Undergraduate

modules

Modules

ECO2004 : Microeconomic Analysis

Semesters
Semester 1 Credit Value: 20
ECTS Credits: 10.0

Aims

To equip the student with intermediate-level microeconomic concepts, and develop students' problem-solving abilities in the context of microeconomics.

This is the core second-year module in microeconomic analysis. It is a pre-requisite for many final-year modules in Economics. At a broad level, it is the theory behind the demand and supply curves. The syllabus includes consumer theory, producer theory, choice under uncertainty, theory of the firm and theory of the industry. The material is an extension of first-year microeconomics, but it is conducted at greater depth and with a much greater reliance on analysis, mainly diagrammatic, but with some mathematics. It is a core module, as it covers the economic techniques that are essential to modern economic analysis at Stage 3 of economics programmes.

Outline Of Syllabus

1. INTRODUCTION
•       Aims and approach of course.
•       Mathematical notation and properties.
•       Constrained optimization.
•       Existence and uniqueness theorems.

2. CONSUMER THEORY
•       Neoclassical consumer theory: Preference relations and indifference curves.
•       Utility function.
•       Demand analysis. Marshallian and compensated demand functions and curves.
•       Revealed preference theory and price indices.
•       Measuring utility changes: compensating and equivalent variations.

3. PRODUCER THEORY
•       The production function: linear programming and neoclassical approaches.
•       Isoquants and production functions.
•       Cost minimization.
•       Homogeneous production functions, including Cobb-Douglas.
•       Product exhaustion and Envelope theorems.

4. CHOICE UNDER UNCERTAINTY
•       Decision rules for state-contingent outcomes.
•       Expected values and the St Petersburg paradox.
•       Expected utility theory, the ex-post utility function and attitudes to risk.
•       Applications to insurance.
•       Criticisms of expected utility theory.

5. THEORY OF THE INDUSTRY
•       Oligopoly: Cournot and Stackelberg models, Bertrand model and efficiency.
•       Collusive oligopoly: joint-profit maximization, stability of cartels and market sharing agreements.
•       Monopoly: price and output determination.
•       Price discrimination and efficiency.

6. THEORIES OF THE FIRM
•       The owner-managed, profit-maximizing assumption.
•       Managerial discretion and the principal-agent problem.
•       The sales revenue model and expense preference model.
•       Effect of taxation on optimal output in these models.
•       Alternative approaches.

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Guided Independent StudyAssessment preparation and completion164:0064:00N/A
Scheduled Learning And Teaching ActivitiesLecture241:0024:00N/A
Guided Independent StudyDirected research and reading150:0050:00N/A
Scheduled Learning And Teaching ActivitiesSmall group teaching81:008:00N/A
Scheduled Learning And Teaching ActivitiesDrop-in/surgery41:004:00N/A
Guided Independent StudyIndependent study150:0050:00N/A
Total200:00
Teaching Rationale And Relationship

Lectures provide an exhaustive and in-depth treatment of the core course material. Seminars facilitate small group interaction with the seminar leader to reinforce learning. Drop-in surgery to deal with specific problems experienced by students. Private study facilitates review and understanding of lecture material and problem sets.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Exams
Description Length Semester When Set Percentage Comment
Written Examination1201A75Candidates required to answer 3 questions from 6 with unrestricted choice
Other Assessment
Description Semester When Set Percentage Comment
Essay1M252000 word essay
Assessment Rationale And Relationship

The unseen examination is designed to encourage study and test understanding across a range of microeconomic topics. The assessed essay gives the opportunity for a more in-depth treatment of key topics.

Reading Lists

Timetable