Microeconomics Course

Lesson 1 • Scarcity, Choice, and Trade-offs

Scarcity forces agents to choose among competing uses of limited resources. This section establishes why trade-offs exist and how opportunity cost quantifies the value of foregone alternatives.

Lesson 2 • The Economic Way of Thinking

Economic reasoning uses marginal analysis and incentives to predict behavior. Students apply this framework to distinguish positive from normative economic statements.

Lesson 3 • Specialization and Gains from Exchange

Comparative advantage explains why specialization and voluntary exchange create mutual gains. Students calculate comparative advantage and identify the basis for beneficial trade.

Lesson 4 • Economic Models and Their Limitations

Models simplify reality to generate testable predictions about economic behavior. Students evaluate model assumptions and understand when simplifications distort real-world conclusions.

Lesson 1 • Producer Supply and Its Determinants

Supply reflects quantities producers are willing to offer at various prices, driven by costs and technology. Students identify supply shifters and construct market supply curves.

Lesson 2 • Comparative Statics Analysis

Comparative statics predicts new equilibria after exogenous shocks to supply or demand. Students apply the technique to simultaneous shifts and ambiguous outcome cases.

Lesson 3 • Consumer Demand and Its Determinants

Demand reflects the quantities consumers are willing and able to purchase at various prices. Students distinguish movements along the demand curve from shifts caused by non-price determinants.

Lesson 4 • Price Controls and Market Distortions

Price ceilings and floors prevent markets from clearing, creating persistent surpluses or shortages. Students evaluate welfare consequences and unintended effects of binding price controls.

Lesson 1 • Price Elasticity of Supply

Supply elasticity reflects how quickly producers adjust output in response to price changes. Students link supply elasticity to production time horizons and resource mobility.

Lesson 2 • Income and Cross-Price Elasticity

Income elasticity classifies goods as normal, inferior, or luxury; cross-price elasticity identifies substitutes and complements. Students use these measures to forecast demand shifts from income or price changes.

Lesson 3 • Elasticity and Total Revenue

The relationship between elasticity and total revenue guides pricing decisions for firms. Students predict revenue changes from price adjustments across different elasticity ranges.

Lesson 4 • Price Elasticity of Demand

Price elasticity of demand quantifies how sensitively quantity demanded responds to price changes. Students compute arc and point elasticities and classify demand as elastic, inelastic, or unit-elastic.

Lesson 1 • Income and Substitution Effects

A price change generates both a substitution effect and an income effect on quantity demanded. Students decompose price changes using the Slutsky method and classify goods by effect direction.

Lesson 2 • Deriving the Individual Demand Curve

The demand curve is derived by tracing optimal choices as price varies, holding income constant. Students construct price-consumption curves and link them to downward-sloping demand.

Lesson 3 • Utility Maximization and Optimal Choice

Consumers maximize utility where the indifference curve is tangent to the budget line. Students solve for optimal bundles algebraically and graphically using the equimarginal principle.

Lesson 4 • Indifference Curves and Budget Constraints

Indifference curves map combinations yielding equal utility; budget constraints define affordable sets. Students graph both tools and identify the feasible region for consumer choice.

Lesson 1 • Short-Run Cost Curves

Short-run costs divide into fixed and variable components that shape average and marginal cost curves. Students derive and graph TC, TVC, AFC, AVC, ATC, and MC from a production function.

Lesson 2 • Long-Run Cost and Economies of Scale

In the long run all inputs are variable, allowing firms to choose optimal plant size. Students construct the long-run average cost curve as an envelope of short-run curves and identify scale economies.

Lesson 3 • Isocost Lines and Cost Minimization

Cost minimization requires choosing the input combination where the isocost line is tangent to the isoquant. Students solve for least-cost input bundles and analyze how input price changes affect choices.

Lesson 4 • Profit Maximization and Output Decisions

Firms maximize profit by producing where marginal revenue equals marginal cost. Students apply the MR = MC rule across market structures and evaluate shutdown versus continue decisions.

Lesson 1 • Consumer and Producer Surplus and Welfare

Consumer and producer surplus measure the welfare gains from market exchange. Students calculate total surplus, identify deadweight loss, and evaluate the efficiency of competitive markets.

Lesson 2 • Characteristics of Perfect Competition

Perfect competition requires many price-taking firms, homogeneous products, and free entry and exit. Students assess real markets against these conditions and understand the price-taker assumption.

Lesson 3 • Short-Run Industry Supply Curve

The industry supply curve is the horizontal sum of individual firm supply curves above minimum AVC. Students derive it and use it to determine short-run market equilibrium.

Lesson 4 • Long-Run Equilibrium and Zero Profit

Entry and exit drive long-run competitive equilibrium to zero economic profit at minimum ATC. Students trace the adjustment process and distinguish constant-, increasing-, and decreasing-cost industries.

Lesson 1 • Regulation of Monopoly Power

Regulators address monopoly inefficiency through price caps, average-cost pricing, or structural remedies. Students evaluate the trade-offs of each approach, including the natural monopoly dilemma.

Lesson 2 • Price Discrimination

Price discrimination allows a monopolist to charge different prices to different buyers, capturing more surplus. Students analyze first-, second-, and third-degree discrimination and their welfare implications.

Lesson 3 • Monopoly Pricing and Output

A monopolist faces the downward-sloping market demand curve and sets MR = MC to maximize profit. Students derive the monopoly price, quantity, and profit graphically and algebraically.

Lesson 4 • Sources and Barriers to Monopoly

Monopoly power arises from barriers that prevent competitive entry, including cost advantages and exclusive control. Students classify barriers as natural, legal, or strategic and assess their durability.

Lesson 1 • Non-Price Competition and Advertising

Firms in imperfect markets compete through product quality, advertising, and innovation rather than price alone. Students evaluate advertising as a signal, a barrier, and a source of market power.

Lesson 2 • Monopolistic Competition

Monopolistic competition combines many firms with differentiated products and free entry. Students analyze short-run profit and long-run zero-profit equilibrium and evaluate excess capacity.

Lesson 3 • Oligopoly Models and Interdependence

Oligopolists recognize mutual interdependence, making strategic interaction central to their decisions. Students compare Cournot, Bertrand, and Stackelberg models and their equilibrium predictions.

Lesson 4 • Game Theory Fundamentals

Game theory provides tools to analyze strategic decisions when outcomes depend on rivals' choices. Students identify dominant strategies, Nash equilibria, and the prisoner's dilemma in economic contexts.