MICROECONOMICS - 2

Microeconomics studies how individuals, firms, the government, and other organizations make choices given the alternatives available to them and how such choices interact in the market to determine prices and allocate resources. The main objective of the course is to make students familiar with the economic way of thinking. We will cover the basic concepts and tools of microeconomics and emphasize how they can be used to understand a broad range of real world problems. We will analyze firms’ behaviour and consumers’ behavior, market equilibria, principles of game theory and the role of the government in the economy.

Expected learning outcomes
1. Knowledge and comprehension:
1.1. Understanding how families and firms take economic decisions and interact in different market structures to determine the equilibrium price and quantity;
1.2. Understanding the consequences in terms of efficiency of policy interventions in markets;
1.3. Identifying the main characteristics of different market structures and implications for firms' behavior.

2. Ability to apply knowledge and comprehension:
2.1. Applying the demand and supply model to determine changes in the market equilibrium conditions;
2.2. Being able to analyze individual choices of consumers and workers as well as firms' choices, by using marginal analysis and the concept of opportunity cost;
2.3. Evaluating the overall welfare of different equilibria and how it varies after policy interventions and across different market structures;
2.4. Distinguishing acrss different situations of individual decision making and strategic interaction.

3. Judging capacity:
3.1. Interpreting in economic terms prices and well functioning of markets;
3.2. Understanding how using economic models can provide insight to economists;
3.3. Drawing conclusions on economic events by using the analytical approach.

The student must have knowledge of mathematical concepts such as derivatives, functional analysis and graphical representation, solution of n-order equations and linear systems.

The following is the preliminary program for Microeconomics-1. Bernheim and Whinston’s book chapters are indicated in parentheses.

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

Theory of Firm
3. Inputs, technology and production
4. Costs
5. Profit Maximization

Consumer Theory
6. Preferences
7. Constraints, choices and demand
8. Comparative statics, demand and welfare
9. An application to the labor supply
10. Choice involving time

The following is the preliminary program for Microeconomics-2. Bernheim and Whinston’s book chapters are indicated in parentheses.

Competitive Markets
11. Price-taking firm and supply curve
12. Market demand and market supply of a competitive market
13. Equilibrium of a competitive market and efficiency

Market Interventions
14. Taxes and subsidies
15. Import tariffs and quotas

Monopoly and Pricing Policies
16. Monopoly
17. Pricing Policies

Game Theory
18. Simultaneous and sequential games and the concept of Nash equilibrium

Oligopoly
19. Oligopoly a la Bertrand, Cournot and Stackelberg; Collusion

Textbooks:

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

Varian, Hal R., 2014, Intermediate Microeconomics with Calculus, W.W. Norton, New York, NY.

Additional references:

Besanko, D., and Braeutigam, R. R.,2014, Microeconomics, 5th Edition, International Student Version, John Wiley & Sons, Chichester, WestSussex, UK.

Perloff, Jeffrey, 2014, Microeconomics with Calculus, 3rd ed., Global Edition, Pearson, Upper Saddle River, NJ.


Additional teaching material will be available on the course website at: http://moodle.unive.it/course/view.php?id=490 .

Written exam. There will be the possibility to attend two mid-terms, one at the end of the Microeconomics-1 course and one at the end of the Microeconomics-2 course. It is required the average grade of the two mid-terms is higher or equal than 18 out of 30.

Lectures and practice sessions.

English

written