114-0502/05 – Microeconomics B - Intermediate Microeconomics (Mic B)
| Gurantor department | Department of Economics | Credits | 6 |
| Subject guarantor | doc. Ing. Jan Janků, Ph.D. | Subject version guarantor | doc. Ing. Jan Janků, Ph.D. |
| Study level | undergraduate or graduate | | |
| | Study language | English |
| Year of introduction | 2019/2020 | Year of cancellation | |
| Intended for the faculties | EKF | Intended for study types | Follow-up Master |
Subject aims expressed by acquired skills and competences
- interpret modern microeconomics at the intermediate level
- illustrate the consumer behaviour through indifference analysis and connect the basic model of consumer behaviour with consumer decision-making under risk
- formulate the conditions of different market structures and compare models of firm's decision-making on the price and size of the output in terms of perfect and imperfect competition
- analyze the market of inputs and identify perfectly and imperfectly competitive markets of inputs
- classify the types of market failure and evaluate the solutions of market failure
- connect the consumer choice and behaviour of the firm in general equilibrium analysis
Teaching methods
Lectures
Seminars
Individual consultations
Summary
The aim of this course is to give students the conceptual basis and the
necessary tools for understanding modern microeconomics at the intermediate
level.
This course develops the neoclassical theory of optimising behaviour of
consumers and firms. The discussion of consumer theory is followed by a
careful examination of price and output determination under alternative market
structures. The implications of alternative goals of firms are also examined.
After the theory of supply and demand in the output market, the focus turns to
an examination of resource markets.
Compulsory literature:
Recommended literature:
Way of continuous check of knowledge in the course of semester
Credit test - partial tests and final credit test
Exam - written exam
E-learning
Other requirements
Students with an approved Individual Study Plan (ISP) can attend seminars (not obligatory) and they can take a review of their studies in the form of a graded credit test at the end of the term. If they pass the graded credit test, then they can take the exam.
Prerequisities
Subject has no prerequisities.
Co-requisities
Subject has no co-requisities.
Subject syllabus:
1. Introduction, Utility and choice
Utility, assumption about utility, Voluntary trades and Indifference Curves (their characteristics, slope, Marginal rate of substitution in consumption), Illustrating Particular preferences, Budget constraint (slope – marginal rate of substitution in exchange, shifts), Graphic and mathematic demonstration of Utility-maximization.
2. Individual Demand Curves
Demand function, Changes in Income, Income Consumption Curve, Normal Goods, Inferior Goods, Changes in a Good´s Price, Substitution and Income Effect for Various Goods, Changes in The Price of another Good, Substitutes and Complements, Construction of Individual Demand Curve, Shifts in an Individual´s Demand Curve, Consumer Surplus.
3. Market Demand and Elasticity
Construction of the Market Demand Curve, Elasticity, Price Elasticity of Demand, Income Elasticity of Demand, Cross Elasticity of Demand
4. Production
Production function, Marginal Product, Isoquant Analysis, Isoquant maps, Rate of technical Substitution, Returns to Scale, Input Substitution, Changes in Technology, Isocost Line (mathematic and graphic presentation), Cost-Minimalizing Input Choice, The firm´s Expansion Path
5. Firm´s costs, revenues, profit
Basic Concepts of Costs (accounting costs, opportunity costs, economic costs), Cost Curves, Marginal and Average Cost, Distinction Between the Short Run and Long Run, Revenues, Marginal and Average Revenues, Marginal Revenues and Price Elasticity, Economic Profit
6. Uncertainty and Risk
Probability and Expected Value, Risk Aversion, Methods for Reducing Risk, The economics of Information (Certainty line, ISO EX-line, Indifferent curves).
7. Perfect Competition
Timing of a Supply Response, Pricing in the Very Short Run, Short-Run Supply, Shifts in Supply and Demand Curves, Long Run (Equilibrium Condition, Profit Maximization, Entry and Exit, Long-Run Equilibrium), the Constant Cost Case, Increasing Cost Case, Decreasing Cost Case and Long-Run Supply, Applying the Competitive Model
8. General Equilibrium and Welfare
A Perfectly Competitive Price System, Pareto model, Efficiency for Exchange, Efficiency for production, Exchange-Production Efficiency, The Edgeworth Box Diagram, PPF.
9. Monopoly
Causes of Monopoly (Technical Barriers to Entry, Legal Barriers to Entry), Profit Maximization, Monopoly Profits, Monopoly Supply Curve, Another Monopoly Goals, Monopolistic Distortions and Transfers of Welfare, Price Discrimination (I., II. III. Degree), Natural Monopolies
10. Oligopoly
Concept of Oligopoly, Barriers to Entry, Cournot Model, Bertrand Model, Other Model of Oligopolies
11. Monopolistic Competition
Concept of Monopolistic Competition, Demand Curve, Barriers to Entry, Compering with Perfect Competitive Firm, Sector Efficiency, Chamberlin Model
12. Pricing in Input Markets
Marginal Productivity Theory of Input Demand, Input Supply, Equilibrium Input Price Determination, Monopsony, Bilateral Monopoly,
13. Labour Market and Capital Market
Allocation of Time, Income and Substitution Effects of a Change in the Real Wage Rate, Labour Supply, Demand for Labour
Individual Savings – The Supply of Loans, Capital, Investments, Interest Rate, Firm´s Demand for Capital and Loans, Determination of the real Interest Rate, Efficiency of Investment (appreciation methods), PV, FV, NPV, Perpetuita
14. Market Failure
Asymmetric information (causes, consequences for market), Moral Hazard, Adverse Choise, Signalling, Externalities, Definition, Externalities and Allocational Efficiency, Property Rights, Bargaining, Coase Thorem, Public Goods, Characteristics, Derivation of the Demand for a Public Goods
Conditions for subject completion
Occurrence in study plans
Occurrence in special blocks
Assessment of instruction