Faculty of Economics and Business

BACHELOR IN ECONOMICS SECOND YEAR Course

Microeconomics III

Code

802355

Module

Economic Analysis

Area

Microeconomics

Nature

Compulsory

Credits

Attendance

3,6

6

Non Attendance

2,4

Year

2

Semester

4

COORDINATION DEPARTMENT Fundamentos del Análisis Económico I

COORDINATOR AND CONTACT Lourdes Moreno; [email protected]

SYNOPSIS BRIEF DESCRIPTION Theory of Production, Costs, and Analysis of Competitive and Non-competitive Markets.

PRE-REQUISITES It is strongly recommended that the student has taken (and passed) the courses of Microeconomics I and II, as well as Mathematics I, II and III.

OBJECTIVES To get familiar with the methodology used in economic theory and with the models of economic behaviour and factors determining market prices. In particular, this subject focuses on the theory of production and costs and the analysis of competitive and non-competitive markets.

COMPETENCES General: CG1, CG2, CG3, CG4 Transversal: CT1, CT2, CT3 Specific: CE3, CE6, CE8, CE9

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LEARNING METHODOLOGY A mixed methodology of teaching and learning will be used in all educational activities with the aim of encouraging students to develop a collaborative and cooperative attitude in the pursuit of knowledge.

TOPICS COVERED (Syllabus) Production in the long run. Costs in the long run. Competitive Firm Supply and the Competitive Markets Equilibrium. Monopoly. Introduction to Game Theory. Oligopoly.

TEACHING ACTIVITIES DISTRIBUTION Theoretical lessons

% of Total Credits

35%

Practical lessons

% of Total Credits

10%

Other Activities

% of Total Credits

55%

Personalized & Group Tutoring: 10%, Assessment Activities: 5%,Individual & Group Homework Assignments: 15%, Hours to Study: 25%

ASSESSMENT Exams

% Share of Final Grade

50%

% Share of Final Grade

40%

% Share of Final Grade

10%

Final exam

Other Activities Cases, quizzes and similar

Other Activities Active participation in the classroom

EVALUATION CRITERIA The final exam will have two parts: a multiple choice quiz and some problems. A minimum threshold grade will be established for the problems part as a requisite to pass the course. In addition, and independently of the score of the other activities, a score of 4 in the final exam is

Faculty of Economics and Business

required to pass the course. ABOUT “NOT TAKEN” FIRST ATTEMPT (MAY) If you don’t want to take the examination opportunity in May, you must not participate in the continuous evaluation activities that take place from the 10th week onwards AND not take the final exam in May. Otherwise, you will be marked according to the percentages fixed above. SECOND ATTEMP (JUNE) If you don’t take the final exam in June, you will be marked as “not taken” whether you have taken part in the continuous evaluation during the course or not. If you take the final exam in June, you will have a grade resulting from the application of the percentages fixed above.

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TIMETABLE Week 1

Chapter Chapter 1. Production in the Long Run Production with two inputs. Isoquants. The Marginal Rate of Technical Substitution. Typical Production Functions in Economics: Cobb-Douglas, Perfect Complements and Perfect Substitutes. Returns to Scale

2

Chapter 2. Costs in the Long Run The cost-minimizing problem. Deriving the cost function from the production function in the short and the long run. The expansion path. The conditional factor demands. Deriving the Cost Function with Cobb-Douglas, Perfect Complements and Perfect Substitutes technologies.

3

Work in the classroom Presentation of the course and realization of exercises by the teacher with active participation of the students.

Work out the classroom To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Exercises, cases, problems done by the students. Assessment Activities.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Presentation of the course and exercises explained by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Presentation of the course and realization of exercises by the teacher with active

To study the theory. Realization of exercises proposed in class and

SEMINAR 1

4

Chapter 3. The supply of the competitive firm and the market equilibrium Maximizing profits in terms of inputs. Maximizing profits in terms or output. The individual supply curve and the market supply curve. The supply curve associated to U-shaped cost functions. The market equilibrium in the short run and the long run.

5

Chapter 3. The supply of the competitive firm and the market

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equilibrium

participation of the students.

exercises problems

Exercises, cases, problems done by the students. Assessment Activities. Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems. To study the theory. Realization of exercises proposed in class and exercises in the collection of problems.

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Exercises, cases, problems done by the students. Assessment Activities.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems

Taxes and subsidies and their effect on the long-run competitive supply and the competitive equilibrium. 6 SEMINAR 2 7

Chapter 4. Imperfect competition I: Monopoly and pricing with market power.

in

the

collection

of

Monopoly. Monopolist’s equilibrium. Equilibrium in terms of elasticities. The effect of a tax. Social costs of monopoly. Measuring monopoly power. 8

Chapter 4. Imperfect competition I: Monopoly and pricing with market power. Multiplant monopoly. Price discrimination. Introducing second degree price discrimination. First degree (or perfect) price discrimination. Third degree price discrimination. Price regulation in monopoly. Two-part tariff.

9 SEMINAR 3 10

Chapter 5. Introduction to Game Theory. Basic elements of Game Theory. Strategic interaction. Cooperative and non-cooperative games. Dominant Strategies. Maximin Strategies. Nash Equilibrium. Dominant Strategy Equilibrium. The Battle of the Sexes. The Prisoner’s Dilemma. Dynamic Games.

Faculty of Economics and Business

Sequential Equilibrium. Credible and Non-credible threats. 11

Chapter 6. Imperfect Competition II: Oligopoly and Monopolistic Competition.

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems.

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems.

Presentation of the course and realization of exercises by the teacher with active participation of the students.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems.

Exercises, cases, problems done by the students. Assessment Activities.

To study the theory. Realization of exercises proposed in class and exercises in the collection of problems.

Oligopoly and its connection with Game Theory. The Cournot (duopoly) model. Reaction curves and equilibrium. Comparing monopoly, Cournot and perfect competition solutions. 12ª

Chapter 6. Imperfect Competition II: Oligopoly and Monopolistic Competition. Cartels. Collusion and instability. Price competition. The Bertrand model with symmetric and asymmetric costs. Price competition with differentiated product.

13ª

Chapter 6. Imperfect Competition II: Oligopoly and Monopolistic Competition. Leadership in quantities. The Stackelberg model. Leadership in prices. Entry games and threts. Introduction to monopolistic competition.

14ª SEMINAR 4

Faculty of Economics and Business

RESOURCES BASIC BIBLIOGRAPHY Pindyck, R.S. and Rubinfeld, D.L. (2009): Microeconomics. Pearson-Prentice-Hall.

COMPLEMENTARY BIBLIOGRAPHY Nicholson, W. and Snyder, C. (2008): Microeconomics: Basic Principles and Applications. Tenth edition. Thomson.

OTHER RESOURCES