ISS-9130 Intermediate Microeconomics (ECD)
Code
Weight of the course
Period
Course Leader
Lecturer
Teaching Methods
Modes of Assessment
Contact
ISS-9130
1.5 ECTS
TERM 1
Peter van Bergeijk
Peter van Bergeijk
Participatory Lecture
Attendance: 100%
Marja de Clercq Zubli
Learning objectives
The aim of the course is to refresh student’s knowledge in the area of micro-economics at the
intermediate level to ensure that all students have the required microeconomics background for
subsequent courses, in particular for ‘Micro and Macroeconomic Analysis of Development’ (ISS-1107)
and ‘Economic Analysis of Households, Firms and Institutions’ (ISS-4206). The focus is on theory and
its application to real world problems.
Course description
This course provides a review of selected micro-economic topics at the intermediate level. All
theoretical concepts are illustrated using a case study that deals with the assessment of costs and
benefits of rural electrification. After a general introduction to the field of microeconomics and the case
study, the lecture starts with a discussion of the basic concepts of the economics of the household:
Budget Constraint, Preferences, Utility Function and Utility Maximisation. Then the calculus of utility
maximisation and derivation of demand functions is introduced and trained. The ‘consumer surplus’ is
presented as a straightforward measure of welfare. Using this concept it is then shown how the
welfare benefits from lighting and TV can be determined. Lecture two presents and illustrates the
concept of income and substitution effects and a few applications of this concept in relation to rural
electrification. Lecture three shifts its attention to the economics of the firm and discusses the concept
of production technology and profit maximization. Using these concepts, the lecture discusses the
benefits from productive use of electrification. Lecture four closes with a general comparison of costs
and benefits of the rural electrification program, considers health and education effects and
summarizes the main lessons learned and concludes.
Assigned textbook:
Varian, H.R. (2003) Intermediate Microeconomics : A Modern Approach. New York: Norton.
World Bank (2008) The Welfare Impact of Rural Electrification: A Reassessment of the Costs and
Benefits. An IEP Impact Evaluation. World Bank Independent Evaluation Group
(IEG).Washington, DC: World Bank. Available at:
<https://ieg.worldbankgroup.org/Data/reports/rural_elec_full_eval.pdf >