• Inactive for Year: 2024/25

• Module Leader(s): Professor Colin Wren
• Demonstrator: Dr Brian Varian, Dr Jonathan Jones, Dr Diemo Dietrich, Professor John Sessions, Dr Bahadir Dursun

• Owning School: Newcastle University Business School
• Teaching Location: Newcastle City Campus

Semesters

Your programme is made up of credits, the total differs on programme to programme.

Aims

To equip the student with intermediate-level microeconomic concepts, and develop students' problem-solving abilities in the context of microeconomics.

This is the core second-year module in microeconomic analysis. It is a pre-requisite for many final-year modules in Economics. At a broad level, it is the theory behind the demand and supply curves. The syllabus includes consumer theory, producer theory, choice under uncertainty, theory of the firm and theory of the industry. The material is an extension of first-year microeconomics, but it is conducted at greater depth and with a much greater reliance on analysis, mainly diagrammatic, but with some mathematics. It is a core module, as it covers the economic techniques that are essential to modern economic analysis at Stage 3 of economics programmes.

Outline Of Syllabus

1. INTRODUCTION
•       Aims and approach of course.
•       Mathematical notation and properties.
•       Constrained optimization.
•       Existence and uniqueness theorems.

2. CONSUMER THEORY
•       Neoclassical consumer theory: Preference relations and indifference curves.
•       Utility function.
•       Demand analysis. Marshallian and compensated demand functions and curves.
•       Revealed preference theory and price indices.
•       Measuring utility changes: compensating and equivalent variations.

3. THEORY OF THE INDUSTRY
•       Oligopoly: Cournot and Stackelberg models, Bertrand model and efficiency.
•       Collusive oligopoly: joint-profit maximization, stability of cartels and market sharing agreements.
•       Monopoly: price and output determination.
•       Price discrimination and efficiency.

4. THEORIES OF THE FIRM
•       The owner-managed, profit-maximizing assumption.
•       Managerial discretion and the principal-agent problem.
•       The sales revenue model and expense preference model.
•       Effect of taxation on optimal output in these models.
•       Alternative approaches.

5. PRODUCER THEORY
•       The production function: linear programming and neoclassical approaches.
•       Isoquants and production functions.
•       Cost minimization.
•       Homogeneous production functions, including Cobb-Douglas.
•       Product exhaustion and Envelope theorems.

6. CHOICE UNDER UNCERTAINTY
•       Decision rules for state-contingent outcomes.
•       Expected values and the St Petersburg paradox.
•       Expected utility theory, the ex-post utility function and attitudes to risk.
•       Applications to insurance.
•       Criticisms of expected utility theory.

Teaching Methods

Teaching Activities

Teaching Rationale And Relationship

Lectures provide an exhaustive and in-depth treatment of the core course material. Seminars facilitate small group interaction with the seminar leader to reinforce learning. Drop-in surgery to deal with specific problems experienced by students. Private study facilitates review and understanding of lecture material and problem sets.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Exams

Formative Assessments

Formative Assessment is an assessment which develops your skills in being assessed, allows for you to receive feedback, and prepares you for being assessed. However, it does not count to your final mark.

Assessment Rationale And Relationship

The written examination is designed to encourage study and test a depth of knowledge and understanding across a range of microeconomic topics.

Reading Lists

• ECO2004's Reading List

Timetable

• Timetable Website: www.ncl.ac.uk/timetable/
• ECO2004's Timetable