MICRO ECONOMICS

Course Contents

1. Demand and Supply Analysis: Introduction

   1.1. Distinguish Among Types of Markets;

   1.2. Explain the Principles of Demand and Supply;

   1.3. Describe Causes of Shifts in and Movements Along Demand and Supply Curves;

   1.4. Describe the Process of Aggregating Demand and Supply Curves;

   1.5. Describe the Concept of Equilibrium (Partial and General), and Mechanisms by which Markets Achieve Equilibrium;

   1.6. Distinguish between Stable and Unstable Equilibrium, Including Price Bubbles, and Identify Instances of Such Equilibrium;

   1.7. Calculate and Interpret Individual and Aggregate Demand, and Inverse Demand and Supply Functions, and interpret Individual and Aggregate Demand and Supply Curves;

   1.8. Calculate and Interpret the Amount of Excess Demand or Excess Supply Associated with a Non–Equilibrium Price;

   1.9. Describe Types of Auctions and Calculate the Winning Price(s) of an Auction;

   1.10. Calculate and Interpret Consumer Surplus, Producer Surplus, and Total Surplus;

   1.11. Describe How Government Regulation and Intervention Affect Demand and Supply;

   1.12. Forecast the Effect of the Introduction and the Removal of a Market Interference (e.g., a Price Floor or Ceiling) on Price and Quantity;

   1.13. Calculate and Interpret Price, Income, and Cross–Price Elasticity’s of Demand and Describe Factors that Affect Each Measure.
2. Elasticity

   2.1. Price Elasticity of Demand

   2.2. More Elasticity’s of Demand

   2.3. Elasticity of Supply
3. Efficiency

   3.1. Self–Interest and Social Interest

   3.2. Resource Allocation Methods

   3.3. Demand and Marginal Benefits

   3.4. Supply and Marginal Cost

   3.5. Is the Competitive Market Efficient?

   3.6. Is the Competitive Market Fair?
4. Markets In Action

   4.1. Housing Markets and Rent Ceilings

   4.2. The Labor market and the Minimum WageTaxes

   4.3. Subsidies and Quotas

   4.4. Markets for Illegal Goods
5. Demand and Supply Analysis: Consumer Demand

   5.1. Describe Consumer Choice Theory and Utility Theory;

   5.2. Describe the Use of Indifference Curves, Opportunity Sets, and Budget Constraintsin Decision Making;

   5.3. Calculate and Interpret a Budget Constraint;

   5.4. Determine a Consumer’s Equilibrium Bundle of Goods Based on Utility Analysis;

   5.5. Compare Substitution and Income Effects;

   5.6. Distinguish between Normal goods and Inferior Goods, and Explain Giffn Goods and Veblen Goods in this Context.
6. Organizing Production

   6.1. The Firm and its Economic Problem

   6.2. Technology and Economic Efficiency

   6.3. Information and Organization

   6.4. Markets and the Competitive Environment

   6.5. Markets and Firms
7. Demand and Supply Analysis: The Firm

   7.1. Calculate, Interpret, and Compare Accounting Profit, Economic Profit, Normal Profit, and Economic Rent;

   7.2. Calculate and Interpret and Compare Total, Average, and Marginal Revenue;

   7.3. Describe a Firm’s Factors of Production;

   7.4. Calculate and Interpret Total, Average, Marginal, Fixed, and Variable Costs;

   7.5. Determine and Describe Breakeven and Shutdown Points of Production;

   7.6. Describe Approaches to Determining the Profit–Maximizing Level of Output;

   7.7. Describe How Economies of Scale and Diseconomies of Scale Affect Costs;

   7.8. Distinguish between Short–Run and Long–Run Profit Maximization;

   7.9. Distinguish Among Decreasing–Cost, Constant–Cost, and Increasing–Cost Industries and Describe the Long–Run Supply of Each;

   7.10. Calculate and Interpret Total, Marginal, and Average Product of Labor;

   7.11. Describe the Phenomenon of Diminishing Marginal Returns and Calculate and Interpret the Profit–Maximizing Utilization Level of an Input;

   7.12. Determine the Optimal Combination of Resources that Minimizes Cost.

   Contents

   Output and Costs

   Decision Time Frames

   Short-Run Technology Constraint

   Short-Run Cost

   Long-Run Cost
8. The Firm and Market Structures

   8.1. Describe Characteristics of Perfect Competition, Monopolistic Competition, Oligopoly, and Pure Monopoly;

   8.2. Explain Relationships between Price, Marginal Revenue, Marginal Cost, EconomicProfit, and the Elasticity of Demand under each Market Structure;

   8.3. Describe aFirm’s Supply Function under each Market Structure;

   8.4. Describe and Determine the Optimal Price and Output for Firms under each Market Structure;

   8.5. Explain Factors Affecting Long–Run Equilibrium under each Market Structure;

   8.6. Describe Pricing Strategy under each Market Structure;

   8.7. Describe the Use and Limitations of Concentration Measures in Identifying Market Structure;

   8.8. Identify the Type of Market Structure within which a FirmOperates
9. Perfect Competition

   9.1. What is Perfect Competition?

   9.2. The Firm Decision in Perfect Competition

   9.3. Output, Price and Profits in Perfect Competition

   9.4. Changes in Tastes and Advancing Technology

   9.5. Competition and Efficiency
10. Monopoly

    10.1. Market Power

    10.2. A Single Price Monopoly Output and Price Decision

    10.3. Single Priced Monopoly and Competition Compared

    10.4. Price Discrimination

    10.5. Monopoly Policy Issues
11. Monopolistic Competition and Oligopoly
    11.1. What is Monopolistic Competition?
    11.2. Price and Output in Monopolistic Competition
    11.3. Product Development and Marketing
    11.4. What is Oligopoly?
    11.5. Two Traditional Oligopoly Models
    11.6. Oligopoly Games
    11.7. Repeated Games and Sequential Games
12. Economics of Regulation
    12.1. The candidate should be able to:
    12.2. Describe Classifications of Regulations and Regulators;
    12.3. Describe Uses of Self–Regulation in Financial Markets;
    

    12.4. Describe the Economic Rationale for Regulatory Intervention;

    12.5. Describe Regulatory Interdependencies and Their Effects;

    12.6. Describe Tools of Regulatory Intervention in Markets;

    12.7. Explain Purposes in Regulating Commerce and Financial Markets;

    12.8. Describe Anticompetitive Behaviors Targeted by Antitrust Laws Globally and Evaluate the Antitrust Risk Associated with a Given Business Strategy;

    12.9. Describe Benefits And Costs of Regulation;

    12.10. Evaluate How a Specified Regulation Affects an Industry, Company, Or Security?

    Contents

    Regulation and Antitrust Policy in A Globalized Economy

    Forms of Industry Regulations

    Regulating Natural Monopoly

    Regulating Non–Monopolistic Industries

    Incentives and Cost of Regulation

    Antitrust Policy

    Antitrust Enforcement

Recommended Books

1. Karl, E. C. & Ray, C. F. (2007). Principles of Economics. 8th Edition, Prentice Hall.
2. McConnell, C. & Bruce, S. (2009). Economics. McGraw–Hill.
3. Michael, P. (1990). Economics. Addison–Wesley.
4. Samuelson, P. A. & Nordhaus, W. D. (2010). Economics. McGraw–Hill Inc.
5. CFA Curriculum.