INTRODUCTION TO ECONOMICS-1

The aim of the course is to cover basic concepts and tools in economics and emphasize how they can be used to understand a broad range of real world problems. In the first module, we will cover general topics of microeconomics that include firms’ behaviour, equilibrium conditions of both competitive and monopolistic markets. In the second module, we will analyse topics related to the market failures, strategic interaction, growth theory and innovation, and international trade.

The student should be able to understand how firms make choices of price and quantity to produce within a specific market structure, thus taking into account their market power, the characteristics of the demand curve (the elasticity), the cost structure, and the characteristics of the product. Also, the student is expected to have knowledge of how firms react to important economic interventions and shocks that might affect their profitability. In this respect, understanding how firms interact in strategic situations and adjust their strategies to the presence of public goods, technological innovation, advertisement, and environmental variables represent important goals of the course.

You are expected to be comfortable with basic principles of Mathematics.

The following is the preliminary program for Microeconomics-1 (Prof. Luca Corazzini). Bernheim and Whinston’s book chapters are indicated in parentheses (BW#).

Introduction to the Study of Microeconomics
1. Preliminaries: what are we going to study in microeconomics? (BW1)
2. Demand and Supply and the concept of elasticity (BW2)

Theory of Firm
3. Inputs, technology and production (BW7)
4. Costs (BW8)
5. Profit Maximization (BW9)

Competitive Markets
6. Price-taking firm and supply curve (BW9)
7. Market demand and market supply of a competitive market (BW14)
8. Equilibrium of a competitive market and efficiency (BW14)

Monopoly and Pricing Policies
9. Monopoly (BW17)
10. Pricing Policies (BW18)

Bernheim, B. D., and Whinston, M. D., 2008, Microeconomics McGraw-Hill/Irwin, Inc. New York, NY.

There will be one final grade for the whole course of Introduction to Economics. Grading will be based on written exams according to the following weighting scheme:

Option 1. Two mid-terms, one for Introduction to Economics-1 and one for Introduction to Economics-2.
Option 2 is meant for those students not attending/failing the first mid-term.
Exams will consist of problem solving and short answer questions similar to those in the assignments.
The two midterms last 1 hour each and cover respectively the material discussed in the first and in the second module. In all other cases, the exams will be cumulative, cover all the course materials, and will have the same time length of a midterm, namely 1 hour.
There is only one date to attend the second midterm. This means that, if you pass the first midterm but do not show-up/ do not pass the second midterm, the grade of the first midterm will be lost.

The course will involve lectures and tutorials. Lectures will be based on slides prepared by the teacher. The text of the tutorials will be uploaded on moodle one week before the due date, and solved with the TA the day after the due date. Tutorials will be evaluated and used for the final grade.

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