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2014/2015  BA-BHAAI1024U  Principles of microeconomics – a policy perspective

English Title
Principles of microeconomics – a policy perspective

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Course period Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor: Dr. Rodrigo Zeidan, Fundação Dom Cabral
    Patricia Plackett - MPP
Main academic disciplines
  • Globalization, International Business, markets and studies
  • Economics, macro economics and managerial economics
  • Economic and organizational sociology
Last updated on 20-05-2014
Learning objectives
Students will learn critical thinking with a solid economic foundation. For instance, they will learn how to determine costs and benefits of economic and social policies. Students will be able to think more systematically about market mechanisms, profit maximization behavior, and the role of government. They will be introduced to a variety of major conceptual and theoretical approaches to understanding political economy, economic and social development, and policy creation.
By the end of the course students should be able to:
  • Have a good working knowledge of microeconomics.
  • Understand market mechanisms and price formation.
  • Develop a critical perspective on the trade-offs of market intervention.
  • Understand profit-maximization and variables relevant to firm behavior.
  • Create graphs of market phenomena and analyze them.
  • Discuss the impact of subsidies on different markets, from farm subsidies to subsidies in support of renewable energy.
Course prerequisites
There are no prerequisites for this course aside from undergraduate standing.
Prerequisites for registering for the exam
Number of mandatory activities: 1
Compulsory assignments (assessed approved/not approved)
Mandatory Mid-term Assignment: Students will analyze a particular microeconomic policy, such as taxation, subsidy, quota, or another form of market intervention, including the effects of government intervention on the market. Of particular importance is applying the perspectives from the course on the ways in which governments can affect markets. Student analysis reports must include a graphical analysis accompanied by a solid explanation of the issue, the assumptions, the change that are being modeled and the observed or expected effects of the change.
Examination
4-hour written exam:
Exam ECTS 7,5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer Term
Aids allowed to bring to the exam Limited aids, see the list below and the exam plan/guidelines for further information:
  • Allowed dictionaries
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content and structure

The course is structured to give students a comprehensive overview of microeconomics, with an emphasis on policy applications. Every student in the social and physical sciences should have a good knowledge of the principles of economics. This course then aims to provide a clear understanding of market mechanisms, the effects of government intervention, the rationale for regulated markets and many more features of the socio-economic landscape. It gives students an opportunity to delve into the principles of microeconomics. The beginning of the 21st century marks a period of growth and challenge to both developing and developed economies, and in this course we focus on understanding how to analyze a range of economic phenomena.
 
The primary goal of the course is to present the main topics in microeconomics to a non-specialized audience. The focus will be on applications and policy implications, instead of formal demonstrations. Ideally, students will leave the course with a critical perspective on economic models and will be able to apply their knowledge to a plethora of different situations. Critical thinking will be as important as knowledge of the formal mechanisms of economic models.
 
The course is structured to provide students with a series of four coherent modules, beginning with the main definitions and going through models in Industrial Economics and International Economics. The first module introduces the basic concepts in economics. The second module presents an analysis of firm behavior. The third module introduces the main concepts of Industrial Economics and the fourth module looks at ‘special topics’ and applications to International Economics.
 
There is a Preliminary Assignment in addition to the Mandatory Mid-term Assignment in this course. For the Preliminary Assignment due in Class 3 students will analyze individually a selected article that focuses on a real-life microeconomics issue, e.g., “Why is the Royal Mail being privatised?” published in the 10 October 2013 issue of The Economist, to prepare a short analysis report on it.
 
For the Mid-term Assignment students will analyze a particular microeconomic policy, such as taxation, subsidy, quota, or another form of market intervention. In your paper there will also be an analysis of the effects on the market from the government intervention. Analysis reports must include a graphical analysis accompanied by a solid explanation of the issue, the assumptions, the change that is being modeled, and the observed or expected effects of the change. Students should apply the information presented in the course in order to understand how governments can affect markets. This project will be due at the beginning of Class 5.

Class Schedule

Class Topic
Class 1 Market Mechanisms; Supply and Demand. Government Policy: Price Controls and Taxes
Class 2 Labor Market. Elasticities of Supply and Demand; Societal Organization and Gains Through Trade.
Class 3 Theory of the Firm. Firm Equilibrium. Pricing and Costs. Preliminary Assignment
Class 4 Break-Even Point. Price Discrimination
Class 5 Market Structure and Competitive Strategy
Class 6 Market Power, Monopoly Pricing, Static Models of Oligopoly: Bertrand, Cournot, Stackelberg; Mandatory Mid-term Assignment
Class 7 A Primer on Game Theory: Competition and Cooperation
Class 8 Game Theory; Market Failures and the Role of Government
Class 9 Market Failures and the Role of Government
Class 10 Policy applications: Tariffs, import quotas, agricultural subsidies, economics of regulation.
Class 11 Comprehensive Review
Teaching methods
Classes usually begin with a lecture and are followed by discussion to ensure that students are able to interpret and critique the readings.
Further Information
Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 3 in order to 'jump-start' the learning process.
Expected literature
The course make use of a textbook. The textbook for the course is Mankiw, G. Principles of Microeconomics (6th edition), 2012, ISBN: 9780538453363. There will be auxiliary readings, based other important books on Microeconomics, such as Pyndick and Rubenfeld, Microeconomics (8th Edition), Prentice Hall, 2012; Gibbons, R. A Primer on Game Theory (2012); and Krugman and Obstfeld, International Economics, 2011. The following is a provisional schedule.
 
Module 1. Basic Concepts (Lectures 1 and 2)
Lecture 1. Market Mechanisms; Supply and Demand. Government Policy: Price Controls and Taxes
Lecture 2. Labor Market. Elasticities of Supply and Demand; Societal Organization and Gains Through Trade.
 
Readings:
Mankiw, chapters 3-6. Pyndick, chapters 1-3.
 
Module 2. Profit Maximization (Lectures 3 and 4).
Lecture 3. Theory of the Firm. Firm Equilibrium. Pricing and Costs.
Lecture 4. Break-Even Point. Price Discrimination.
 
Readings:
Mankiw, Chapters 13-14. Pyndick, chapters 4-6.
 
Module 3. A Primer on Industrial Economics (Lectures 5-8)
Lecture 5.Perfect Competition, Externalities and Public Goods.
Lecture 6. Market Power, Monopoly Pricing, Static Models of Oligopoly: Bertrand, Cournot, Stackelberg
Lecture 7. Product differentiation. Welfare Economics: Consumer and Producer Surplus
Lecture 8. A Primer on Game Theory. Competition and Cooperation.
Readings:
Mankiw, Chapters 10,11,15-17. Gibbons, Chapters 1 and 2.
 
Module 4. Special Topics and Applications to International Economics (Lectures 9 and 10)
Lecture 9. Income Inequality and poverty
Lecture 10. Policy applications: Tariffs, import quotas, agricultural subsidies, economics of regulation.
Mankiw, Chapters 18,20, Krugman and Obstfeld, Chapters 7 and 8.
Last updated on 20-05-2014