Microeconomics

Introduction

Through the study of microeconomics students will learn the fundamentals of how markets and economic institutions function.

The course is a thorough study on price formation and the production and income distribution in markets. The analysis covers both markets for consumer goods and markets for production resources. There is a special emphasis on the analysis of price trends and industry development in short and long term.

Furthermore, criteria for economic efficiency and high value added are discussed. In particular the course discusses if conditions for individual economic decisions are leading to effective utilisation of community resources. One sees here both the decisions in competitive markets and decisions in markets with limited competition.

Course content

1. Introduction to microeconomic analysis
2. Market economics: supply and demand.
3. Individual choices: available choices, the budget constraint, and preferences.
4. Applications:
   • Choice of labor supply - economic valuation of time.
   • Savings and consumption over time.
   • Effects of changes in prices and income.
   • Demand functions and elasticities.
5. Firms' economic decisions: Technology, costs, and production:
   • ​Technology: The production function.
   • The cost function.
   • Maximization of profit.
   • Short and long run adaptation.
6. Market theory:
   • ​Price formation under different cost structures.
   • The formation of prices and income in the short and long run.
   • Sectoral dynamics.
   • How taxation affects the market equilibrium - prices and production.
7. Economic efficiency.
8. Limited competition: ​Monopolies and market power.
9. Innovation and productivity.