. - Microeconomics
PROFESSORS SERGIO SERAFINO PARAZZINI – PAOLO RIZZI
COURSE AIMS
The course aims to supply microeconomics' main theoretical and analytical
tools useful for a fundamental understanding of: the working of modern
economies; the decision-making processes of economic agents; the interrelationships between firms and the external environment; the working of markets;
competitive and non-competitive strategies, the properties of market efficiency;
cases of market failure (namely market power and information asymmetry).
LEARNING OUTCOMES
- Grasp of theoretical and analytical fundamentals of the economic science which
are useful for understanding how modern economies work.
- Understanding of, and capacity to manage, basic instruments (mathematics and
diagrams, in particular) for understanding and evaluating (in a critical and
rigorous manner) the rational decision-making processes of economic agents, the
relationships and the efficiency of the economic system.
COURSE CONTENT
The course is structured in two main parts. The first part entails analysis of the
behaviour of consumers and firms. The second part studies the themes of market
equilibrium and efficiency in perfect competition, the social cost of market power
(monopoly, oligopoly etc.), the decisions of economic agents in conditions of
imperfect competition, and strategic behaviour of economic agents. The course
ends up with the study of the general economic equilibrium and an analysis of
economic efficiency, with an overview of some major market failures (asymmetric
information, public goods and externalities).
PART I: THE CONSUMER AND THE FIRM
Consumer behaviour
- Preferences, budget constraint, utility maximization.
- Individual and market demand, elasticity of demand.
The theory of the firm
- Production and Cost functions: short-term and long-term cost functions;
technological constraints, long-run and short-run production functions,
diminishing returns and returns to scale, optimal combination of factors.
- Profit maximization and competitive supply. The competitive firm in the
short-run and long-run; firm and market supply in perfect competition.
PART II: MARKET STRUCTURES AND COMPETITIVE STRATEGIES
Competitive markets analysis:
- Analysis of competitive markets: equilibrium and efficiency; deadweight
loss; government policies and market equilibrium.
Monopoly Markets
- Monopoly: social costs, pricing with market power
- Price discrimination and advertising
Imperfect competition and strategic behaviour
- Game theory and competitive strategy.
Market structures and competition
- Oligopoly: collusion and competition
Exchange Economy and market
- General economic equilibrium and economic efficiency.
READING LIST
D.A. BESANKO-R.R. BRAEUTIGAM, Microeconomia, McGraw-Hill, Milan, 2012.
R.S. PINDYCK-D.L. RUBINFELD, Microeconomia, 7a ed., Pearson, Milan, 2009.
M.L. KATZ-H.S. ROSEN-C.A. BOLLINO-W. MORGAN, Microeconomia, McGraw-Hill, 4a ed., Milan,
2011.
TEACHING METHOD
The course will be taught through lectures and assignments that will be planned at the
start of each quarter.
ASSESSMENT METHOD
Written mid-term exam in relation to Part I of the course. Written final exam, that may
be supplemented by an interview.
NOTES
Further information can be found on the Faculty notice board.