Microeconomics

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.

• 1Distinguish between positive and normative issues;
• 2Appreciate the purpose of models and the inevitable limitation of every model;
• 3Apply formal models to analyse positive problems and answer normative questions;
• 4Identify the conditions under which markets can be expected to work satisfactorily, and the conditions under which they cannot;
• 5Apply thorough economic reasoning to shed light on ongoing policy debates;
• 6Identify and analyse problems that arise from imperfect information including the phenomenon of adverse selection and the principle-agent problem;
• 7Apply 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;
• 8Apply advanced economic tools and reasoning to inform policy debates;
• 9Identify the properties of standard competitive markets (consumer theory, producer theory, welfare theorems, decision making under uncertainty);
• 10Understand Coase Theorem and its implications, which include transaction costs economics, for environmental policy, and market design.