Economics is the social science that deals with the allocation of limited resources to satisfy unlimited human wants. Broadly speaking, economics is composed of two branches, microeconomics and macroeconomics. Microeconomics studies the economic behaviour of individual economic decision makers such as consumers, workers, firms, or managers. It also analyses the interaction and behaviour of groups of these individuals such as households, industries, markets, labour unions, and trade associations.
We will be looking at decision-making and markets when all agents have perfect information about goods and prices and individual agents cannot affect prices through their own actions. We will begin with an overview of the equilibrium behaviour of competative markets and the main tools used by economists to analyse such markets: the demand curve, the supply curve and the notion of market equilibrium. The rest of the term will be spent on understanding how market demand and supply curves come about. We build up a model of consumer preferences and consumer choice, which can be used to derive a market demand curve. Before addressing issues of market supply, we turn briefly to the study of intertemporal choice and behaviour under uncertainty by consumers and other economic agents. We then move on to the theory of production and firm behaviour to derive a market supply curve. We can then turn to the concept of market equilibrium with our more detailed understanding of demand and supply in order to derive properties of market behaviour. This type of analysis is called "partial equilibrium" because it characterises behaviour in a single market.
Microeconomic analysis relies on a small set of very powerful analytical tools: constrained optimisation analysis, equilibrium analysis, and comparative statics analysis. This module attempts to help you master these tools by presenting their graphical, algebraic and logical mechanics as well as by illustrating their use in many different contexts throughout the module.
The module provides students with the following employability skills. Academic skills (literacy, numeracy, ICT Skills) are enhanced through essay writing, mathematical problem solving and the use of ICT equipment. Communication skills are enhanced through various forms of assessment and class participation. Personal development planning (target setting and time management) is also promoted.
- Module Supervisor: Albin Erlanson