoretical and behavioral foundations of consumer theory
b) sound knowledge of the theoretical foundation of production theory
c) ability to integrate consumption and production decisions into the formulation of a competitive equilibrium
d) sound knowledge of the welfare theorems, of their limits and their implications

2. Application of acquired knowledge and skills:
a) ability to investigate, understand, and interpret stylized economic and financial phenomena by means of microeconomic analysis
b) ability to use the tools of microeconomic analysis in order to asses positive and normative statements
c) ability to build formal models of competitive equilibrium under different market structures

3. Judgement and interpretation skills:
a) ability to asses the typical trade-offs in optimal consumption and production choices
b) ability to interpret market equilibrium outcomes in terms of behavioral and technological assumptions
c) ability to relate market equilibrium efficiency to behavioral and technological assumptions

This course emphasizes both the formal representation of economic problems and the practical applications of theoretical concepts. While there are no formal prerequisites, students are strongly encouraged to have successfully completed standard undergraduate courses in microeconomics, optimization, and probability to maximize their understanding and engagement with the material. On the mathematical side, students are expected to be familiar with material in the mathematical appendix in Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green (1995), Microeconomic theory. New York: Oxford University Press.

Contents of the course are divided in two parts, A and B

Part A
1) Theory of consumer’s behavior: preference relations, choice rules, consumption set, competitive budget, demand function, preference and utility, the utility maximization problem, the expenditure minimization problem.
2) Theory of production: productions sets, production and cost functions, profit maximization and cost minimization, efficient production.

Part B
3) Choice under uncertainty: expected utility theory, money lotteries and risk aversion
4) Introduction to general equilibrium: the Edgeworth Box and the Robinson Crusoe Economy
5) Pareto optimality, competitive equilibrium and its welfare properties (I and II welfare theorem)

The textbook for both parts is:
Mas-Colell, Andreu, Michael Dennis Whinston, and Jerry R. Green (1995), Microeconomic theory. New York: Oxford University Press. The course covers material from chapters: Ch. 1-6, 10, 15-17, 19

For the introductory part:
Hausman, Daniel M. (2003), "Philosophy of Economics" https://stanford.library.sydney.edu.au/entries/economics/
Sandmo, Agnar. Economics evolving: A history of economic thought. Princeton University Press, 2011.
Stigler, George H. (1950), “The development of utility theory. I”, Journal of Political Economy, vol. 58, pp. 307-327.
Stigler, George H. (1950), “The development of utility theory. II”, Journal of Political Economy, vol. 58, pp. 373-396.
Varian, Hal R. (1998), "Microeconomics"In J. Eatwell, M. Milgate, and P. Newman, editors, The New Palgrave Dictionary of Economics. Palgrave Publishers Ltd., 1998.

A webpage for the course is active on the e-learning platform at moodle.unive.it. The page will contain references for additional readings from scientific journals, exercises, details on the weakly program and lectures and other materials.

Written exam.

In each academic year, there are 4 exam sessions. The first session takes place during the first semester. It is articulated in a midterm partial written examination on the contents of Part A, administered at the end of the first teaching period, and a final written examination on the whole content of the course, administered at the end of the second teaching period. The final evaluation is obtained as a weighted average of the two examinations (30% and 50%, respectively) and of attendance (20%). The remaining sessions (from January until September) present a single comprehensive examination on the full contents of the course.

Both written exams consist of exercises similar to those solved during the course and theoretical questions, each with its own score. All written exams are closed-note and closed-book. Students are allowed to use a pocket calculator.

written

Questions and exercises are chosen to test whether students have acquired the knowledge about the foundations of the microeconomic analysis of competitive markets and the ability to apply to concepts to the analysis of microeconomic phenomena.

Each question is assigned a number of points and the total points gained makes up the final grade in the range from 0 to 30 cum laude (above 30 points). The passing grade is 18.

Grades within 18 and 22 will be assigned in case of:
- sufficient knowledge of the main content of the program;
- limited ability to solve exercises;

Grades within 23 and 26 will be assigned in case of:
- discrete knowledge of the main content of the program;
- discrete ability to solve exercises;

Grades within 27 and 30 will be assigned in case of:
- good or optimal knowledge of the main content of the program;
- good or optimal ability to solve exercises, elaborate and interpret its results, also providing a critical view on them


The grade 30 cum laude is assigned when the student shows excellent abilities to handle the content of the program of the course, ability to solve exercises and proof of excellent critical thinking.

The course follows a conventional teaching approach, based on lectures, exercise sessions, and discussions.

Teaching is delivered through fifteen lectures for each of the two parts of the course. Additionally, students have the opportunity to attend five supplementary lessons for each part, where a tutor solved selected exercises that are distributed in advance.

The course is attended by both QEM students and first-year doctoral students. Lectures are shared by both groups. However, doctoral students may be required to independently study more advanced material on selected topics.

Accessibility, Disability and Inclusion
Accommodation and support services for students with disabilities and students with specific learning impairments

Ca’ Foscari abides by Italian Law (Law 17/1999; Law 170/2010) regarding support services and accommodation available to students with disabilities. This includes students with mobility, visual, hearing and other disabilities (Law 17/1999), and specific learning impairments (Law 170/2010). If you have a disability or impairment that requires accommodations (i.e., alternate testing, readers, note takers or interpreters) please contact the Disability and Accessibility Offices in Student Services: disabilita@unive.it.

This subject deals with topics related to the macro-area "Poverty and inequalities" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development