Economic Theory I
- The goal of the course is to teach students the economic way of thinking about a business decision and strategies. Objectives of this course are: - to introduce a comprehensive set of tools required for manageres to make efficient business decisions; - to provide a real-world examples and necessary decision-making skills.
- Use marginal analysis to determine the optimal level of a production.
- Identify the factors in a consumer demand and a producer supply, and determine a market equilibrium graphically and algebraically.
- Apply basic estimation techniques in determining demand and supply functions.
- Calculate different elasticities and use elasticity concepts to determine the optimal price-quantity combination to maximize revenues and profits.
- Determine and analyze a production and costs in the short and long run.
- Identify the different types of market structures and determine how a given market structure impacts on a firm’s quantity and pricing decisions.
- Analyze the optimal quantity and pricing decisions of firms in different market structures (perfect competition, monopoly, monopolistic competition) to achieve profit maximization.
- IntroductionFounding Principles. Scarcity, choice, marginal analysis. Tradeoffs and Opportunity Cost. Types of Economics. Microeconomics vs. macroeconomics. Positive economics vs. normative economics. Production Possibilities Graph. Straight vs. bowed PPF. Circular Flow Model. Product market, Factor market, and Public sector.
- Demand forecastingDemand. Law of demand. Market demand curve. Determinants of demand. Substitutes and complements. Supply. Law of supply. Market supply curve. Determinants of supply. Equilibrium and Efficiency. Surplus, shortage, consumer surplus, producer surplus. Government Policies. Price floors and Price ceilings. Тaxes, Subsidies. Elasticity. Price, Income, and Cross Price elasticity of demand. The total revenue. price, cross price elasticity of supply. Consumer Choice. Law of diminishing marginal utility. Utility theory, marginal analysis, total utility, marginal utility, diminishing marginal utility, utility maximization, consumer equilibrium.
- Production and cost analysisProduction. Total product, average product, marginal product. Economists vs. Accountants. Explicit and Implicit costs. Economic costs and profits Costs of Production. Fixed Costs, Variable costs, and Total costs. Per-unit costs (AVC, AFC, ATC). Marginal costs and Marginal revenue. Law of Diminishing Marginal Returns. Increasing returns. Decreasing returns. Negative returns. Characteristics of Perfect Competition. Price takers. Firm vs. industry (market). Short-run (profit or loss). Long-run equilibrium (New firm enter and exit). Normal profit. Shutdown decision.
- Market structure and pricing theoryMarket structure characteristics, perfect competition, monopolistic competition, monopolies, oligopolies. Characteristics of Monopolies. Dead-weight loss. Price discrimination. Characteristics of Monopolistic Competition. Long-run equilibrium. Excess capacity. Non-price competition. Product differentiation. Characteristics of Oligopolies. Collusion and cartels.
- Interim assessment (2 module)0.25 * control test + 0.4 * final exam + 0.1 * home assesment + 0.25 * quizzes
- Martin Kolmar. (2017). Principles of Microeconomics. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sptbec.978.3.319.57589.6
- Stiglitz, J. E. (2016). Principles of Economics (Vol. Second edition). Milton, Qld: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1650548
- Acemoglu, D., Laibson, D. I., & List, J. A. (2016). Economics, Global Edition (Vol. Global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1419560
- Henning Schwardt. (2017). The Path to a Modern Economics. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sprbok.978.3.319.52785.7
- Lipsey, R., & Chrystal, A. (2015). Economics. Oxford University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.oxp.obooks.9780199676835