Prerequisites: Introductory microeconomics, ordinary and partial differential calculus
Dr Andrew Ellis
Dr Francesco Nava
The aim of this course is to give students the conceptual basis and the necessary tools for understanding modern microeconomics at the intermediate level. This course makes extensive use of calculus.
The course covers five broad areas:
The theory of the firm: competition, monopoly
General equilibrium and welfare
Game theory applications: (a) imperfect competition, (b) moral hazard and contracts, (c) information problems.
Consumer theory discusses the demand side of the economy, while the theory of the firm investigates the supply side of the market under perfect competition and monopoly, as well as the relationship between technology and costs. General equilibrium is covered, including welfare implications, in particular in the presence of externalities. These three areas cover most of orthodox intermediate microeconomics but neglect interesting topics such as market structure, information, contracts and insurance. To address these topics, the course introduces some basic concepts of game theory.
Because a working knowledge of differential calculus is essential for the study of quantitative solutions to economic problems and, indeed, enhances one's understanding of the underlying concepts, it is a pre-requisite for the course. In class on the first day of the course, partial differential calculus will be reviewed and students will be introduced to the techniques of constrained maximization, such as Lagrangian procedures, used throughout the course.
Snyder, Christopher and Walter Nicholson. Microeconomic Theory: Basic Principles and Extensions, (11th edition, International Edition), South-Western College Publishing (2011). Please note that the textbook differs from previous editions as well as the American edition.
Lectures: 36 hours Classes : 12 hours
Assessment: Two written examinations