Microeconomics

This module surveys core theories and techniques in microeconomics. The aim is to develop a thorough theoretical grounding and to serve as reference for more applied modules of the MSc degree. The module focuses on the key themes of relative price determination and strategic choice from the perspective of different traditions in microeconomics. Three topics are considered: (1) classical and (2) neoclassical price theory, and (3) non-cooperative game theory. Topic one introduces the class-based circular flow model, and the choice of technique in multisectoral economies. Topic two compares neoclassical consumer, producer and exchange theory in Marshallian and Walrasian modes with its classical counterpart. Moreover, perfect and imperfect market outcomes are evaluated from a welfare perspective. Topic three covers non-cooperative solutions to static and dynamic games with and without perfect information. Game theory is discussed as an analytical lens on social coordination problems.

Each week the module convenor holds a lecture and a seminar session. The lectures introduce the topics, and the seminars provide space for critical discussion, solving of problem sets as well as empirical data analysis where appropriate (e.g. input-output tables, firm level financial data).

Students pursuing a degree external to the Department of Economics should contact the convenor for approval to take this module.

Objectives and learning outcomes of the module

Upon completion of the module, students are expected to be able to:

• demonstrate a good understanding of key microeconomic concepts

• apply analytical microeconomic reasoning to concrete problems

• critically evaluate the underlying assumptions and explanatory power of particular microeconomic theories

Method of assessment

AS1 - 10% / AS2 - 30% / EXAM - 60%

Suggested reading

Indicative reading topic 1: Broome, J. (1983) The Microeconomics of Capitalism, Academic Press; Kurz, H. and Salvadori N. (1995) Theory of Production: A long-period analysis, Cambridge University Press.

Indicative reading topic 2: Varian, H. (1992) Microeconomic Theory, Norton and Company; Starr, R. (2012) General Equilibrium Theory, Cambridge University Press.

Indicative reading topic 3: Fudenberg D. and Tirole J. (1991), Game Theory, MIT Press; Bowles, S., Foley, D. and Halliday S. (forthcoming) Coordination, Conflict and Competition.

These readings are supplemented with excerpts of classic contributions in the field.

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