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Microeconomics-II

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Course Type Course Code No. Of Credits
Discipline Core NSUS1EC107 4

Course Coordinator and Team:                  SES Faculty

Email of course coordinator:                       pcbabed@aud.ac.in  

Pre-requisites:                                               No

Course Description: 

This course builds on Principles of Economics and Microeconomics I, and develops basic ideas of individual decision making introduced in those two courses and applies them to the study of market. The students are introduced to the different market structure, strategic aspects of decision making, theory of general equilibrium and welfare. The purpose of Microeconomics II is to give students a thorough understanding of the principles of economics that are used to analyse the behaviour of individual decision makers, both consumers and producers, within the larger economic system. This course, along with Microeconomics I and Macroeconomics I and II creates the basic analytical framework for other core and elective courses of the BA Economics Programme like International Economics, Development Economics, Public Economics, and it is also a prerequisite for elective courses like Topics in Microeconomics.

Course Objectives:

  • To develop an understanding about the different market structures such as Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly (collusive/non-collusive).
  • To develop their ability to understand the key aspects and dimensions related to strategic decision making and covers topics such as dominant strategies, Nash equilibrium, repeated games, and sequential games
  • To describe the notion of efficiency and concepts of Pareto optimality using general equilibrium approach.
  • To explain the key aspects of the theory of welfare (such as first and second theorem of welfare economics, and fair allocation).
  • To develop insights about the limitations of the market mechanism and the relevance and significance of public intervention.

Course Outcomes: 

  • Explain the methodology used in mainstream economics to analyse and evaluate markets in particular and institutions in general.
  • Develop a comprehensive and rigorous understanding of the economic approach for micro-level analysis of strategic behaviour.
  • Illustrate critical perspective on the use of the partial and general equilibrium approach to the analysis of economic phenomenon.
  • Explain the limitations of market mechanism and causes of its failures in the efficient allocation of resources.
  • Assess the role of state and examine potential outcomes of state interventionusing suitable analytical framework.

Brief description of the modules: 

Module 1 Market Structures: This module introduces students to the different market structures such as Perfect competition, Monopoly, Monopolistic Competition and Oligopoly (collusive/non-collusive). Besides familiarising students about differences in their fundamental characteristics, analytical understanding of their functional aspects is covered comprehensively.

Module 2 Game Theory and Competitive Strategy: This module introduces the basic concepts of game theory. It develops their ability to understand the key aspects and dimensions related to strategic decision making and covers topics such as dominant strategies, Nash equilibrium, repeated games and sequential games.

Module 3 General Equilibrium: This module focuses on the notion of efficiency and introduces students to the concept of Pareto optimality using general equilibrium approach. It covers several key aspects of theory of Welfare and acquaints them with concepts such as social welfare function, equity, and fair allocation.

Module 4 Market Failure: This module focusses on the limitations of market mechanism and encourages students to understand the various situations in which it fails to achieve an efficient outcome. Further, the case of externalities and public goods (or bads) as illustrations of market failure are covered in great detail.

Assessment Plan

S.No

Assessment

Weightage

1

Class Test

30%

2

Assignment

30%

3

End Term

40%

References:

  • Hall R. Varian (2014) Intermediate microeconomics with Calculus, 1st ed. W. W. Norton & Co.
  • R. Pindyck, D. Rubinfeld (2013) Microeconomics, 8th ed, Pearson.
  • Reference books
  • Arredondo, F. Garcia (2020) Intermediate Microeconomic Theory - Tools and Step-by-Step Examples, MIT Press.
  • Snyder, C., Nicholson, W. (2008). Microeconomic Theory, 10th ed. Cengage Learning.

 

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