Ap­plied Mi­croe­co­nom­ics

Course content

This course provides an introduction to microeconomic theory and how economic markets function: it describes what lies behind the notions of demand and supply. Emphasis is placed on the behavioral and technological assumptions that generate product demand and supply, and on market competition and regulation. We also explore important extensions to the basic decision model such as game theory and uncertainty. The main topics in the curriculum are: 
 

• Supply and Demand
• Consumer theory: preferences, rationality assumptions, budgetary constraints
• Extensions: Game Theory, Externalities
• Producer theory: production and costs functions
• Market structure: perfect competition, monopoly, etc.

Practical Application of Theory
In each main topic the theory is exemplified with economic problems and issues. We will discuss how one can use microeconomic theory to evaluate tax and labor market policies with macro-economic implications. 

Relation to a Business or an Institutional Setting
We consider in depth how different market structures infuence decisions by producers and consumers. We also emphasize how governments design institutions to correct market imperfections. 

Relation to International Business or Economics
Several examples from the international business area are considered. Examples will be drawn particularly from U.S., Canada and Europe. 

Research Based Teaching
Issues which are currently under debate in economic research are presented when relevant. In particular, we will discuss the limits of neoclassical models and how the research frontier confronts those limits.

Relation to Nordic Nine

Applied microeconomics will provide you with an introduction to the economic way of thinking, which aligns with several Nordic Nine values.
-You will learn how to approach different and potentially ambiguous problems with an analytical mindset: formulating hypotheses and models, testing them using data, and revising and questioning models and their assumptions whenever they fall short in explaining the real world (NN1, NN2, NN8).

-You will learn how to approach key human challenges and ethical dilemmas with intellectual rigor and honesty: carefully identifying and considering the tradeoffs and unintended consequences of economic decisions and policies, and considering solutions through positive (instead of normative) lenses (NN3, NN5).

- You will acquire a toolkit to explore how economic agents optimize consumption and production of goods, and how they interact in markets. But the very same analytical tools can be used to understand other important aspects of our society, such as the role of people’s other-regarding preferences for their decisions, and the importance of comparative advantages, skills specialization, and returns to scale from cooperation (NN4, NN6).