Introduction to Microeconomics

2020/2021

Academic Year

ENG

Instruction in English

7

ECTS credits

Delivered at:

International College of Economics and Finance

Course type:

Compulsory course

When:

1 year, 1, 2, 4 module

Instructors

Avtonomov, Yury V.

Векилян Армине Вагенаковна

Verem, Irina Y.

Зимрутян Гаянэ Аршаковна

Коваленко Яна Алексеевна

Yurko, Anna

Course Syllabus

Abstract

The Introductory Economics (Microeconomics–1) is a one semester course designed to teach students the main concepts of economics. The course is taught in English, but the main ideas and concepts can be explained in Russian as well during class work. Pre-requisites: good understanding of high school mathematics, including basic calculus.

Learning Objectives

• Provide an analysis of the behavior of individual economic agents, including consumer behavior and demand, producer behavior and supply, price and output decisions by firms under various market structures, factor markets, market failures.
• Explain the core concepts of microeconomics. Students should be able to understand the fundamental concepts and evaluate them using analytical tools.
• Develop students ability to critically evaluate and understand how individual decision-makers behave, microeconomists build models, use data and conduct experiments.
• Enable students to participate in debates on microeconomic issues and policies.
• Creating an academic atmosphere in which students may develop their intellects and skills.

Expected Learning Outcomes

• Explain the role of scarcity, specialization, opportunity cost and cost/benefit analysis in economic decision-making. Ability to use theoretical concepts of Scarcity, trade-offs, find Opportunity cost, and apply Marginal analysis
• Identify the benefits of free trade using the concept of comparative advantage. Ability to use theoretical notions, concepts of Absolute and Comparative advantage and interpret results.
• Identify the determinants of supply and demand; demonstrate the impact of shifts in both market supply and demand curves on equilibrium price and output, define equilibrium, solve equations.
• Calculate supply and demand elasticities, identify the determinants of price elasticity of demand and supply, and demonstrate the relationship between elasticity and total revenue. Ability to find and interpret price Elasticity of Demand, define Determinants of Elasticity, Total Revenue, Income Elasticity, Cross-Price Elasticity of Demand, Elasticity of Supply.
• Summarize the law of diminishing marginal utility; describe the process of utility maximization. Construct Budget Constraint and Utility, Total and Marginal Utility, define Unconstrained Choice, Law of Diminishing Marginal Utility, Constrained Choice, Utility Maximizing Rule.
• Describe the production function and the Law of Diminishing Marginal Productivity; calculate and graph short-run and long-run costs of production, Accounting and Economic Profit, define Explicit and Implicit Costs. Calculate and graph short-run and long-run costs of production.
• Identify the four market structures by characteristics; calculate and graph the profit maximizing price and quantity in the output markets by use of marginal analysis. Ability to define structural characteristics of Perfect competition, Demand, Profit Maximization, Short-Run Profits, Decision to Shut Down, Long-Run Adjustment.
• Determine structural characteristics of Monopoly and Monopolistic competition, Monopoly Demand, Profit Maximization, Efficiency Analysis, solve problems on Price Discrimination.
• Determine structural characteristics of Oligopoly, Industry Concentration, Prisoners’ Dilemma, Collusion.
• Determine the profit maximizing price and quantity of resources in factor markets under perfect and imperfect competition by use of marginal analysis. Define structural characteristics of competitive markets, Marginal Revenue Product, Profit Maximizing Employment, Derived Demand, Determinants of Resource Demand.
• Describe governmental efforts to address market failure such as monopoly power, externalities, and public goods. Ability to define Private and Public Goods, Spillover Benefits and Positive Externalities.

Course Contents

• Introduction to Economics
  Definition of Economics. Economic goods. Scarcity and choice. Opportunity costs and sunk costs. Economic Models. Microeconomics and Macroeconomics. Positive and normative economics
• Comparative Advantage and Exchange Comparative advantage
  Production possibility frontier. Factors shifting the production possibility frontier. Specialization and exchange of goods. Comparative advantage and international trade. Economic systems: market economy, command economy, mixed economy.
• Supply and Demand
  Market. Demand curve and its determinants. Supply curve and its determinants. Equilibrium. Producer surplus and consumer surplus. Deficit and surplus. Free market and price control.
• Elasticity
  Price elasticity of demand. Point and arch elasticity. Elasticity of Demand and Total Revenue of the firm. Cross-Price Elasticity. Price and Income. Elasticity of Demand. Application of elasticity theory. Taxation.
• Consumer Choice
  Preferences. Indifference curves. Marginal rate of substitution. Budget constraint. Consumer choice. Total and marginal utility. Adjustment to price and income changes: income effect and substitution effect. Normal and inferior goods. Substitutes and complements. In-kind and money subsidies
• Producer Theory: Revenues and Costs
  The firm’s production decisions. Revenues, costs and profits. Total, average and marginal revenues. Short run and long run. Fixed and variable costs. Total, average and marginal costs. Profit maximization
• Short-Run and Long-Run. Perfect competition
  Costs in short run and in long run. Firm’s short run and long run output decisions. Economies and diseconomies of scale. Firm’s supply and industry supply. Perfect competition. Its advantages and disadvantages
• Monopoly and Monopolistic Competition
  Types of market structures. Features of monopoly. Profit maximization under monopoly. Comparison with perfect competition: output and price. Social cost of a monopoly. Dead-weight loss. Regulation of monopoly. Natural Monopoly. Regulation of natural monopoly. Price discrimination. Industrial policy. Features of monopolistic competition. Comparison with perfect competition: output and price. Advertising.
• Oligopoly
  Features of oligopoly. Price wars and collusion. Game theory and interdependence. Prisoner’s dilemma. Cartels. Barriers to entry. Other forms of imperfect competition.
• Factor Markets: Labor Market
  Factors (inputs) of production. Derived demand for factors. Demand and supply of labor. Equilibrium in labor market. Trade unions. Minimum wages and unemployment. Differences in wages, economic rent. Human capital. Investments in human capital: costs and revenues. Signaling. Discrimination in the labor market.
• Market Failures. Externalities and Public Goods
  Income distribution. Market failure. Externalities. Public goods. Free-rider problem. Scope for government intervention. Government failure.

Assessment Elements

• final exam
  Retakes are organized in accordance with the HSE Interim and Ongoing Assessment Regulations (incl. Annex 8 for ICEF). Only winter exam is subject to retakes. Grade determination after retakes is done in accordance with ICEF Grading Regulations (par. 5) available at BSc https://icef-info.hse.ru/goto_icef_file_29833_download.html There are no blocking elements.
• Midterm test
  All assignments are in written form. Для студентов она дистанте экзамен проводится в письменной форме с использованием асинхронного прокторинга. Экзамен проводится на платформе https://hse.student.examus.net). К экзамену необходимо подключиться за 10 минут до начала. Проверку настроек компьютера необходимо провести заранее, чтобы в случае возникших проблем у вас было время для обращения в службу техподдержки и устранения неполадок. Компьютер студента должен удовлетворять требованиям: 1. Стационарный компьютер или ноутбук (мобильные устройства не поддерживаются); 2. Операционная система Windows (версии 7, 8, 8.1, 10) или Mac OS X Yosemite 10.10 и выше; 3. Интернет-браузер Google Chrome последней на момент сдачи экзамена версии (для проверки и обновления версии браузера используйте ссылку chrome://help/); 4. Наличие исправной и включенной веб-камеры (включая встроенные в ноутбуки); 5. Наличие исправного и включенного микрофона (включая встроенные в ноутбуки); 6. Наличие постоянного интернет-соединения со скоростью передачи данных от пользователя не ниже 1 Мбит/сек; 7. Ваш компьютер должен успешно проходить проверку. Проверка доступна только после авторизации. Для доступа к экзамену требуется документ удостоверяющий личность. Его в развернутом виде необходимо будет сфотографировать на камеру после входа на платформу «Экзамус». Также вы должны медленно и плавно продемонстрировать на камеру рабочее место и помещение, в котором Вы пишете экзамен, а также чистые листы для написания экзамена (с двух сторон). Это необходимо для получения чёткого изображения. Во время экзамена запрещается пользоваться любыми материалами (в бумажном / электронном виде), использовать телефон или любые другие устройства (любые функции), открывать на экране посторонние вкладки. В случае выявления факта неприемлемого поведения на экзамене (например, списывание) результат экзамена будет аннулирован, а к студенту будут применены предусмотренные нормативными документами меры дисциплинарного характера вплоть до исключения из НИУ ВШЭ. Если возникают ситуации, когда студент внезапно отключается по любым причинам (камера отключилась, компьютер выключился и др.) или отходит от своего рабочего места на какое-то время, или студент показал неожиданно высокий результат, или будут обнаружены подозрительные действия во время экзамена, будет просмотрена видеозапись выполнения экзамена этим студентом и при необходимости студент будет приглашен на онлайн-собеседование с преподавателем. Об этом студент будет проинформирован заранее в индивидуальном порядке. Во время выполнения задания, не завершайте Интернет-соединения и не отключайте камеры и микрофона. Во время экзамена ведется аудио- и видео-запись. Процедура пересдачи проводится в соответствии с нормативными документами НИУ ВШЭ.
• Homework assignments
  All assignments are in written form.
• Class performance
  All assignments are in written form. Class performance includes attendance (5%) and class assignments (5%) at the beginning of each class. Class assignments are graded out of 10. Class assignments may be provided in class or via https://www.socrative.com, all additional information will be provided by the class teacher.

Interim Assessment

• Interim assessment (2 module)
  0.51 * final exam + 0.1 * Class performance + 0.1 * Homework assignments + 0.29 * Midterm test

Bibliography

Recommended Core Bibliography

• Principles of economics, Case, K. E., 2016

Recommended Additional Bibliography

• Principles of microeconomics, Frank, R. H., 2009