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The objectives of the subject are to introduce new techniques of microeconomic analysis; and to study applications of microeconomic theory to a range of situations involving behaviour of consumers and firms, and market interaction. Topics include game theory and oligopoly, economics of information, behaviour under uncertainty and general equilibrium analysis.
Intended learning outcomes
On successful completion of this subject, students should be able to:
- Distinguish between positive and normative issues;
- Appreciate the purpose of models and the inevitable limitation of every model;
- Apply formal models to analyse positive problems and answer normative questions;
- Identify the conditions under which markets can be expected to work satisfactorily, and the conditions under which they cannot;
- Apply thorough economic reasoning to shed light on ongoing policy debates;
- Identify and analyse problems that arise from imperfect information including the phenomenon of adverse selection and the principle-agent problem;
- Apply game theory techniques to analyse situations with strategic interactions, such as competition between firms with market power, provision of public goods, or between generals at war;
- Apply advanced economic tools and reasoning to inform policy debates;
- Identify the properties of standard competitive markets (consumer theory, producer theory, welfare theorems, decision making under uncertainty);
- Understand Coase Theorem and its implications, which include transaction costs economics, for environmental policy, and market design.
- High level of development: Economic reasoning; appreciation of the use of models; purpose and limitations of models; evaluate models; use models to analyse positive questions and to make normative evaluation of alternative policies;
- Moderate level of development: Mathematical analysis, written communication; critical thinking; problem solving; and receptiveness to alternative ideas.
- Some level of development: Independent thinking; solving new problems; constructing a coherent argument; apply economic reasoning to a variety of practical problems.
Last updated: 20 February 2024