(Created 2010-07-25.)

MICROECONOMIC ANALYSIS | EXTF50 |

**Aim**

The aim of the course is to provide deepened insights into microeconomic theory and its applications.

*Knowledge and understanding*

For a passing grade the student must

· understand and be able to describe the underlying principles guiding optimal individual consumption decisions under uncertainty,

· understand and be able to describe the underlying principles guiding the optimal production decisions by firms in both the short run and the long run,

· understand and be able to describe the underlying principles behind general equilibrium in an exchange economy,

· understand the basic problems faced by a monopolist in terms of pricing and price discrimination,

· understand simple instances of quantity competition (the Cournot model).

*Skills and abilities*

For a passing grade the student must

· formulate and solve the utility maximisation and expenditure minimisation problems faced by an individual,

· formulate and solve the cost minimisation and profit maximisation problems faced by a firm,

· analyse the basic problems faced by a monopolist in terms of pricing and price discrimination,

analyse simple instances of quantity competition (the Cournot model).

*Judgement and approach*

For a passing grade the student must

**Contents**

The course deals primarily with economic decision making concerning consumption and production. The course starts with a treatment of the underlying principles that guide an individual's optimal consumption decisions under both certainty and uncertainty. This treatment leads to the utility maximisation and expenditure minimisation problems faced by an individual which, in turn, determine individual demand. Next, there is a treatment of the underlying principles guiding the optimal production decisions by firms in both the short run and the long run. This treatment leads to the cost minimisation and profit maximisation problems faced by a firm which, in turn, determine firm supply. There is also a treatment of general equilibrium in a simple exchange economy, and a treatment of the problems faced by a monopolist in terms of pricing and bundling ("price discrimination"). The course is concluded by an extension of the monopolist's problem to the Cournot model.

**Literature**

Varian, Hal (2006): Intermediate Microeconomics, a modern approach, seventh edition

Supplementary material

Recommended literature: Andersson, Tommy (2007): Föreläsningsanteckningar till Mikroekonomisk analys B, mimeo