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
2018 Autumn
Active status: 
Level of study: 
Teaching language: 
Course type: 
One semester

People and firms 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 at 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? How should we expect firms to interact in a given market setting? How do people and firms react to changes in their environment?

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

Learning outcomes - Knowledge

The aim of this course is to provide a comprehensive understanding of markets and 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.

More specifically, students will gain fundamental knowledge about:

  • Choice theory;
  • Market equilibrium and efficiency;
  • Game Theory.
Learning outcomes - Skills

Students should be able to:

  • Predict individual choice and market outcomes such as prices;
  • Identify market failures related to external effects and public goods;
  • Understand the basics workings of insurance markets and of the banking system;
  • Decide on optimal investment under uncertainty; 
  • Analyze strategic choices of firms;
  • Design optimal contracts between a principal and an agent;
  • Simulate basic microeconomic models using MatLab.
Learning Outcome - Reflection

Student should develop an understanding for the mechanisms involved in decision-making processes.

Students should be able to critically assess the underlying assumptions of the methods used.

Course content

Main topics are:

  • Choice theory
  • Equilibrium analysis
  • External effects
  • Public goods
  • Uncertainty
  • Game Theory
  • Information problems
Learning process and requirements to students

Students are encouraged to participate in complementary lab experiments where students actively make choices in virtual markets contexts.

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 It'sLearning or text book.

Software tools

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 categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Form of assessment:
Written submission
Exam code:
Grading scale:
Grading rules:
Internal and external examiner
Examination when next scheduled course
100Yes3 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Final written examination under supervision
Exam category:Submission
Form of assessment:Written submission
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:3 Hour(s)
Comment:Final written examination under supervision
Exam code:GRA66264
Grading scale:ECTS
Resit: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.