The aim of this course is to examine the analytical framework used in microeconomics. New concepts are illustrated with entertaining and informative examples, both verbal and numerical. In addition, several purely ‘micro’ topics are illustrated with ‘macro’ applications. On the successful completion of this unit, students should have a clear understanding of the basic principles of microeconomics and with the aid of simple mathematical tools, be able to solve specific problems and answer questions appropriate to this level. Topics include supply, demand and equilibrium, the behavior of consumers, the behavior of firms, production and costs, competition welfare economics, knowledge information, monopoly, market power, collusion and oligopoly, the theory of games, external costs and benefits, common property and public goods, the demands for factors of production, the market for labor, risk and uncertainty.
The primary objective of this course is to teach students the fundamental principles and methods of modern microeconomics theory. Also to illustrate the usefulness of these principles and methods and models for studying actual microeconomics problems. Comprehending of economic life and analyzing of consumer behaviors
| Week | Topics |
|---|---|
| 1 | Introduction & Syllabus Review |
| 2 | Chapter 1:The Market; In this chapter, we demonstrate how we do simple economic analysis through a simple model of apartment market. We set up a model about renters and landlords, see how they make decisions, how apartments are allocated, and how outcomes change when exogenous variables changes. We also talk about a criteria for evaluating outcome: Pareto Efficiency. Page numbers (1-19) |
| 3 | Chapter 2: Budget Constraint; The budget set describes what consumption bundles are affordable to the consumers. The budget constraint is typically described by p1 x1 + p2 x2 = m, which is a straight line when prices are constant. When income increases, budget set shifts outward, enlarging the budget set. When prices increases, the slope of budget line changes, and the it shrinks the budget set. Page numbers (20-32) |
| 4 | Chapter 3: Preferences; Rationality in Economics - Behavioral Postulate: A decisionmaker always chooses its most preferred alternative from its set of available alternatives. So to model choice we must model decisionmakers’ preferences. Page numbers (34-52) |
| 5 | Practical Session |
| 6 | Chapter 4: Utility; Utility Functions: A preference relation that is complete, reflexive, transitive and continuous can be represented by a continuous utility function. Continuity means that small changes to a consumption bundle cause only small changes to the preference level. Page numbers (57-70) |
| 7 | Chapter 5: Choice; The principal behavioral postulate is that a decisionmaker chooses its most preferred alternative from those available to it. The available choices constitute the choice set. Page numbers (73-90). |
| 8 | Practical Session |
| 9 | Midterm Exam |
| 10 | Chapter 6: Demand; Consumer demand is defined as the - willingness and ability of consumers to purchase a quantity of goods and services in a given period of time, or at a given point in time. Page numbers (73-90) |
| 11 | Chapter 8: Slutsky Equation; Effects of a Price Change - What happens when a commodity’s price decreases? Substitution effect: the commodity is relatively cheaper, so consumers substitute it for now relatively more expensive other commodities. Income effect: the consumer’s budget of $y can purchase more than before, as if the consumer’s income rose, with consequent income effects on quantities demanded. Page numbers (137-157) |
| 12 | Practical Session |
| 13 | Chapter 10: Intertemporal Choice; Persons often receive income in “lumps”; e.g. monthly salary. How is a lump of income spread over the following month (saving now for consumption later)? Or how is consumption financed by borrowing now against income to be received at the end of the month? Page numbers (182-202) |
| 14 | Overview of the Term - Review of the chapters : theory and exercises |
| Method | Qty | % Each |
|---|---|---|
| Midterm Exam(s) | 1 | 40 |
| Lab/Practical Exams(s) | 4 | 5 |
| Final Exam | 1 | 40 |
Intermediate Microeconomics: A Modern Approach, ninth Edition, author: Hal R. Varian, publisher: W.W. Norton & Company (2014).