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Microeconomics EC2066

This course is designed to equip students with the economic principles which are necessary to analyse a whole range of economic problems.

This course builds on the foundations of economic analysis provided in course EC1002 Introduction to economics.

Prerequisites/ Exclusions

If taken as part of a BSc degree, courses which must be passed before this course may be attempted:

  • EC1002 Introduction to economics
  • MT105a Mathematics 1 or MT1174 Calculus.

This course may not be taken with:

  • MN3028 Managerial economics.

Topics covered

  • Consumer choice and demand, labour supply
  • Choice under uncertainty, the expected utility model
  • Producer theory: production and cost functions, firm and industry supply.
  • Game theory: normal-form and extensive-form games, Nash equilibrium and subgame perfect equilibrium, repeated games and cooperative equilibria
  • Market structure: competition, monopoly and oligopoly.
  • General equilibrium and welfare: competitive equilibrium and efficiency
  • Pricing in input markets
  • Inter-temporal choice: savings and investment choices.
  • The economics of information: moral hazard and adverse selection, resulting market failures and the role of contracts and institutions
  • Market failures arising from monopoly, externalities and public goods. The role of policy.

Learning outcomes

If you complete the course successfully, you should be able to:

  • The determinants of consumer choice, including inter-temporal choice and choice under uncertainty
  • The behaviour of firms under different market structures
  • How firms and households determine factor prices
  • Behaviour of agents in static as well as dynamic strategic situations
  • The nature of economic interaction under asymmetric information
  • Be able to analyse and assess:
  • Efficiency and welfare optimality of perfectly and imperfectly competitive markets
  • The effects of externalities and public goods on efficiency
  • The effects of strategic behaviour and asymmetric information on efficiency
  • The nature of policies and contracts aimed at improving welfare
  • Be prepared for further units which require a knowledge of microeconomics.

Assessment

Unseen written exam (3 hrs).

Essential reading

  • Nicholson and Snyder. Intermediate Microeconomics and its Application, 12th ed 2015, Cengage Learning.

Study material