APPLIES TO ACADEMIC YEAR 2013/2014

SØK 3520 Microeconomics

Responsible for the course
Christian Riis

Department
Department of Economics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
Norwegian

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.

Learning outcome
Acquired knowledge
Students will understand the basic relationships between individual economic decisions and the social consequences in different market situations. Students will understand the basic principles of how changes in some markets have ripple effects to other markets. Students should also understand the distinction between descriptive and normative theory.
 
Acquired skills
Students will master the basic techniques of financial analysis: They should be able to master the basic economic model system, and understand the distinction between exogenous and endogenous variables. They will also be able to formulate economic optimise problems and solve them analytically.

Reflection
Students will be able to identify the welfare and distributional consequences of market processes. They will be encouraged to be aware of trade-offs between market efficiency and other considerations that are not captured by market analysis.

Prerequisites
MET 2910 Mathematics or equivalent

Compulsory reading
Books:
Riis, Christian, Espen R. Moen. 2012. Moderne mikroøkonomi : med digital arbeidsbok. 2. utg. Gyldendal akademisk

Recommended reading

Course outline

1. Introduction to Microeconomic Analysis
2. Market equilibrium: supply and demand
3. Consumer Behaviour
   • Budget constraint and consumer preferences
   • Effects of price and income changes
   • Demand functions and elasticities
4. Firm behaviour
   • Product function
   • The cost function
   • Profit maximisation
   • Substitution
   • The adjustment in the short and long term
5. Market Theory
   • Price formation under various cost structures
   • Price and income generation in the short and long term
   • Industrial dynamics
6. Economic efficiency
7. Limited competition
   • Monopolies and market power