Micro Requirements for MS Study

Students planning to enter the Master's program in the Department of Agricultural Economics should prepare themselves by completing the following study: Microeconomic Theory (ECON 323) Determination of prices and their role in directing consumption, production and distribution under both competitive and non-competitive market situations. This is a course in intermediate microeconomics. Its institutional framework is free-market capitalism. But the important differences between the ways that decentralized competitive markets and centralized command economies allocate resources and pay them are stressed. Monopolies are considered. The topics covered in ECON 323 are: Chapter 1 - Preliminaries: Micro and macro; theories and models; real vs. nominal economic variables Chapter 2 - Supply and Demand: How free-market prices and quantities get determined in competitive markets; how prices ration goods and services; elasticities of demand: own price elasticity, income elasticity, cross price elasticity; short-run and long-run elasticities; shifts in market demand and market supply. Chapter 3 - Consumer Behavior: Preferences and preference orderings; indifference curves and their shapes; consumer budgets and how they show feasible consumption points; how consumers get the most "bang for the buck" (pp. 79-91); cost-of-living indexes: Paasche and Lasperyres. Chapter 4 - Individual Demand and Market Demand (Where They Come From): Substitution effects and income effects; Engel curves; normal and inferior goods; adding up individual demands to obtain market demand; consumer surplus Chapter 6 - Production: How inputs are combined to produce goods and services. Production models , isoquants, short-run vs. long-run production; law of diminishing returns (short-run); returns to scale (long-run, all inputs variable) Chapter 7 - Costs of Production: Opportunity costs in general; fixed costs and variable costs; short-run costs (pp. 209-215); cost minimization and long-run costs (pp. 215-229); economies of scope; learning by experience and learning curves Chapter 8 - Profit Maximization and Competitive Supply: What is a perfectly competitive market? Demand and marginal revenue for a competitive firm; profit maximization (pp. 258-263) and the competitive firm's short-run supply (pp. 263-266); short-run industry supply and the real-world facts of short-run profits or losses; long-run competitive equilibrium and zero pure profit as an outcome of capitalism Chapter 9 - The Analysis of Competitive Markets: Consumer surplus and producer surplus; the mixed effects of price controls (pp. 289-293); supply and demand for kidneys (pp. 295-298); economic effects of minimum prices (pp. 298-302); taxes and subsidies (pp. 313-320) Chapter 10 - Market Power: Monopoly and Monopsony; when can monopoly occur? How a monopolist maximizes profit (pp. 328-333); how a multiplant monopolist maximizes profit (pp. 337-339); social costs of monopoly (pp. 347-348); limiting market power by means of antitrust laws (pp. 359-364) Chapter 11 - Pricing with Market Power: First, second, and third-degree price discrimination; two-part tariffs as a means of capturing consumer surplus; bundling: selling two or more goods as a package; advertising and how advertising can increase a firm's profits

Recommended textbooks:

Textbook: R.S. Pindyck and D.L. Rubinfeld, Microeconomics, 5th edition, Prentice-Hall, 2001 Intermediate Microeconomics by William S. Neilson and Harold Winter Price Theory and Applications by B. Peter Pashigian, Boston, Massachusetts: Irwin/McGraw-Hill Microeconomics by Jeffrey M. Perloff, Adddison Wesley Longman, Inc.