Microeconomics
The "Microeconomics" course is designed for undergraduate students who are eager to delve into the foundational principles of economic theory and its applications. Over the span of 40 class sessions, each lasting 3 hours, students will engage in a comprehensive exploration of microeconomic concepts, equipping them with the analytical tools necessary to understand and evaluate economic phenomena.
Course Overview: This course provides a thorough introduction to microeconomic theory, focusing on the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Students will explore key topics such as consumer behavior, production and cost functions, market structures, and the role of government in economic regulation.
Key Topics Covered:
- Consumer Theory: Understanding utility, budget constraints, and the derivation of demand curves.
- Production and Costs: Analyzing production functions, cost minimization, and the derivation of supply curves.
- Market Structures: Examining perfect competition, monopoly, oligopoly, and monopolistic competition.
- Game Theory: Introduction to strategic interactions, Nash equilibrium, and applications in economic contexts.
- Welfare Economics: Exploring concepts of Pareto efficiency, social welfare, and the impact of externalities.
- General Equilibrium and Market Efficiency: Understanding the conditions for market equilibrium and the implications for resource allocation.
Skills and Knowledge Gained:
- Develop a solid understanding of microeconomic principles and their real-world applications.
- Gain proficiency in using mathematical models to analyze economic behavior and market outcomes.
- Learn to critically evaluate economic policies and their impact on efficiency and equity.
- Acquire the ability to apply game theory to model strategic interactions in various economic settings.
Course Structure: The course is structured to provide a balanced mix of theoretical instruction and practical application. Each session will include lectures, interactive discussions, and problem-solving exercises. Students will engage in case studies and simulations to apply theoretical concepts to real-world scenarios. Assessments will include quizzes, assignments, and a final exam to evaluate understanding and application of the material.
Engagement and Motivation: This course is designed to be engaging and intellectually stimulating, encouraging students to think critically about economic issues and their implications. By the end of the course, students will be well-prepared to apply microeconomic principles in advanced studies or professional settings, fostering a deeper appreciation for the complexities of economic decision-making.
Adaptive
Varies by mastery
17 domains
How the course works
A session is a short study-and-practice checkpoint, not a fixed class meeting. The course can move faster when material is already familiar and slow down when a topic needs more practice.
Study a focused page
Read a small prerequisite-ordered set that gives the context for the next practice step.
Check understanding
Answer linked questions so the system can tell what is already strong and what needs review.
Keep moving
Unlock the next set after the current material is understood, with review scheduled as needed.
Who this course is for
Undergraduate students, adult learners, and professionals who want a structured introduction to microeconomic reasoning. The course is appropriate for learners who are new to economics or returning to it after a break, especially those who want to understand how households, firms, markets, incentives, scarcity, strategic interaction, market failures, and policy choices can be analyzed with clear economic models. Learners should be comfortable with basic algebra and graph reading, but the course is designed to build the economic concepts step by step.
Objectives
- Understand and apply the concept of utility and budget constraints to derive individual demand curves.
- Analyze production functions and cost structures to derive firm supply curves.
- Evaluate different market structures, including perfect competition, monopoly, oligopoly, and monopolistic competition, and their impact on market outcomes.
- Apply game theory to model strategic interactions and predict outcomes in economic contexts.
- Assess the role of government in economic regulation and its impact on market efficiency and equity.
- Use welfare economics to evaluate the efficiency and equity of different economic outcomes, including the impact of externalities.
- Understand and apply the principles of general equilibrium and market efficiency to analyze resource allocation.
- Develop proficiency in using mathematical models to analyze economic behavior and market outcomes.
- Critically evaluate economic policies and their impact on efficiency and equity.
- Apply the concept of Pareto efficiency to assess the optimality of resource allocations.
- Understand the implications of the First Fundamental Theorem of Welfare Economics for market efficiency.
- Analyze the divergence between social and private costs and benefits and its implications for resource allocation.
- Understand the concept of Nash equilibrium and its application in competitive markets.
- Apply the principles of constrained optimization to solve economic problems involving utility maximization and cost minimization.
- Evaluate the impact of externalities on market outcomes and explore solutions for internalizing external costs and benefits.
- Understand the role of elasticity in determining consumer and producer responses to price changes.
- Analyze the impact of short-run and long-run adjustments on market supply and demand.
- Understand the principles of profit maximization and cost minimization in firm decision-making.
- Apply the concept of marginal analysis to evaluate economic decisions.
- Understand the role of incentives in shaping economic behavior and market outcomes.
- Develop the ability to apply economic theory to real-world scenarios through case studies and simulations.
- Engage in critical discussions and problem-solving exercises to deepen understanding of microeconomic concepts.
- Prepare for assessments, including quizzes, assignments, and a final exam, to demonstrate understanding and application of course material.
Syllabus
Kutesmart automates personalized tailoring
Economic decisions: Opportunity costs, economic rents, and incentives
Comparative advantage, specialization, and markets
Firms, technology, and production
Modelling a dynamic economy: Technology and costs
Modelling a dynamic economy: Innovation and profit
Cheap coal, expensive labour: The Industrial Revolution in Britain and incentives for new technologies
Economic models: How to see more by looking at less
Markets, cheap calories, and cotton: The colonies, slavery, and the Industrial Revolution in Britain
Growth: Escaping the Malthusian trap
Capitalism + carbon = hockey stick growth + climate change
How good is the model? Economists, historians, and the Industrial Revolution
References
Would you work fewer hours if your hourly wage doubled?
A problem of choice and scarcity
Goods and preferences
The feasible set
Decision-making and scarcity
Hours of work and technological progress
Income and substitution effects on hours of work and free time
Is this a good model?
Explaining our working hours: Changes over time
Application: Work hours, free time, and inequality
Explaining our working hours: Gender and working time
Explaining our working hours: Differences between countries
References
Climate negotiations: Conflicts and common interests
Social interactions: Game theory
Best responses in the rice–cassava game: Nash equilibrium
Dominant strategy equilibrium and the prisoners’ dilemma
Evaluating outcomes: The Pareto criterion
Public good games and cooperation
Social preferences: Altruism
Repeated interaction: Social norms, reciprocity, and peer punishment in public good games
Using experiments to study economic behaviour
Cooperation, negotiation, and conflicts of interest
The ultimatum game: Dividing a pie (or leaving it on the table)
Fair farmers, self-interested students? Experimental results of the ultimatum game
Coordination games and conflicts of interest
Modelling the global climate change problem
References
Pirate economics
Institutions and power
Evaluating institutions and outcomes: Fairness
Setting up a model: Technology and preferences
Institutions, and the case of the independent farmer
Case 1: Forced labour
Case 2: A take-it-or-leave-it contract
Case 3: Bargaining in a democracy
Case 3 continued: Negotiating to a Pareto-efficient sharing of the surplus
Lessons on the impact of institutions on efficiency and fairness
The distribution of income: Endowments, technology, and institutions
Measuring economic inequality
Application: A policy to redistribute the surplus and raise efficiency
Application: Conflicts of interest and bargaining over wages, pollution, and jobs
References
Exploding tyres: The mystery unravelled
The structure of the firm: Owners, managers, and workers
Other people’s money: The separation of ownership and control
Finding jobs and filling vacancies
Managing hiring and quitting: The reservation wage curve
Getting the work done: Contracts, principals, and agents
Employment rents: The cost of job loss
Counting the cost of job loss: Rents and reservation wages
Getting employees to work hard: The labour discipline model
Combining recruitment and labour discipline: The wage-setting model
Putting the wage-setting model to work: Wages, employment, and the rate of unemployment
How employers exercise power
Application: The minimum wage
Application: Another kind of business organization
References
Winning brands
Breakfast cereal: Choosing a price
Economies of scale and the cost advantages of large-scale production
Production and costs: The cost function for Beautiful Cars
Demand, elasticity, and revenue
Setting price and quantity to maximize profit
Gains from trade: The surplus and how it is divided
Price setting, competition, and the market
How firms differentiate their products
Markets with few firms: Strategic price setting
Firms and markets with decreasing long-run average costs
Influencing market power, and competition policy
References
Supply and demand: Markets with many buyers and sellers
Buying and selling: Demand, supply, and the market-clearing price
Competitive equilibrium and price-taking
Firms in competitive equilibrium
Gains from trade in competitive equilibrium: Allocation and distribution
Changes in supply and demand
Short-run and long-run equilibria
Application: Market dynamics in the oil market
How competition works: Transforming a cartel coordination game into a competitive prisoners’ dilemma
Supply, demand, and competitive equilibrium: Is this a good model?
Application: Why information about prices matters
The effect of a tax
Price controls
References
The importance of Chambar moneylenders
Income and wealth
Borrowing: Bringing consumption forward in time to the present
Reasons to borrow: The value of spending now
Application: Discounting, external effects, and the future of the planet
Lending and storing: Moving consumption to the future
Investing: Another way to move consumption to the future
Conflicts over the gains made possible by borrowing and lending
Borrowers and lenders: A principal–agent problem
Inequality: Lenders, borrowers, and those excluded from credit markets
How good is the model?
A poverty trap for those with limited wealth
Application: Policies to reduce risk exposure of less well off people
References
Bananas, fish, and cancer
The external effects of pollution: Private and social costs and benefits
Solving the problem: Private bargaining and property rights
Solving the problem: Regulation, taxation, and compensation
External effects: More examples and diagnoses
Public goods, non-rivalry, and excludability: A model of radio broadcasting
Public goods and bads, open access, and shared resources
Asymmetric information: Principal–agent relationships, hidden actions, and incomplete contracts
Hidden actions and risk: Market failure in insurance and credit markets
Asymmetric information: Hidden attributes and adverse selection
The limits of markets
References
References
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