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Regular version of the site
Master 2019/2020


Type: Bridging course (Politics. Economics. Philosophy)
Area of studies: Political Science
When: 1 year, 1 module
Mode of studies: offline
Instructors: Daur Zukhba
Master’s programme: Политика. Экономика. Философия
Language: English
ECTS credits: 3

Course Syllabus


This course aims to make graduate students familiar with the major concepts, theories, and debates in basic economics, bough micro and macro theory. The course is intended to help a student to enter the universe of economics and its applications and interdisciplinary relations in particular with politics and philosophy. This allows students with different levels of basic education and background to prepare for further effective study of the courses in PPE program.
Learning Objectives

Learning Objectives

  • Goal of this course is to make students familiar with the major concepts, theories, and debates in basic economics, bough micro and macro theory. Learning Objectives - to provide students with economic way of thinking; - to present basic theories of economics; - introduce the students to core concepts and standard methodological tools that lay the foundation of modern economics and political analysis and decision making.
Expected Learning Outcomes

Expected Learning Outcomes

  • analyzes the impact of opportunity costs; builds production possibility curve (PPC).
  • determines (analytically and graphically) the optimal consumer bundle
  • Build individual demand curves, "income - consumption" and "price - consumption".
  • determines the value of individual and market supply and demand; analyzes their dynamics under the influence of price and non-price determinants; calculates price and cross elasticity of supply and demand
  • calculates production costs and carries out economic justifications for choosing the minimum effective size of the enterprise and the optimal capacity of the existing enterprise
  • calculates the optimal output of a competitive and non-competitive enterprise; substantiates the pricing policy of the enterprise in conjunction with the degree of product differentiation and the industry-wide situation
  • applies the concept of general economic equilibrium. Including uses the Pareto efficiency concept and the Edgeworth box model
  • determines injections and leakages in the circular flow model; on the basis of macroeconomic identities calculates nominal and real macroeconomic indicators
  • on the basis of the AD-AS model determines equilibrium indicators taking into account supply and demand shocks
  • determines equilibrium parameters of a macro-system based on the Keynesian Cross model in a recessionary and inflationary gap, calculates the multiplier and propensity to consume and to save
  • analyzes the influence of the relationship of such macroeconomic variables as interest rate, money supply, price level, demand for cash, demand for goods, production level of the economy. reveals the consequences of changes in one or more of these values on the shift of the intersection point of the LM and IS curves, the level of production (and income) in the economy, as well as the corresponding interest rate level.
  • calculates indicators of economic growth; compares monetary and fiscal instruments of stabilization policy and analyzes the consequences of their application on real statistical material
  • calculates indicators of employment and unemployment, loss from unemployment
  • applies the basic theoretical concepts to explain the measures of the implemented macroeconomic policy, as well as to develop possible proposals for its development
  • uses the understanding of the knowledge frontier achieved by modern economic theory and the prospect of its expansion to solve applied issues related to ethics, state and economic policy
Course Contents

Course Contents

  • Topic 1. Economics as theory and as applied science. Thinking like an economist.
    What is studying economics? Subject and methods of economics. Principles of Economics. Why economics is one of the potentially practice oriented and applied sciences. Economic theory and economic policy. The role of economic agents' expectations. Positive and normative analysis. Rational behavior. Micro- and Macroeconomics Aggregation. Model of circular flows. Free and economic goods. Factors of production. Income of the factors of production owner’s. The limitation (scarcity, rarity) of the factors of production and the immensity of the needs: the problem of choice. Production possibility frontier and social choice. Opportunity cost. Comparative advantage. The division of labor, specialization and exchange/trade. Basic economic questions and answers on them in different economic systems. Bases of economic theory: a new economic rationality, utility function; uncertainty and risk; time and cycles; equilibrium and disequilibrium; interpretation of the measurements and test of the theory; and information theory. Interdisciplinary relations: economic theory and philosophy, mathematics, semiotics, linguistics, logic, psychology, political science, law, history. Stages of development of economic theory’s methodology: early positivism, dialectics from abstract to concrete, late positivism, post positivism. What methodology is needed to economists? Revolutions in the development of economic theory. What does it mean: think like an economist?
  • Topic 2. Is Marginalism an applicable theory?
    The utility in economic theory and the problem of its measurement. The concept of the needs of their types. The economic goods and their classification. The concept of utility, its characteristics and the way to achieve it. Total and marginal utility. Utility function as the relationship between the number of units consumed and the level of benefits of utility, which is achieved by the consumer. The law of diminishing marginal utility of goods. The law of diminishing marginal utility of the good, its graphic representation. Optimization of consumption in a plurality of consumable goods. The impact on consumer behavior of budget constraints and price. The essence of rational consumer choice. Equilibrium of the consumer with the cardinal position. The concept of consumer equilibrium. Model kit consumption goods. Gossen’s laws. The concept of demand for goods. Individual demand for good. Topic 2. Consumer’s Choice. Indifference curves and its characteristics. The marginal rate of substitution for goods. Budget line. Budget constraint. Consumer reaction to changes in income and prices of goods. "Income - Consumption" model. Engel curve. Engel's Law. "Price - Consumption" model.
  • Topic 3. Demand, supply and their interaction
    Demand and demand law. Elasticity. Supply and the law of supply. The interaction of supply and demand at the micro level. Case of innovative products.
  • Topic 4. Firm’s theory
    Income-Production Curve. Production Function. Average and Marginal Productivity. Isoquant curve. Isoquant Maps. Rate of Technical Substitution (RTS). Cost of production. Total revenue. Fixed costs (FC). Variable costs (VC). Total costs (TC). Total profit. Average and Marginal costs revenue and profit. Relationship between AC, AVC and AFC. Breakeven point. Firm as decision making center. The nature and behavior of firms. Production function/ Isoquant maps. Cost of production. Profit maximization. Alternative microeconomic models of the firm. Revenue maximization. Contracts within firms. Organization of firms. Contracts with workers. Contracts with managers. Nonprofit organizations. Owners equity maximization.
  • Topic 5. How do work market structures
    Perfect competition. Market perfect competition model and its characteristics. The market of perfect competition in the short and long run. Market power and monopoly. Monopsony. Monopoly’s demand curve. Simultaneous selection of a monopolistic price and volume of production. Price discrimination. The rule of profit maximization. Market of monopolistic competition. Non price competition Oligopolistic market. Imperfect competition: a game-theoretic approach.
  • Topic 6. General equilibrium of competitive markets and its failure
    The concept of general equilibrium. Feedback effect. General equilibrium’s system of equations. Walrasian model. The effectiveness of the exchange. "Edgeworth Box." Curve of contracts. Pareto efficiency.
  • Topic 7. The Keynesian revolution as a response to market failures
    The main macroeconomic identities. Classical vs Keynesian approach. The necessity for the Keynesian revolution. The concept of macroeconomic policy and its role in the practice of macroeconomic activity.
  • Topic 8. Aggregate Demand and Aggregate Supply
    "Aggregate Demand - Aggregate Supply» (AD-AS) as one of economic equilibrium models. The equilibrium price and the equilibrium level of production. The mechanism to achieve balance in separate segments of the aggregate supply curve. Changes in balance caused by the shocks of aggregate demand and aggregate supply.
  • Topic 9. Keynesian and classical concept of macroeconomic equilibrium.
    Consumption and savings. Investments and savings factors. The aggregate demand on investments. Multiplier. Keynesian model of macroeconomic equilibrium. Conditions of model building. A simplified equilibrium model "Keynesian Cross".
  • Topic 10. IS - LM model
    Structure and equilibrium of national market. Mechanism of its realization. Model IS - LM and its application for the development and analysis of macroeconomic policy.
  • Topic 11. Economic Growth and Cycles
    Economic growth and economic development. Factors and limit of economic growth. Modelling of economic growth: «AD - AS» model and the production possibilities curve. Macroeconomic models of economic development cycles. Extensive and intensive growth. Models of exogenous and endogenous economic growth. Economic growth in the different countries. The policy of stimulating economic growth.
  • Topic 12. Employment policy and the role of regulation in ensuring labor market equilibrium.
    Employment, Unemployment and Underemployment and potential level of production. Okun's Law and the loss of economy from cyclical unemployment. Interrelation of inflation and unemployment. Phillips curve. Employment policy and the role of government to ensure labor market equilibrium.
  • Topic 13. Government macroeconomic policy
    State at economic cycle. Theories of macroeconomic regulation. The classical theory. Keynesian theory. Monetarism. Applications of governmental macroeconomic policy
  • Topic 14. Economic theory frontiers
    Adverse selection. The risk of bad faith. Overcoming information asymmetry. Transaction costs. Game theory and competitive strategy. Choice under uncertainty. The balance of the consumer in the face of uncertainty. Exchange risk (exchange model under uncertainty) Cognitive constraints and the behavior of actors. Microeconomics of innovations.
Assessment Elements

Assessment Elements

  • non-blocking classroom written work (15 minutes)
  • non-blocking homework: short essays
  • non-blocking cases
  • non-blocking tests
  • non-blocking tasks
  • non-blocking exam
Interim Assessment

Interim Assessment

  • Interim assessment (1 module)
    0.15 * cases + 0.15 * classroom written work (15 minutes) + 0.45 * exam + 0.15 * homework: short essays + 0.07 * tasks + 0.03 * tests


Recommended Core Bibliography

  • A short course of economics, Blake, D., 1993
  • Economics, Begg, D., 2014

Recommended Additional Bibliography

  • Economics : an analytical introduction, Witztum, A., 2005