Dr Dimitra Petropoulou 32L 2.29 and Prof Timothy Besley 32L 3.37

This course is compulsory on the BSc in Environmental Policy with Economics, BSc in Geography with Economics, BSc in Government and Economics, BSc in International Social and Public Policy and Economics and BSc in Social Policy and Economics. This course is available on the BSc in Accounting and Finance, BSc in Business Mathematics and Statistics, BSc in Economic History with Economics, BSc in Economics, BSc in Economics and Economic History, BSc in Economics with Economic History, BSc in Finance, BSc in Mathematics and Economics, BSc in Mathematics with Economics, BSc in Mathematics, Statistics, and Business, BSc in Philosophy and Economics, BSc in Philosophy, Politics and Economics, BSc in Politics and Economics, Diploma in Accounting and Finance and MSc in Economics (2 Year Programme). This course is available as an outside option to students on other programmes where regulations permit. This course is available with permission to General Course students.

This is an intermediate course in microeconomic analysis.  Students are expected to have completed Economics A (EC100) OR Economics B (EC102), or an equivalent introductory course in economics based on textbooks such as Morgan W., M. Katz and H. Rosen, Microeconomics.  Students are also expected to have completed an introductory mathematics course such Quantitative Methods (Mathematics) (MA107) and should revise calculus including partial derivatives and the use of Lagrangians.

This is an intermediate course in microeconomic analysis giving a broad overview of economic principles including some recent developments in thinking. Students should expect to find the course challenging and by the end of it should be able to apply the tools of microeconomics to thinking about concrete economic problems.  It will cover the following topics:

I. Consumer Theory – the analysis of decision-making under constraints: preferences and utility; utility maximisation and uncompensated demand; expenditure minimisation and compensated demand; income and substitution effects; welfare analysis. Selected applications to savings and labour supply. II. Behavioural Economics I –Anomalies in decision-making; time-inconsistency. III. Decision-making with Risk – expected utility theory; risk-sharing, risk-pooling and insurance; prospect theory. IV. Producer Theory – Production and cost functions; firm and industry supply; market structure. V. Strategic Choice – Game theory: simultaneous and sequential games; subgame perfection; repeated games. Selected applications to oligopoly; auctions. VI. The Market System as a General Equilibrium – Efficiency, distribution and inequality; social welfare. VII. Living Interdependently – Public goods and externalities; the role of government intervention. VIII. Behavioural Economics II – Analysis of markets; the role of government. IX. Political Economy – Effectiveness of government; preference aggregation; constraints on the power of the state, X. Asymmetric Information – Contracts and markets with moral hazard and adverse selection. XI. Innovation – product innovation; the role of government intervention.

20 hours of lectures and 20 hours of classes in the MT. 20 hours of lectures and 20 hours of classes in the LT.

Two hours of revision lectures will be held in week 11 of both MT and LT

Students should complete the weekly web-based quizzes before attending classes. In addition, at least four pieces of written work will be required and marked by class teachers.

Lecture material will be complemented with required additional reading from journal articles. There is no set textbook for this course, though chapters from suitable intermediate textbooks will be recommended for those who may wish to consult a text (though this is not required).

Students will be expected to discuss critically the theoretical ideas and models taught by engaging with the required reading alongside working through microeconomic problems. The readings will be discussed in the weekly classes.

Exam (25%, duration: 1 hour, reading time: 15 minutes) in the January exam period.
Exam (75%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.

The Lent term examination is based on the Michaelmas term syllabus, and the Summer exam on 33% on the Michaelmas term syllabus and 67% on the Lent term syllabus.