MICROECONOMICS-2

This first year course is an introduction to market equilibrium analysis from a microeconomic point of view. In this course students study consumer’s and producer’s decisions and the way these individual decisions contribute to the process of price determination in the market. The course addresses both perfect and imperfect competition.

1. Knowledge and understanding:
1.1. understand the decision process of individuals as consumers and workers, as well as the decisions of business firms, and their interactions in various market structures;
1.2. understand the welfare implications of public intervention in markets;
1.3. recognise 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 decision, strategic decision and asymmetric information situations.

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

It is advisable to have a course in Mathematics. In particular, students must be able to draw and interpret functions of two variables, to solve simple systems of two equations and to take derivatives.

FIRST PART
- Demand, supply and market equilibrium. Elasticity.
- Consumer choice: demand curve and Engel curve, income and substitution effects. Labour supply. Intertemporal choices.
- Firm choice: production function and returns to scale, cost function, average and marginal cost, economies of scale.

SECOND PART
- Profit maximization for a price-taker firm
- Competitive equilibrium.
- Market intervention: price floors, tariffs and quotas.
- Monopoly: equilibrium and deadweight loss. Regulation of monopolies.
- Pricing policies: perfect price discrimination, two-part tariffs, multimarket discrimination.
- Game theory: dominance and Nash equilibrium in static games. Sequential games.
- Oligopoly: Cournot models with homogeneous goods.
- Introduction to choices under uncertainty.
- Asymmetric information: adverse selection and moral hazard.

D. Bernheim and M. Whinston, Microeconomia (fourth edition), McGraw-Hill Italia, 2023.
M.C. Molinari, Esercizi di Microeconomia. Guida per una soluzione ragionata, Cafoscarina, 2026.
A detailed syllabus is available on Moodle.

Written examination with open questions and exercises analogous to those given in the practice sessions and in the exercise book. The passing grade is 18; points assigned to each question are clearly indicated in the exam.
At the end of the third period, there will be a midterm exam covering the first part of the syllabus. Only students who have uploaded the assigned exercises to the Moodle platform during the first part of the course will be eligible to take the exam (see Moodle for details). Students who pass this exam will be eligible to take a second midterm exam covering the second part of the syllabus at the end of the second semester.
The examination tests the student’s understanding of the topics covered in the course and his/her ability to analyse closely related problems and to interpret their results.
Two written examinations from the previous year can be found on the Moodle platform and their solution is presented in class
The instructor reserves the right to conduct random oral exams to verify that the written exam results reflect the student's level of preparation.

written

The instructor is responsible for ensuring the authenticity and originality of all examinations and coursework. In cases of suspected academic misconduct, an additional on-site assessment may be required during the exams, which may differ from the standard format.

The final grade is expressed on a 30-point scale and corresponds to the total sum of points awarded for each theoretical question and exercise in the written examination. The evaluation takes into account calculation accuracy, methodological rigor, analytical skills, and the precision of the economic interpretation of the results.

The grade breakdown is defined as follows:

Grades in the 18–22 range (Sufficient): * Elementary yet sufficient knowledge of fundamental microeconomic concepts and basic models; Limited capacity for autonomous application, but adequate ability to approach and solve standard exercises; Sufficient capacity to interpret the resulting economic outcomes.

Grades in the 23–26 range (Satisfactory/Good): * Good knowledge and understanding of microeconomic models and theories; Solid ability to analyze microeconomic problems and solve exercises without major conceptual errors; Adequate capacity to independently comment on and interpret results.

Grades in the 27–30 range (Very Good/Excellent): * In-depth and comprehensive knowledge of all course topics; Strong analytical skills and complete mastery of mathematical and graphical tools required to solve complex problems; Fully appropriate and rigorous skills in interpreting and discussing economic solutions.

30 cum laude (Outstanding): * Flawless and brilliant mastery of the subject matter, demonstrated through complete accuracy in exercise execution and exceptional maturity in the economic interpretation of the results.

Lectures
Exercise lectures
Individual assignments
Students are urged to read the material before class, actively participate in class discussion and attempt the assigned problems (available on Moodle) before attending the exercise lectures.