Microeconomics

Aim

On completion of the course, the student should be able to - account for how resource allocation via price fixing functions in a market economy under different market types - account for the meaning of efficient resource allocation, have an understanding of the conditions in a market that leads to efficient resource allocation and understand the conditions that lead to markets not functioning efficiently - account for why socioeconomic profitability calculations are done and how they are carried out. - explain the history behind the origin of international trade and the welfare effects of trade and trade policy - apply economic models in order to analyse microeconomic problems, such as - explain how markets are influenced by various types of disturbances, for example fluctuations in demand and political interventions - determine if a market is efficient, and what may increase efficiency - evaluate the welfare effects of public decisions

Content

Prior to this course, the student should be familiar with the basic economic problems, have the ability to use economic reasoning and have knowledge of the determinants of demand and supply, different production and cost relationships for a company and how a market with perfect competition functions. The course is a continuation of the course Introduction to Economics. The following is covered in the course - theories on how the household makes its choices in the commodities and factor market, and how the choice is influenced by a change in prices, salaries and income. - how the resource allocation of goods, services and production factors work in different forms of imperfect competition, such as monopoly, monopolistic competition, oligopoly and monopsony. This part also contains the bases of game theory. - the basic concepts of economic welfare theory, how socioeconomic efficiency is defined in welfare theory and how an economy with perfect competition in all markets in the ideal case leads to socioeconomic efficiency. - the conditions that lead markets to function in a socioeconomically inefficient way and the measures that can then be taken. - how to explain, from a so called public-choice perspective, why public encroachments in the market economy can sometimes lead to a deteriorated efficiency. - how efficiency is influenced by different kinds of taxes and different ways of taxing publicly provided goods and services. - why socioeconomic profitability calculations are done and how they are carried out. - the history behind the origin of international trade and the welfare effects of trade and trade policy - current economic policy, for example environmental policy and housing policy, but possibly other fields as well.