The subject Intermediate Microeconomics consists mainly in a deep analysis of the theory of the firm that was introduced in the subject Introduction to Economics I: Principles of Microeconomics.

The first four chapters consider the decision of the firms (producers): How and how much to produce. It is assumed that firms act as price-takers in the competitive markets where they are present (markets of factors and markets of the products). The equilibrium of the market and the welfare effects of the equilibrium end this first part of the subject. Chapter 5 deals with general equilibrium with production and it is also considered the social welfare associated to the equilibrium. Chapter 6 considers two market failures: externalities in the production and public goods.

The subject requires that students have understood the contents of the following subjects: Mathematics I, Mathematics II and Microeconomics.

Intermediate Microeconomics is part of a topic -Microeconomics- that is one of the main contents in the degree of Economics.

Introduction to Economics I: Principles of Microeconomics in the first year is the first contact of the students with the topic. In the second year Microeconomics (first semester) analyzes with detail the theory of the consumer and general equilibrium in interchange economies. In the third year other two subject complete the topic: Market Power and Strategy (first semester) and Uncertainty and Contracts (second semester).

The five subjects are closely related. In order to afford one of the subjects, students should understand the contents of the previous subjects in the sequence.

The understanding of Microeconomics is needed for other subjects such as Pubic Economy: Spending, Public Economy: Revenue, Experimental Economics, International Trade, Mathematical Programming and Game Theory, Environmental Economics and Natural Resources and Information Economics.

The subject provides interesting tools to understand and analyze the decisions of the firms in a framework of competitive markets.

Goals of the subject:



To analyze in detail the contents of the theory of the firm that has been introduced in the subject Introduction to Economics I: Principles of Microeconomics.

To analyze in detail the general equilibrium in economies with production and its associated social welfare effects.

To analyze some market failures: Externalities and public goods.



Specific skills of the subject:



1- To characterize the behavior of the firm by using mathematical programs that model the basic motivation of the firm: the maximization of profits taking into account the restrictions imposed by its technology.

2- To obtain the cost function of the firm that arises from the as a result of profit maximizer behavior.

3- To model the economic behavior of the firm and to interpret in economic terms the results of the model. To analyze the effects produced by changes in the economic elements which have been incorporated in the models.

4- To analyze, interpret and model the different issues related with efficiency and welfare of the society.



Learning results:



1- To know the behavior of the producer by using mathematical models and optimization of the programs. This implies how to derive the cost function of a firm once it is known the technology and the price of the factors.

2- Ability to compute cost functions given the technological restriction of the firm.

3- Ability to interpret in economic terms the obtained results and capacity to understand the changes generated by some modifications of the elements that affect the decision of the agents.

4- Ability to identify, model and analyze economic situations with the presence of public goods and externalities.



Cross-cutting skills of the course:



1- C3 Capacity to make reasoned statements and ability to decide several relevant questions critically.

2- C6 Ability to communicate by writing reports in a comprehensive and coherent way.

3- C8 Capacity to work in group tasks with responsibility and respect; Leadership ability and capacity to take decisions.

es.

1. Production.

1.1. Marginal product and the Rate of Technical Substitution.

1.2. Returns to scale.

1.3. Examples.

1.4. Technical Progress.



2. Production cost.

2.1. Economic Costs.

2.2. Cost-minimizing input choices.

2.3. The expansion path of the firm.

2.4. Cost functions.

2.5. Short-run, long-run distinction.



3. Supply by a competitive firm.

3.1. Profit maximization.

3.2. Short-run supply by a competitive firm.

3.3. Profit maximization and input demand.

3.4. Long-run supply by a competitive firm.

3.4. Producer surplus.



4. The supply of industry and the competitive equilibrium.

4.1. Short-run market supply.

4.2. Short-run market equilibrium.

4.3. Long-run market supply.

4.4. Long-run market equilibrium.

4.5. Economic efficiency and welfare analysis.



5. General equilibrium and welfare economic.

5.1. Efficiency of a competitive economy.

5.2. General competitive equilibrium in Production economics.

5.3. The First Theorem of Welfare Economics.

5.4. The Second Theorem of Welfare Economics.



6. Externalities and public goods.

6.1. Externalities and allocative inefficiency.

6.2. Solutions to the externality problem.

6.3. Public goods and allocative inefficiency.

6.4. Lindhal pricing of public goods.

This course is best suited to a lecture format, although there will also be practical sessions and seminars. In the practical sessions the lecturer will solve some exercised related to the subject. In the seminars, students will be asked both to solve individually short questions covering the issues developed in lectures and practical sessions and to solve in groups practical cases or theoretical questions. If, for any reason, the situation does not allow for in-class teaching, the classes will take place on-line using the platform eGela.

• Continuous Assessment System
• Final Assessment System
• Tools and qualification percentages:
  • Written test to be taken (%): 70
  • Realization of Practical Work (exercises, cases or problems) (%): 30

The grading is based on a semester-long continuous evaluation. First, there will be a written final exam (scheduled by the Dean's office), in which each student has to solve individually both theoretical and practical problems. The final exam will represent 70% of the final grade.

Additionally, students will be evaluated on basis of their work performed in several seminar classes, distributed all along the semester. It will represent 30% of the final grade. The dates of these seminars will be made public in the beginning of the course via the platform eGela.



Students who cannot or do not wish to participate in the continuous-evaluation system may opt out and only take the final exam, which would correspond to 100% of their final grade. The exam prepared for such students can differ from that prepared for students who successfully passed the partial exams. All students have to decide whether to participate or not in the continuous-evaluation system within 9 weeks after the beginning of the course (Artículo 8, punto 3 de la Normativa de Evaluación).



If for any reason the exams cannot be done in class, all the exams will be substituted by an online exam.

The second, extraordinary final exam (scheduled by the Dean’s office) will represent 100% of the final grade.



If for any reason the exams cannot be done in class, all the exams will be substituted by an online exam.

Basic bibliography and a collection of workouts provided by the lecturers of the subject (the collection of workouts would be published at Moodle before studding each topic).

Basic bibliography

Varian, H.R. (2010) Intermediate Microeconomics: A Modern Approach, W.W. Norton & Company.

In-depth bibliography

Snyder, C. and W. Nicholson (2008), Microeconomic Theory: Basic Principles and Extensions, 10th Edition, South-Western Cengage Learning.
Pindyck, R. S. y D. L. Rubinfeld (2009): Microeconomía. Prentice Hall, 7ª edición.
Rosen, H.S., Katz, M. L. y Morgan W. (2007): Microeconomía Intermedia. Mc Graw Hill, 2ª edición.