Intermediate Microeconomics

University of the South Pacific

Course Description

  • Course Name

    Intermediate Microeconomics

  • Host University

    University of the South Pacific

  • Location

    Suva, Fiji

  • Area of Study

    Economics

  • Language Level

    Taught In English

  • Prerequisites

    EC102: Principles of Microeconomics

  • Course Level Recommendations

    Upper

    ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.

    Hours & Credits

  • Credits

    3 - 4
  • Recommended U.S. Semester Credits
    3 - 4
  • Recommended U.S. Quarter Units
    4 - 6
  • Overview

    The aim of this subject is to provide a systematic treatment of tools of Microeconomic analysis at an intermediate level.
    Microeconomics is the study of economic activity at the level of economic units, which are usually firms and consumers and their interaction at the marketplace. This intermediate course in microeconomics is designed to give students a solid understanding of economic intuition, theoretical constructs and analytical tools used in economics. It would particularly suit students interested to further advance in the study of economics, those expecting to be involved in business and policy fields and analyzing social processes.
    Microeconomics focuses on how various classes of economic units come to terms with the economic problem of scarcity. Households and firms are studied to analyse their behaviour within the resource constraints they face and the procedures they employ for identifying choices that would optimise their objectives. Simply put, it is the task of economics to show how to make optimal choices by the best use of scarce resources and therefore to maximise
    economic welfare. As will become evident during the course, the general procedures for determining optimal choices involve the application of common sense and logic.
    The tools of microeconomics analysis developed in this course is in the particular context of an economy characterised by the private ownership of property and free markets and where economic units seek rationally to optimize their behaviour. The focus here is clearly on the neo-classical theory of economics.
    Topics covered include theories of consumer behaviour, firms, market structures, distribution and general equilibrium.
    Mathematics is the language of formal logic that enables one to define precisely and to express economic concepts and ideas clearly. The mathematical requirements for this course are basic algebra and calculus but the level of abstraction is much more intense than at the introductory level.
    Learning Objectives
    - Understand and know the main principles of microeconomics theory, in particular to comprehend the main ideas associated with economic reasoning.
    - To apply theory to understand and analyze micro-economic issues in different applications.
    - Understand and analyze problems in social decision making.
    - Upgrade student analytical skills from introductory level.
    - Gain experience in the application of microeconomic principles to analyze of a range of economic issues.
    Course Content
    Week 1
    Topic: Introduction
    Introduction
    Why study microeconomics?
    Three key analytical tools
    Positive and Normative Analysis
    Demand and Supply Analysis
    Demand, Supply and Market Equilibrium
    Price Elasticity of Demand and relationships with changes in price and total revenue
    Other elasticities
    Back of envelope calculations
    Readings: BB pages 4-47; JP pages 11-68; NS pages 4-19
    Week 2
    Topic: Consumer Theory
    Consumer Preferences and the concept of utility
    Consumer Choice
    Readings: BB pages 73 ? 136; NS pages 53 ? 138; JM pages 74 ? 105
    Week 3
    Topic: The Theory of Demand
    Optimal choice and Demand
    Substitution and Income Effect
    Compensating and Equivalent variation Choice of labour and leisure
    Readings: BB pages 152-199; JP pages 111 ? 140
    Week 4
    Topic: Inputs and Production Functions
    Production with single input
    Production functions with more than one input
    Substitutability among Inputs
    Returns to Scale
    Technological Progress
    Readings: BB pages 202 ? 244; JP pages 152 ? 178; NS pages 215 ? 238
    Week 5
    Topic: The Cost Minimization Problem and Cost Curves
    The Cost Minimization Problem
    Readings: BB pages 253 ? 281; JP pages 195 ? 204; NS pages 243 ? 273
    Cost Curves
    BB pages 287 ? 315; JP pages 182 ? 195; NS pages 243 ? 273
    Week 6
    Topic: Perfect Competition and Welfare: Applications
    Short run and long run equilibrium
    Applications: Taxes, tariffs, price supports, price ceilings and floors, Production quotas and Incidence of taxes.
    Readings: BB pages 330 ? 437; JP pages 224 ? 304; NS pages 274 ? 341.
    Week 7 and Week 8
    Topic: Market Power
    Profit Maximization by a monopolist, The Importance of elasticity of demand, Inverse elasticity pricing rule, Lerner Index, Multiple plants, Monopsony, Inverse elasticity pricing rule for monopsonists, Monopsonists, Capturing Surplus: price discrimination.
    Readings: BB pages 440 ? 527; JP pages 349 ? 422; NS pages 377 ? 402
    Week 9 and Week 10
    Topic: Imperfect Competition
    Models of Oligopoly, Dominant Firm markets, Monopolistic Markets
    Readings: BB pages 530 ? 570; NS pages 408 ? 444; JP pages 430 ? 468
    Week 11
    Topic: Game Theory and Strategic Behaviour
    Nash Equilibrium, Repeated Prisoner?s Dilemma, Sequential Move and strategic moves
    Readings: BB pages 573 ? 603; JP pages 477- 503; NS pages 175 ? 208
    Week 12
    Topic: Factor Markets
    Competitive Factor Markets, Effect of Monopolies on Factor Markets, Monopsony and Welfare
    Readings: JP pages 510-537; NS pages 451 ? 472
    Week 13 and Week 14
    Topic: General Equilibrium Theory
    General Equilibrium Analysis: Two Markets, Economic Efficiency, First and Second theorems of Welfare Economics.
    Readings: NS pages 345 ? 369; BB pages 650 ? 692; JP pages 309 - 331
    Assessment
    Two In-Semester Tests: 15% each
    Two sets of exercises: 7.5% each
    Tutorial Participation: 55
    Final Exam: 50%

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