Microeconomic Theory (ECON 6000)

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THE UNIVERSITY OF THE WEST INDIES, ST. AUGUSTINE CAMPUS

DEPARTMENT OF ECONOMICS

COURSE OUTLINE

COURSE TITLE: Microeconomic Theory

COURSE CODE: ECON 6000

LEVEL: Graduate

CREDITS: 5

SEMESTER: 1 and 2 (Year-long)

INSTRUCTOR INFORMATION:

Lecturer: Ewan Scott, Ph.D.

Email Address: [email protected]

Office: Social Sciences Faculty Office

Office Hours To be announced

Lecturer: Regan Deonanan, Ph.D.

Email Address: [email protected]

Room Number: Room 107, Office 10 FSS

Office Hours To be announced

REQUIRED AND SUPPORTING TEXTS:

Essential Texts

Varian, Hal R. 1992. Microeconomic Analysis. 3rd Ed. W. W. Norton and Company.

Varian, Hal R. 2006. Intermediate Microeconomics. A Modern Approach 7th Ed. W. W. Norton

and Company.

Supporting Texts

Jehle, Goeffrey A. and Philip J. Reny. 1998. Advanced Microeconomic Theory. Addison Wesley

Longman, Inc.

Mas-Colell, Andreu, Michael D. Whinston and Jerry R. Green. 1995. Microeconomic Theory.

Oxford University Press.

mailto:[email protected]

mailto:[email protected]

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PURPOSE OF THE COURSE:

The purpose of this course is to enhance the microeconomic knowledge of students, to improve

their techniques of economic analysis and to introduce students to selected advanced topics. The

course combines the use of economic theory, diagrams and mathematical concepts to ensure that

students understand that all of these are necessary tools to be used when economic analysis is being

conducted. The course will focus on those areas likely to be most useful to students in the design

and evaluation of economic policy as well as in future economic research. Finally, Microeconomic

Theory is designed to provide prospective UWI Economics graduates with the skills necessary to

generate robust economic reports, analyses and evaluations of microeconomic conditions and

policies.

LETTER TO THE STUDENT:

First let us welcome you to the course! It is our pleasure to be teaching this course, ECON 6000

– Microeconomic Theory. This course is year-long and will be delivered via face-to-face lectures

over the two traditional fall and spring semesters. Activities include three in-class quizzes and a

final exam. We emphasize that we are available for consultation during office hours and by

appointment through email communication. Our main aim is ensure that you leave with a thorough

understanding of Microeconomic Theory and the methods of analysis. In closing, we hope that we

can all have a very successful year.

EXPECTATIONS:

As a student enrolled in Microeconomic Theory, we expect that you will be fully engaged in

required readings, lectures and review questions. We must stress that success depends on both our

teaching skills and your studying skills. You MUST attend ALL lectures to make maximum use

of our teaching methods and you must also do ALL the required readings. It is a very good idea to

start doing end-of-chapter questions and past paper questions on each topic very early so that you

can get a feel for what is required of an examination-quality answer and ascertain any gaps you

may have in your understanding of the material.

COURSE DESCRIPTION:

Microeconomic Theory is a year-long course that furnishes essential and advanced tools and

techniques, which are used in all areas of economic analysis, microeconomic research and

economic policy design and evaluation. The course will be presented in three Parts over the fall

and spring semesters:

Part I will include a revision of basic concepts including the determinants of economic

welfare, utility and profit maximization, and competitive and non-competitive markets.

Part II will seek to deepen the students' knowledge of utility theory and production

theory.

Part III will explore selected key concepts and topics of advanced microeconomics: game

theory, oligopoly, exchange/production, asymmetric information and externalities/public

goods.

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We assume that students have taken undergraduate intermediate microeconomics classes and that

students are comfortable with multivariable calculus and linear algebra.

COURSE GOALS:

As previously emphasized, the main aim of this course is to ensure that the student is well versed

in microeconomic theory and methods of analysis of microeconomic theory. Students should also

use the course as a means for improving their methods of economic analysis and research skills.

The course aims to prepare the student to:

Demonstrate the mathematical underpinnings of microeconomic concepts

Apply microeconomic concepts and measures to the solution of real life problems of

consumers and producers

Critically and cogently analyze and evaluate or design policies of a microeconomic

nature

Read and write journal articles and other publications in the field of advanced

microeconomics

COURSE CONTENT, LEARNING OBJECTIVES & SCHEDULE:

Students will have three (3) contact hours for lectures weekly and the course material will be

covered as follows:

Semester I

Time

Part I: Welfare and Foundations of Firm Theory

Topic Learning Objectives Required Reading

Weeks 1-2

1. Economic welfare of

the individual, the firm,

and the society – intrinsic

and extrinsic

determinants. Where

does the plantation fit in?

Explain the concept of economic

welfare.

Describe how economic welfare

of the individual, the firm, and

society are related.

Distinguish among economic

welfare of the individual, the

firm, and society.

Hal R. Varian, Intermediate

Microeconomics, pp 334 – 343.

Loayza et al, “Macroeconomic

Volatility and Welfare in

Developing Countries” The World Bank Economic Review, Vol 21, 2007

Mark Blaug, Economic Theory

in Retrospect, pp 570-585.

Lloyd Best, "Outlines of a

Model of Pure Plantation

Economy" Marronage, 1998.

Karl Theodore, “Economics of

Poverty” DOE Lecture Notes,

1999.

http://archive.myelearning.sta.uwi.edu/mod/resource/view.php?id=500260



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Semester I

Time

Part I: Welfare and Foundations of Firm Theory


Weeks 3-4

2. Competitive and Non-

competitive markets

Describe the models of pure

competition and monopoly.

Derive and illustrate the

equilibrium outcomes of the

models of pure competition and

monopoly.

Relate the models of pure

competition and monopoly to

markets in T&T.


Microeconomics, pp 423 -452.

Hal R. Varian, Microeconomic

Analvsis, pp 215 -222.

Mas-Colell, Whinston and

Green, Microeconomic Theory,

pp 383 – 400.

Jehle and Reny, Advanced

Microeconomic Theory, pp. 253

– 262.

Weeks 5-6

3. Foundations of

Production Theory

Define and describe the

production function.

Derive and illustrate profit

maximization for perfectly

competitive and monopolistic

firms.

Derive and illustrate cost

minimization for perfectly

competitive and monopolistic

firms.

Demonstrate how profit

maximization and cost

minimization theory are related

and can be applied to different

types of firms.

Propose policy measures that can

improve competition among

firms.


Microeconomics, pp 322 - 333,

353 – 382.


Analysis, pp 1 - 21, 49 – 77.



pp 127 -143.

Week 7

Quiz I

Comprehensive essay and short

answer assessment on topics 1-3.

Semester I

Time

Part II: Foundations of Consumer Theory


Weeks 8-9

4 Foundations of Utility

Theory

Explain the concept of a utility

function.



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Semester I

Time

Part II: Foundations of Consumer Theory


Describe how utility functions are

related to consumer demand.

Demonstrate how consumer

demand can be derived assuming

a particular utility function.


Analvsis, pp 94 – 140.



pp 40 – 62.

Week 10-11

5. The Slutsky Equation

Explain the concept of the Slutsky

Equation.

Illustrate how the Slutsky

Equation is derived.




Analysis, pp 119 -122.



pp 71 – 73.

Week 12

Quiz 2



Semester II

Time

Part III: Selected Topics in Advanced Microeconomics


Weeks 13-

14

6. Game Theory

Define and explain the concept of

a Nash Equilibrium and

distinguish among the various

types of Nash equilibria.

Derive Nash equilibria for

simultaneous and sequential-

move games.

Solve and evaluate relevant real-

life economic problems using

Nash equilibria techniques.




Analysis, pp 260 -282.



pp 217 – 224.


Microeconomic Theory, pp 363

– 371.

Weeks 15-

17

7. Oligopoly

Describe the four main oligopoly

models: Cournot, Bertrand,

Stackelburg and Price leadership.

Derive the equilibrium outcomes

for each of these four models.




Analysis, pp 285 – 310.

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Semester II

Time



Compare and contrast the

equilibrium outcomes of each of

the four models.

Evaluate the efficiency of

Caribbean markets from the

perspective of the four main

oligopoly models.



pp 224 – 228.



– 381.

Week 18-19

8. Asymmetric

Information

Describe asymmetric information.

Explain how asymmetric

information gives rise to adverse

selection and moral hazard.

Distinguish between adverse

selection and moral hazard.

Discuss the economic

implications of these problems.

Examine suggestions to mitigate

these two problems.







pp 436 – 501.



– 466.

Week 20

Quiz 3



Weeks 21-

22

9. Exchange and

Production




Analysis, pp-314 – 357.



pp 511 – 588.



– 316.

Weeks 23-

24

10. Externalities and

Public Goods


Microeconomics, pp 626 - 648,

670 – 693.



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Semester II

Time





pp 350 – 382.

Week 25

11. Introducing

Econometrics of Special

Cost Functions and

Demand Systems


Analvsis, pp 198 -214.

Examination

Period

Final Exam



TEACHING STRATEGY:

The course will mainly be delivered through lecture-style teaching. However, students will be

required to interact with the lecturer and their peers as required, when a discussion-style technique

is employed. Any additional course material and changes to the class schedule may be posted on

MyElearning.

ASSESSMENT STRATEGY:

Assessment of this course will be based on in-course quizzes and a final exam as follows:

Three (3) in-course quizzes - 30% (10% each)

Final Examination - 70%

Quiz dates are contingent on completion of the topics to be tested (see schedule above). Any

changes to the quiz schedule will be communicated during the lecture prior to the tentative quiz

date, as well as, through MyElearning. Each quiz will comprise short-answer and essay-type

questions. All quizzes will be administered in the same classroom and at the same time as the

weekly lectures.

Final Examination – A 3-hour written examination comprising short-answer and essay-type

questions based on all topics covered. Examination schedules will be available for viewing

approximately one month before the scheduled date of each examination session. Access

examination schedules by logging on to http://mysta.uwi.edu/.

http://mysta.uwi.edu/

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PLANNED COURSE ACTIVITIES

Student Participation in planned Departmental activities for 2017/18

1. Attendance at the Department’s Post National Budget Forum 2017. Date, venue and time of this

event TBA.

2. Attendance at the Conference on the Economy (COTE 2017) on October 11 – 12, 2017.

3. Mandatory attendance at the Department’s Research Day presentations – dates TBA.

COURSE EVALUATION: At the end of each of the three major parts of the course, the lecturer will solicit feedback on how

the information is being processed and the course in general. The feedback will be used to make

improvements, correct errors, and try to address relevant unmet needs of the student. Additionally,

at the end of the course, the CETL will evaluate the course, so it is important that students are in

attendance during that time.

CLASS ATTENDANCE POLICY:

Regular class attendance is essential. A student who misses a class will be held responsible for the

class content and for securing material distributed. Attendance is the responsibility of the student.

Nonattendance will be recorded. Be reminded of the implications of nonattendance.

IN-COURSE QUIZ POLICY: Students are required to sit for in-course quizzes on the prescribed date. In extenuating

circumstances, a student may be offered a make-up quiz at the discretion of the lecturer. However,

the specific pre-written authority of the course lecturer, not later than a week before the start of the

relevant quiz date is required. Missed quizzes will result in the student forfeiting the points

allocated to the relevant quiz.

STATEMENT OF DISABILITY PROCEDURES:

The University of the West Indies at St. Augustine is committed to providing an educational

environment that is accessible to all students, while maintaining academic standards. In accordance

with this policy, students in need of accommodations due to a disability should contact the

Academic Advising/Disabilities Liaison Unit (AADLU) for verification and determination as soon

as possible after admission to the University, or at the beginning of each semester.

POLICY REGARDING INCOMPLETE GRADES:

Incomplete grades will only be designated in accordance with the University’s Incomplete Grade

Policy.

Documents

Microeconomic Theory (ECON 6000)