Microeconomic Theory and its Application

6 reviews
Enrolled: 107 students
Duration: 12 weeks 180 Hours
Lectures: 12
Level: Advanced

Economics influences our everyday lives whether we realize it or not. Even our decision to work or rest is guided by economic principles.

Microeconomics is a high study branch of economics that has several components such as supply and demand. For the benefit of those new to economics as a subject, we will define economics with a focus on making choices in a world of scarce resources then move onto supply, demand, and equilibrium and their application in the market for labor and finance. We will use supply and demand diagrams to analyze the impact of overall changes in supply and demand on price and quantity.

Microeconomics studies the behavior of individuals and businesses and how decisions are made based on the allocation of limited resources. It is the study of how we make decisions because we know we don’t have all the money and time in the world to purchase and do everything. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services which determine the prices we pay. These prices in turn determine the number of goods supplied by businesses and the number of goods demanded by consumers.

Microeconomics helps us determine how families determine what goods to buy and how much to save. It also determines the number of goods a manufacturer may decide to make and what prices to sell, as well as how competitive different industries are and how that affects consumers.

Microeconomics must not be confused with macroeconomics which is the study of economy-wide things such as growth (GDP), inflation, and unemployment. This course focuses on microeconomic theory and how it affects policy decisions. We introduce concepts and analysis, such as theories of the firm (producer theory) showing how the level of competition between firms depends on the market structure and the level of market regulation or artificial price distortions by government interventions. This may happen when subsidies to certain businesses or industries such as agriculture of fuel distort through market prices of the communities on the market.

We look at individual behavior (consumer theory) and the factors that may influence consumer decisions. What is market failure and why does it occur? What can government do to curb pollution? Would a carbon tax work? How do welfare economies differ from non-welfare economies? We will see how individual markets work such as the labor market and goods market. We study market structures looking at competition and monopoly.

This course will ensure that you can relate fundamental microeconomic theory with daily economic activity. You will develop critical thinking skills by considering the case of market failure which occurs in sharp contrast to traditional microeconomic theory.

Students will learn that despite the notion that supply and demand are determined by the market, there are cases of missing markets where government intervention is required to substitute for the price mechanism. You will be able to use the knowledge gained on this course to everyday circumstances and be able to apply this knowledge in other related subjects.

1. Introduction- Welcome to Economics!

What is Economics, and Why Is It Important? Microeconomics vs Macroeconomics, How Economist Use Theories and Models to Understand Economic Issues, How to Organize Econ-omies: An Overview of Economic Systems, How Individuals Make Choice Based on their Budget Constraints

2. Market Institutions

Development and Expansion of Markets, The Market System as an Efficient Mechanism for Information, Demand and Supply in Labour Markets, Demand and Supply in Financial Markets,

3. Supply and Demand

The theory of Supply and Demand – Market Adjustments, Demand, Supply, and Equilibrium in Markets for Goods and Services, Shifts in Demand and Supply for Goods and Services, Changes in Equilibrium Price and Quantity: The Four Step process, Price Ceilings and Price Floors, Demand, Supply and Efficiency

4. Working with Supply and Demand

Price- Buyer Behaviour- the Price Elasticity of Demand and Supply, Elasticity of Supply, Polar Cases of Elasticity and Constant Elasticity, Elasticity and Pricing, Elasticity in Areas Other Than Price

5. Production Costs and Industry Structure

The Process and Function of Production Economic Costs, Explicit and Implicit Costs, Accounting and Economic Profit, Production in the Short Run and in the Long Run, Costs in the Short Run and in the Long Run

6. Product Decisions

The Nature of Capital Stocks -Marginal Thinking- Discrete Decision-Making- Financial Capital as an Input to Production – Competition Equilibrium

7. Perfect Competition

Understanding Market Power and Competition- Perfect Competition and Why it Matters – How Perfectly Competitive Firms Make Output Decisions – Deadweight Loss – Perfect Competition – Efficiency and Equity in the Case of Perfect Competition – Entry and Exit Decisions in the Long Run – Efficiency in Perfectly Competitive Markets

8. Markets for Labour

Thinking About Markets for labour – Labour Supply- Explaining Variation in Wages – Labour in the Traditional Neoclassical Model – The Market System as an Efficient Mechanism for Information – Demand and Supply at Work in Labour Markets

9. Market Failure and Government Policy

Social Policy-Urban Policy- Regional Policy- Government Policies to Reduce Income Inequality -The Economics of Environmental pollution – Wages and Employment in an Imperfectly Competitive Labour Market – Flaws in the Democratic System of Government

Monopoly Competition and Anti Trust Policy

Monopolistic Competition- Oligopoly- Anti-trust Policy- Corporate Mergers- Regulating Anticompetitive Behaviour – Regulating Natural Monopolies -The Great Deregulation Experiment –

11. Positive Externalities and Public Goods

How Governments can Encourage Innovation – Public Goods – Why the Private Sector Underinvests in Innovation – What Happens When a Country Has Absolute Advantage in All Goods? Protectionism As an Indirect Subsidy from Consumers to Producers

12. Poverty and Economic Inequality

Drawing the Poverty Line -The Poverty Trap- The Safety Net- Income Inequality: Measurement and Causes – How to Raise Business Financial Capital- How to Accumulate Personal Wealth.
Yes. You are required to have completed the four Prerequisite courses 1. Critical Thinking, Logic and Epistemology 2. Moral Philosophy (& Moral Education) 3. Social and Cultural Anthropology and 4. Political Philosophy
Course Commences in the Spring of 2022
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