2289.19 - Intermediate Microeconomics 2

2289.19

Intermediate Microeconomics 2

7.5

Principles of Microeconomics, Mathematics for Economists 1 and 2.

The purpose of the course is to make the students able to read and understand basic economic journal papers, and to use basic microeconomic theory and method in analysis of practical economic questions.

Micro 2 analyses formal, mathematical models of microeconomic questions. The course emphasises training the students independently to use of microeconomic theory in analysis of economic issues. Skeiðið leggur dent á at venja tey lesandi í sjálvstøðugari nýtslu av mikrobúskaparfrøði í greiningum av búskaparligum spurningum. While Micro 1 consisted of a basic treatment of economic models with perfect competiton, Micro 2 widens and nuances this treatment by analysing market failures stemming from market power, strategic interaction, externalities, public goods, or asymmetric information which by construction are excluded from models with perfect competition, and what can be done about these market failures.

3 lectures and 2 tutorials per week for 14 weeks. In weekly tutorials, the students present their solutions to assigned exercises from the textbook.

The student should become proficient in analysis and use of the theoretical concepts and mathematical models presented during the course in order to: • Analyse monopoly behaviour • Analyse strategic interaction with ‘normal form games’ and to find Nash-equilibria • Analyse strategis interaction with ‘strategic form games’) and find subgame perfect equilibria • Analyse firm behaviour in markets with oligopolistic competition using the models of Cournot, Bertrand ella Stackelberg • Analyse consumer and producer behaviour under uncertainty • Analyse consumer and producer behaviour, and market equilibria in factor markets • Analyse how externalities impact consumer and producer behaviour, and when and how government can mitigate market inefficiencies stemming from externalities • Analyse challenges with respect to production and use of public goods • Analyse market situations with asymmetric information – including ‘hidden action’ and ‘hidden characteristics’ problems in markets

Written 3 hour mid-term exam, which counts for 25% of the total grade. Written 3 hour final exam, which counts for 75% of the total grade.

External

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Jóannes Jacobsen