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. The course covers the basic concepts and analytical tools of microeconomics and show how they can be used to understand a broad range of real-world problems. The course analyzes 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 following is the preliminary program for 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

The following is the preliminary program for 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 (if feasible, given time constraints)
20. Adverse selection; Moral hazard

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)

A single final grade is assigned for the entire 12-credit course. Assessment is carried out through a written exam. This exam requires both indicating whether certain given statements are true or false—clearly explaining the reasoning—and solving a number of exercises. The true/false statements are aimed at assessing theoretical knowledge, while the exercises test the ability to apply that knowledge to problem-solving.

The total duration of the exam is 100 minutes. At the end of the first module, students will have the opportunity to take a first partial exam. Students who pass this exam will be allowed to take a second partial exam at the same time as the first full exam session.

The final grade will also take into account the weekly exercises assigned by the instructor.

written

A. 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;

B. 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;

C. 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

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

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.