Microeconomics

Aim

The general aim of the course is to develop the student's knowledge of and ability to describe, understand and evaluate how the resource allocation process in a market economy works. On completion of the course, the student should be able to - account for the basic economic issues and assumptions - describe how resource allocation via price fixing works in a market economy in different market types - explain the meaning of efficient resource allocation, the conditions in a market that result in efficient resource allocation and the conditions that result in inefficient markets - carry out a simple socioeconomic profitability calculation and account for what that separates a such from a financial calculation - use economic models to analyse microeconomic issues regarding - the choices that consumers and producers make - how markets are influenced by different kinds of shifts of demand and cost, taxes, subsidies and price regulations - the efficiency of the resource allocation in a market and what may affect it

Content

• The problem of scarcity and the concept of opportunity cost. - The conditions for resource allocations, the actors in the market and the rationality assumption - Consumption theory - Production theory - Elasticity - Resource allocations in perfect competition and different kinds of imperfect competition (monopoly, monopolistic competition, oligopoly, monopsony) - The production factor market - The basics of welfare theory - External effects and public good