The course examines how economic decisions are made by households and firms, and how they interact to determine the quantities and prices of goods and factors of production and the allocation of resources.
The topics covered are:
* Consumer choice and demand, labour supply.
* Choice under uncertainty: the expected utility model.
* Producer theory: production and cost functions, firm and industry supply.
* Game theory: normal-form and extensive form games, Nash equilibrium and subgame perfect equilibrium, repeated games and cooperative equilibria.
* Market structure: competition, monopoly and oligopoly.
* General equilibrium and welfare: competitive equilibrium and efficiency.
* Pricing in input markets.
* Intertemporal choice: savings and investment choices.
* The economics of information: moral hazard and adverse selection, resulting market failures and the role of contracts and institutions.
* Market failures arising from monopoly, externalities and public goods. The role of policy.