GRA 6031 Microeconomics
What limits or enhances the utilization of scarce resources in an economy or within an organization? Under what conditions should we expect firms and persons who act in isolation to promote welfare for all? How can we facilitate coordination to promote the common good? Microeconomics addresses these questions emphasizing on how incentives and constraints shape decisions. This course introduces students to microeconomic decisions by and within firms. Firms might care only about their own profits, but they are constrained by available production technology, existing regulation, and competitors’ behavior. Decisions about pricing, market entry and investment cannot ignore how customers and competitors will react. Moreover, within the firm itself it is challenging to organize activities efficiently in the first place. The fundamental problem of economic organization within a firm is to coordinate and motivate employees to work in ways that are coherent and advance performance of the entire firm, not just each division or each employee alone. We study firms’ behavior under alternative types of competition, strategic interaction between agents with potentially conflicting interests, how to price products, contractual relationships between and within firms, and the economics of organization.
This course aims to provide students with an understanding of: (i) the economics of competition, monopoly, and oligopoly; (ii) contracts such as product pricing; (iii) basic game theory; (iv) vertical relations between firms; (v) economic organization. Overall, students learn an economic approach to assessing firm decisions and organization of economic activities.
- Students should be able to design price schedules or structure products that maximize firm profits under the constraints posed by market structure and available information and evaluate how these solutions affect social surplus.
- Students should be able to analyze strategic interaction among firms, and thereby develop skills to predict market outcomes such as prices, competition intensity and ultimately firm profitability and social surplus.
- Students should develop skills to design contracts that can be used between and within firms to solve coordination problems and create value to firms and society. As part of this skill, students should be able to assess how the content of contracts is likely to shape decisions made by the contractual parties and the distribution of surplus between them.
Through this course, students should develop basic understanding of how outcomes such as firms’ price setting, social surplus and organizational efficiency are shaped by individual incentives and constraints. The course aims to develop an understanding of strategic interaction. Namely, to evaluate the consequences of a possible decision by one firm or employee, it is necessary to internalize how that decision affects the behavior of other firms and workers. Students should also learn the basic economic challenges that are associated with organizing economic activities when many agents are involved, as in a firm. Throughout the course, students will learn how to design contracts wisely, and some of the main solutions that economics proposes to overcome coordination problems and to promote surplus at the higher level of the firm or society at large.
- Competition and efficiency
- Monopoly and price discrimination
- Game theory and oligopoly
- Vertical relations and contracts
- Organizational economics
Lectures, digital material for each lecture, assignments with seminar sessions.
The exam for this course has been changed starting academic year 2023/2024. The course now has two exam codes instead of one. It is not possible to retake the old version of the exam. Please note new exam codes in the Exam section of the course description.
It is the student’s own responsibility to obtain any information provided in class.
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.
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
|Exam category||Weight||Invigilation||Duration||Support materials||Grouping||Comment exam|
Form of assessment:
|0||No||2 Day(s)||Individual||This mid-term exam has a fixed duration 48 hours, this allows the students to start a timeboxed exam (2 hours) whenever they wish within this period. Retake examination is offered in January (and not in May/June) in the spring semester.|
Form of assessment:
|100||Yes||3 Hour(s)||Individual||Written examination under supervision. Retake examination is offered in January (and not in May/June) in the spring semester.|
|Form of assessment:||Structured test|
|Comment:||This mid-term exam has a fixed duration 48 hours, this allows the students to start a timeboxed exam (2 hours) whenever they wish within this period. Retake examination is offered in January (and not in May/June) in the spring semester.|
|Exam code:||GRA 60315|
|Form of assessment:||Written submission|
|Support materials:|| |
|Comment:||Written examination under supervision. Retake examination is offered in January (and not in May/June) in the spring semester.|
|Exam code:||GRA 60316|
All exams must be passed to get a grade in this course.
Feedback activities and counselling
Prepare for teaching
Student's own work with learning resources
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.