GRA 6626 Economic Theory

GRA 6626 Economic Theory

Course code: 
GRA 6626
Course coordinator: 
Tom-Reiel Heggedal
Course name in Norwegian: 
Economic Theory
Product category: 
MSc in Business - Economics
2017 Autumn
Active status: 
Level of study: 
Teaching language: 
Course type: 
One semester

People, firms and organizations make decisions every single day. Students may have to decide which master program to attend. Education providers may have to decide which master programs to offer and to what price. In these problems, the basic issue it to make a choice from a set of available alternatives, which immediately raises a number of basic questions. How are individuals’ decisions made? What can we know about the market interactions between firms? How do people and firms react to changes in their environment? How are prices in a market determined?

Microeconomics is the basic tool for understanding economic decision-making for people and firms, and for understanding the allocation of resources in complex market-oriented economies. This course provides the students with the concepts and models used in modern microeconomic analysis.

Learning outcomes - Knowledge

The aim of this course is to provide a comprehensive understanding of how people and firms make optimal decisions when:

  1. they are constrained by technology, available resources and information;
  2. and interact with each other in a market.

This more specifically implies that students will gain knowledge about:

  • the characteristics of individual consumer and firm behavior;
  • the characteristics of a competitive equilibrium and the role of economic institutions in shaping the allocation of resources in the economy;
  • basic game theoretical concepts;
  • how to analyze decision-making in static and dynamic settings, with and without asymmetric information;
  • how market failures related to external effects and public goods may give inefficient allocations, and whether firms and/or policy makers can alleviate these problems.
Learning outcomes - Skills

By gaining in-depth understanding of economic decision-making students should be able to identify the economics incentives, objectives and constraints facing people, firms and organizations. This will allow students to analyze and facilitate optimal decision-making by firms and policy makers.

Students should be able to analyze and predict competitive market outcomes such as prices and allocations.

Students should be able to identify and analyze market failures related to external effects and public goods, and to prescribe instruments that may increase profits and welfare.

Students should be able to analyze strategic interaction among people and firms, and thereby develop skills to predict behavior within and between firms and organizations.

Students should be able to design optimal contracts between firms and workers to maximize profits, in situations with and without information problems.

Learning Outcome - Reflection

Student should know how to identify the relevant economic problems and constraints facing decision-makers, and they should develop an understanding for the important mechanism involved.

Students should be able to think critically about the underlying assumptions of the methods used to analyze individual behavior and equilibrium outcomes.

Course content

Main topics are:

  • Consumer theory
  • Profit maximization and market structure
  • Competitive markets and equilibrium analysis
  • Basic welfare economics and various forms of market failure
  • Choice under uncertainty
  • Game theory
  • Asymmetric information and contracts
Learning process and requirements to students

Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class that is not included on the course homepage/It's learning or text book.

Software tools
No specified computer-based tools are required.

All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.

Exam category: 
Form of assessment: 
Written submission
Support materials: 
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
3 Hour(s)
Final written examination with supervision
Exam code: 
Grading scale: 
Examination when next scheduled course
Exam organisation: 
Ordinary examination
Total weight: 
Sum workload: 

A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.