Principles of Microeconomics

General Information

PREREQUISITES

MATH 1430: College Algebra (Recommended)

READINGS

Pindyck, R. S., & Rubinfeld, D. L. (2018). Microeconomics. 9th Edition. Upper Saddle River, N.J: Pearson/Prentice Hall.

LEARNING OUTCOMES

The student is able to understand introductory economic terms and concepts.
The student is able to understand the production possibility frontier.
The student is able to understand how supply and demand work together to determine prices and output.
The student is able to understand the fundamentals of production and cost theory.
The student is able to understand concepts such as profit maximization under different economic environments.

COURSE POLICIES / ADDITIONAL INFORMATION

Attendance is recorded. Unexcused absence lowers the grade accordingly.
It is the students' responsibility to check Canvas and their Webster email regularly.
For every hour spent in class it is expected of the students to invest 3 hours per week outside of class in homework, reviewing material, assignments, etc.

UNIVERSITY POLICIES

Students are required to inform themselves of WUV academic policies.

A full list of these policies is available on the WUV website: http://webster.ac.at/academic-policies

Materials and Assignments

Introduction to Microeconomics [Slides]

Supply and Demand [Slides][Assignment]

Consumer Behavior [Slides][Assignment]

Individual and Market Demand [Slides][Assignment]

The Production Decisions of a Firm [Slides][Assignment]

The Cost of Production [Slides][Assignment]

Profit Maximization and Competitive Supply [Slides][Assignment]

The Analysis of Competitive Markets [Slides][Assignment]

General Equilibrium Theory [Slides]

Monopoly [Slides][Assignment]

Monopsony [Slides]

Monopolistic Competition [Slides]

Price Discrimination [Slides][Assignment]

Oligopoly [Slides][Assignment]

Game Theory [Slides][Assignment]

Asymmetric Information [Slides]

Externalities [Slides]

Weekly Schedule

Week 1

Introduction to Microeconomics

· The Themes of Microeconomics

· What is Market?

· Real versus Nominal Prices

· Why study Microeconomics

Supply and Demand

· Supply and Demand

· The Market Mechanism

· Changes in Market Equilibrium

· Elasticities of Supply and Demand

Week 2

Supply and Demand

· Short Run versus Long Run Elasticities

· Understanding and Predicting the Effects of Changing Market Conditions

· Effects of Government Interventions – Price Controls

Consumer Behavior

· Consumer Preferences

· Budget Constraints

Week 3

Consumer Behavior

· Consumer Choice

· Revealed Preference

· Marginal Utility and Consumer Choice

Individual and Market Demand

· Individual Demand

· Income and Substitution Effects

· Market Demand

Week 4

Individual and Market Demand

· Consumer Surplus

· Network Externalities

Individual and Market Demand

· Utility Maximization

· The Method of Lagrange Multipliers

· The Equal Marginal Principle

· Marginal Rate of Substitution

Week 5

Individual and Market Demand

· Marginal Utility of Income

· Duality in Consumer Theory

· Income and Substitution Effects

The Production Decisions of a Firm

· Firms and their Production Decisions

· Production with One Variable Input

Week 6

The Production Decisions of a Firm

· Production with Two Variable Inputs

· Returns to Scale

The Cost of Production

· Measuring Costs: Which Costs Matter?

· Costs in the Short Run

Week 7

The Cost of Production

· Costs in the Long Run

· Long Run versus Short Run Cost Curves

Profit Maximization

· Perfectly Competitive Markets

· Marginal Revenue, Marginal Cost and Profit Maximization

Week 8

Profit Maximization

· Choosing Output in the Short Run

· The Competitive Firm’s Short Run Supply Curve

· The Short Run Market Supply Curve

· Choosing Output in the Long Run

· The Industry’s Long Run Supply Curve

The Analysis of Competitive Markets

· Evaluating the Gains and Losses of Governmental Policies

· The Efficiency of Competitive Markets

· Minimum Prices

· Price Supports and Production Quotes

Week 9

Mid-Term Exam

Monopoly, Monopsony & Monopolistic Competition

· Monopoly

· Monopoly Power

· Sources of Monopoly Power

· The Social Costs of Monopoly Power

Week 10

Monopoly, Monopsony & Monopolistic Competition

· Monopsony

· Monopsony Power

· Monopolistic Competition

Pricing with Market Power

· Capturing Consumer Surplus

· Price Discrimination

Week 11

Pricing with Market Power

· The Two-Part Tariff

· Bundling

· Advertising

Oligopoly

· Cournot

· Bertrandt

· Stackelberg

Week 12

Oligopoly

· Competition versus Collusion: The Prisoners’ Dilemma

· The Prisoners’ Dilemma for Oligopolistic Pricing

· Cartels

Game Theory

· Gaming and Strategic Decisions

· Dominant Strategies

· The Nash Equilibrium

Week 13

Game Theory

· Repeated Games

· Sequential Games

· Threats, Commitments, and Credibility

· Entry Deterrence

· Auctions

General Equilibrium Theory

· General Equilibrium Analysis

· Why Markets Fail

Week 14

Markets with Asymmetric Information

· Quality Uncertainty and the Market for Lemons

· Market Signaling

· Moral Hazard

· The Principle-Agent Problem

Externalities

· Positive and Negative Externalities

· Ways of Correcting Market Failure

· Externalities and Property Rights

Week 15

Public Goods

· Common Property Resources

· Public Goods

· Private Preferences for Public Goods

Final Exam

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