Learning Objectives
5 objectives- Understand the foundational principles and concepts of microeconomics including supply, demand, and market structures.
- Analyze market equilibrium and the determination of prices under various market conditions.
- Evaluate consumer and production theories to understand decision-making by individuals and firms.
- Differentiate between different market structures such as perfect competition, monopoly, monopolistic competition, and oligopoly.
- Examine market failures, externalities, and policies addressing income distribution and social welfare.
Content Outline
PreviewUnit 2770: Microeconomic Theory and Market Structures
1. Introduction to Microeconomic Theory
- Definition and scope of microeconomics
- Basic principles: scarcity, opportunity cost, marginal analysis
- Key concepts:
- Supply and demand curves
- Market mechanisms
- Role of individuals and firms in the economy
2. Market Equilibrium
- Definition of market equilibrium
- Equilibrium price and quantity
- Effects of shifts in supply and demand
- Price determination in different market conditions
- Case studies and graphical analysis
3. Elasticity of Demand and Supply
- Concept of elasticity
- Price elasticity of demand
- Price elasticity of supply
- Income elasticity of demand
- Cross-price elasticity
- Calculation and interpretation of elasticity coefficients
- Factors affecting elasticity
- Applications of elasticity in real-world economics
4. Consumer Theory
- Consumer preferences and utility
- Budget constraints and choice
- Utility maximization and consumer equilibrium
- Indifference curves and budget lines
- Income and substitution effects
5. Production Theory
- Inputs and outputs in production
- Short-run and long-run production functions
- Law of diminishing returns
- Costs of production:
- Fixed, variable, and total costs
- Marginal and average costs
- Profit maximization and production decisions
6. Perfect Competition
- Characteristics of perfectly competitive markets
- Many buyers and sellers
- Homogeneous products
- Free entry and exit
- Price takers and market efficiency
- Short-run and long-run equilibrium in perfect competition
7. Monopoly and Monopolistic Competition
- Monopoly:
- Characteristics and sources of monopoly power
- Price setting and output decisions
- Deadweight loss and inefficiency
- Monopolistic competition:
- Product differentiation
- Pricing and output decisions
- Long-run equilibrium
8. Oligopoly and Game Theory
- Definition and characteristics of oligopoly markets
- Strategic interaction among firms
- Introduction to game theory concepts:
- Nash equilibrium
- Dominant strategies
- Cooperative vs non-cooperative games
- Models of oligopoly behavior:
- Cournot
- Bertrand
- Stackelberg
9. Market Failures and Externalities
- Definition and examples of market failures
- Externalities:
- Positive and negative externalities
- Effects on social welfare
- Internalizing externalities: taxes, subsidies, regulation
- Public goods and free rider problem
- Imperfect information and asymmetric information
- Role of government intervention
10. Income Distribution and Welfare Economics
- Measures of income distribution and inequality
- Lorenz curve
- Gini coefficient
- Concepts of fairness and equity in economics
- Welfare economics principles
- Policies for improving social welfare:
- Taxation
- Transfers and subsidies
- Minimum wage laws
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