MICROECONOMICS

The goal of this course is to provide students with the tools necessary to understand the economics behaviours of consumers, producers and markets. Special emphasis will be given to the functioning and malfunctioning (market failures) of the markets mechanisms.

Basic notions of algebra and calculus.

Knowledge and understanding: The course will offer key theoretical tools for the analysis of microeconomic phenomena: consumption decisions, production, markets and their limitations (market failure, asymmetric information, public goods). Applying knowledge and understanding: The students will be able to examine and understand basic economic phenome with the appropriate frames, models and terminology. Making judgements: We expect students to be able to understand the current debate on microeconomic phenomena and related policies and assess the sustainability, effectiveness and implications of the latter. Communications Skills: This course will give the students the possibility to acquire and understand major terms and concepts in order to communicate their ideas, proposals, analysis and critical reasoning in an appropriate way, but at the same time being able to convey effectively insights and economic implications to a non-specialized audience. Learning skills: This course will contribute to empower learners giving them very versatile tools that can be applied to many social and economic contexts. They can also be combined with knowledge from other disciplines to provide more accurate or alternative analysis.

Preferences and consumers’ choice: budget constraint, utility function, indifference curves; utility maximization and individual demand functions; income effect and substitution effect; optimal choice with income expressed in form of good endowments; leisure-labor choice; Intertemporal choice: the discounted utility model. Choice under uncertainty: the expected utility model; attitude towards risk. The firm and technology: production function, marginal and average product; isoquants and isocosts; returns to scale; revenue curves, cost curves in short and long run: profit maximization, cost minimization. Market structure: perfect competition, monopoly and oligopoly (Bertrand, Cournot and Stackelberg). Introduction to game theory: simultaneous and sequential games, dominant strategies, Nash equilibrium, subgame-perfect Nash equilibrium. General equilibrium: Edgeworth box and Pareto efficiency under different market structures, first and second welfare theorems. Market failures, asymmetric information, externalities and public goods

A. Goolsbee, S. Levitt, C. Syverson, "Microeconomics", Worth Publishers (Macmillan learning)

Lectures and discussions of problem sets.

Written exam with multiple choices, true/false questions, problems. There will be a mid-term exam for attending students (50% of total grades) in the break week.

Passing the exam.