Books used for the class: Pindyck R.& Rubinfeld D.: Microeconomics; David A. Besanko and Ronald R. Braeutigam: Microeconomics (available here with WU VPN)
This course serves as preparation for the Master in Digital Economy. All topics from Applied Microeconomics are repeated. Microeconomics studies how individual market participants, like households and firms, make their choices from the alternatives available to them. It also studies how such choices interact in the market to determine prices and resource allocations. A thorough understanding of microeconomics will be useful for any economic course students will take in the future and will provide an invaluable analytical framework for addressing a number of economically relevant questions. Examples of such questions are the following: how do firms set wages for their employees? How do firms set prices for their products? Should the government regulate monopolistic firms?
The first half of the course is devoted to the study of consumer and producer theory and it will illustrate the ideal circumstances under which the market solves the allocation problem and in which sense. The second half of the course is devoted to those problems, which arise when those ideal circumstances fail to exist and it will carefully discuss whether some form of government intervention should be invoked to improve upon the market allocation. Some game-theoretical concepts, which help model the interaction between economic agents, will be introduced.