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BAEcon Economics and Philosophy / Course details
Year of entry: 2022
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Course unit details:
Intermediate Microeconomic Theory 1: Consumers, Producers and General Equilibrium
|Unit level||Level 2|
|Teaching period(s)||Semester 1|
|Offered by||School of Social Sciences|
|Available as a free choice unit?||Yes|
This course provides students with an intermediate level understanding of microeconomics through the development of theories that are at the core of neoclassical microeconomics and fundamental for the understanding and advancement of general, more sophisticated models for consumers and firms. A particular focus is on the notion of welfare in a basic competitive market economy where all agents have full information about the behaviours of other agents in the economy. To achieve that, a deep and concise understanding of the models of consumer choice and demand is required as well as a clear understanding of the decision processes of firms in the short run (decisions to produce or not) and the long run (decisions to enter a market or not). Finally, the unit addresses welfare issues such as the existence of equilibria, which are specific prices for goods at which consumers and produces act such that supply and demand in all markets of the economy are balanced. The properties of such equilibria and the corresponding allocation of goods are explored.
|Unit title||Unit code||Requirement type||Description|
|Principles of Microeconomic Theory 2: Markets, Prices and Strategy||ECON10172||Pre-Requisite||Compulsory|
|Macroeconomic Analysis 2||ECON10182||Pre-Requisite||Compulsory|
|Introduction to Mathematical Economics||ECON10192||Pre-Requisite||Compulsory|
|Macroeconomic Analysis 1||ECON10181||Pre-Requisite||Compulsory|
ECON10172 AND ECON10182 AND ECON10192
The aims of this unit are to: (i) provide students with rigorous understanding of the core neoclassical microeconomics involving consumers, producers, markets and notions of partial and general equilibrium.
At the end of this unit students should be able to: (i) demonstrate a clear understanding of preferences, choice, utility and demand; (ii) demonstrate a clear understanding of inputs, outputs, production, cost and supply; and (iii) perfect competition in a market and general equilibrium and welfare.
I. Preferences, Choices, Utility, Demand:
- a. Definition of Relations, Rationality and Properties of Preferences
- b. Existence of a Utility& Properties of Utility; Ordinal versus Cardinal
- c. Consumer Problem
- d. Demand; Marginal Rates of Substitution, Indirect Utility/Expenditure
- e. Income and Substitution Effect; Law of Demand
- f. Consumer Surplus; Elasticities; Slutsky Equation; Market Demand
- g. Equilibrium in Exchange Economy, Pareto Optimality, Welfare Theorems.
II. Production, Costs, Supply
- a. Inputs and Outputs; Technology
- b. Firms and their Objective
- c. Price Taking Firms, Cost Function/Marginal/Average Costs, MRTS, Law of Supply/Demand
- d. Returns to scale, elasticity of output,
III. General Equilibrium and Welfare
- a. The Robinson Crusoe Economy, Optimality and Walrasian Equilibrium
- b. Competitive Equilibrium, Def. Walrasian Equilibrium Price,
- c. Existence of Equilibrium
- d. First Welfare Theorem
- e. Second Welfare Theorem
Teaching and learning methods
Synchronous activities (such as Lectures or Review and Q&A sessions, and tutorials), and guided self-study
- Analytical skills
- Critical reflection and evaluation. Decision-making.
- Oral communication
- Problem solving
- Written communication
- General foundations for neo-classical Microeconomics. Using economic modelling tools and techniques. Understanding role of incentives and strategic thinking. Planning and implementing independent study using library, electronic and online resources. Work to set deadlines.
40% Online tests x8
Students receive feedback from lectures, tutorials & office hours, and after the corresponding online tests.
- Nicholson, Walter and Christopher Snyder, Intermediate Microeconomics and its Applications, Cenage Learning, 2015.
- Varian, Hal. R., Intermediate Microeconomics with Calculus, Norton, 2014.
- Jehle, G.A. and P.J. Reny, Advanced Microeconomic Theory, Addison-Wesley, 2011.
- Riley, John G., Essential Microeconomics, Cambridge UP, 2012.
Very Advanced Reading:
- Mas-Colell, A., M. Whinston, J. Green, Microeconomic Theory, MIT Press, 1995.
- Ackerman, Frank (1997) “Consumed in Theory: Alternative Perspectives on the Economics of Consumption,” Journal of Economic Issues 31 (3), 651-664.
- Arrow, Kenneth J. (1959) “Rational Choice Functions and Orderings,” Economica, New Series 26 (102), 121-127.
- Arrow, Kenneth J. (1963) “Uncertainty and the Welfare Economics of Medical Care,” American Economic Review 53 (5), 941-973.
- Waldfogel, Joel (1993) “The Deadweight Loss of Christmas,” American Economic Review 83 (5), 1328-1336.
|Horst Zank||Unit coordinator|
For every 10 course unit credits we expect students to work for around 100 hours. This time generally includes any contact times (online or face to face, recorded and live), but also independent study, work for coursework, and group work. This amount is only a guidance and individual study time will vary.