MICROECONOMICS - 2

Microeconomics examines the decision-making processes of individuals, firms, governments, and other organizations within the constraints of available alternatives. It further explores how these decisions interact within markets to determine prices and to allocate resources. This course aims to familiarize students with the fundamental perspectives, analytical approaches, and methodologies employed by economists in the study of microeconomic phenomena. It provides a comprehensive introduction to key microeconomic concepts, theories, and analytical techniques, emphasizing their applicability to real-world economic scenarios. The course is structured into two parts. The first part, *Microeconomics 1*, focuses on analyzing the individual behavior of consumers and firms. The second part, *Microeconomics 2*, explores how consumers and firms interact within various market structures and examines the role and impact of government interventions on market outcomes.

Intended learning outcomes
1. Knowledge and comprehension:
1.1. Students will analyze how households and firms make economic decisions and interact in different market structures to determine the market outcome;
1.2. Students will be able to understand the consequences in terms of efficiency of policy interventions in markets;
1.3. Students will be able to identify the main characteristics of different market structures and implications for firms' behavior.

2. Ability to apply knowledge and comprehension:
2.1. Students will be able to apply the demand and supply model to determine changes in the market outcomes;
2.2. Students will be 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. Students will evaluate the overall welfare of different equilibria and how it varies after policy interventions and across different market structures;
2.4. Students will learn how to apply tools from game theory to understand strategic interaction among individuals, among firms, as well as across a wide variety of situations where there is economic/business interaction.

3. Judging capacity:
3.1. Students will be able to Interpret in economic terms prices and well functioning of markets;
3.2. Students will understand how to use use economic models to conceptualize complex phenomena and provide economic insights;
3.3. Students will draw conclusions on economic events by using the analytical approach.

The student must have a working knowledge of differential and integral calculus, algebra and graphical representation of functions in the real plane.

*************************** MICROECONOMICS 1 ***************************
1. Introduction to the Study of Microeconomics
1.1. Preliminaries: What is Microeconomics about?

2. Theory of Firm
2.1. Inputs, technology and production
2.2. Costs
2.3. Profit Maximization

3. Consumer Theory
3.1. Preferences
3.2. Budget constraints, consumption decisions, and demand curve
3.3. Comparative statics and welfare
3.4. Intertemporal choice

*************************** MICROECONOMICS 2 ***************************
1. Competitive Markets
1.1. Price-taking behavior of firms and the supply curve.
1.2. Market demand and market supply.
1.2. The concept of elasticity.
1.4. Equilibrium of a competitive market.
1.5. Efficiency of a competitive market.

2. Market Interventions
2.1. Taxes and subsidies
2.2. Import tariffs and quotas

3. Monopoly and Pricing Policies
3.1. Monopoly
3.2. Pricing Policies

4. Oligopoly
4.1. Cournot competition.
4.2. Bertrand competition.
4.3. Stackelberg competition.
4.4. Collusion.

5. Asymmetric information (if feasible, given time constraints)
5.1. Adverse selection in the market for "lemons".
5.2. Signaling and the value of warranties.

• 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 Moodle page.

The examination will be based on a written exam. Further details will be provided at the beginning of the course.

written

• Scores in the 18-22 range will be awarded in the presence of:
- sufficient knowledge and understanding of the program;
- limited ability to interpret concepts and form independent judgments;
- sufficient communication skills, especially in relation to the use of specific language related to economic concepts.
• Scores in the 23-26 range will be awarded in the presence of:
- fair knowledge and understanding of the program;
- fair ability to interpret concepts and form independent judgments;
- sufficient communication skills, especially in relation to the use of specific language related to economic concepts.
• Scores in the 27-30 range will be awarded in the presence of:
- Good or excellent knowledge and understanding of the program;
- Good or excellent ability to interpret concepts and form independent judgments;
- Fully appropriate communication skills, especially in relation to the use of specific language related to economic concepts.
• Honors (30L) will be awarded in the presence of in-depth knowledge and understanding of the program, exceptional critical thinking skills, and effective communication abilities.

The course will be supported by lectures covering the relevant topics. The primary aim of the lectures is to provide an overview of the curriculum and enhance students' understanding of the material. Instruction will be conducted in English. Additionally, students will have the opportunity to attend exercise sessions focused on solving problem sets and preparing for the final written examination.