Overview

Class Central Tips

Welcome to the Microeconomics course! This course will help you develop an in-depth understanding of the microeconomics principles and market mechanisms. It provides the tools and framework you need to understand the economy at large and decision-making at the individual unit level. In a world with infinite calls on finite resources, the choice is the central problem of public policy. The tools and techniques of economics are critical in addressing it. A microeconomic model can help you analyze and evaluate any problem associated with a choice, be it climate change, inequality, or which color jeans to buy. A choice, however, only makes sense if we are aware of the available options. The (dismal) science of economics helps there too, by hard coding limitations into these optimization efforts. This course helps you dive deep into the economic elements, even if you have little or no previous exposure to formal economics. This course enables you to use the basic framework of incentives, trade-offs, prices, markets, and underlying modern microeconomics to understand the economy at large. The economic theories from the course will help you contextualize the current pressing concerns of public policy, which will further aid in the development of a more precise formulation of policy-relevant problems and potential solutions.

Syllabus

Basic Toolkit

This module introduces you to the essential tools that economists use to think about and analyze problems. You will learn how to identify the components of choice analysis and how to characterize choice as a problem. You will gain an understanding of what incentives and trade-offs are and how opportunity costs measure trade-offs. It will also help you learn how to make sensible decisions when faced with challenging policy options.

Consumer Choice

In this module, you will learn about the consumer choice theory that analyzes how individuals decide how many goods to consume and how much labor to supply. The module will help you comprehend how the economic environment influences these choices. It will also help you explore the income, substitution effect, and labor supply curve, also known as backward bending.

Producer Choice

In this module, you will learn about the producer choice theory that analyzes a firm’s behavior. You will learn how to identify the components of decisions that producers make. You will learn how a producer can maximize profits. It will also help you understand the changes in the firm’s supply and demand choices in response to changes in the economic environment.

Perfectly Competitive Market and Basic Policy Toolkit

In this module, you will gain an in-depth understanding of how prices affect the allocation of scarce resources in the economy. You will learn the techniques for analyzing several markets operating simultaneously. It will help you compare the effects of market changes on partial versus general equilibrium. It will also enable you to comprehend the impact of policy interventions in markets.

Social Choice and Welfare

This module introduces you to the social choice theory, which is the technique for aggregating the preferences of individuals (who make up the society) to reflect society’s collective choices. You will learn how to identify the various aspects of perfectly competitive markets. It will also help you grasp the fundamental theorem of welfare economics and utilitarianism. It will enable you to examine the challenges that can arise when addressing social welfare objectives.

Social Strategic Interactions

In this module, you will learn about strategic games, an equilibrium concept that helps us solve strategic games and their applications. You will learn how to define strategic interactions and comprehend the significance of the movement order. It will enable you to examine the impact of asymmetric information on decision-making. It will also empower you to analyze the principle-agent problem in the market.

Introduction to Imperfect Competition

In this module, you will discover the problems that arise when one deviates from the competitive equilibrium assumption of infinite firms supplying goods in the economy. You will learn how to describe simple models of imperfect competition and the impact of changes in market structure. It will help you explore the strategic interactions between producers. It will also help you understand how to examine the influence of competition policy interventions.