Principles of Microeconomics Assignment Help

What is Principles of Microeconomics?

A basic course in principles of microeconomics offers introduction to the economic analysis of the market mechanism studied under an introductory microeconomic and mathematical framework. Emphasis on supply and demand, elasticity, cost analysis, market structures, externalities, and contemporary microeconomic issues.

The principles of microeconomics course is taken by all undergraduate and graduate students who major in economics, mathematics, finance, accounting, statistics, law and even business subjects.

The learning objective of a course in principles of microeconomics is the following:

Explain the concepts of demand and supply, law of demand, law of supply and identify the variables that can influence the demand and supply of a firm’s product or service, and determine equilibrium and the resulting market price and quantity.
Describe the effects on equilibrium price and equilibrium quantity with government intervention in a market.
Explore aspects of market failure such as concepts of externalities and public goods, imperfect competition, asymmetric information, adverse selection and moral hazard.
Understand and explain the economic model of consumer behaviour through consumer theory.
Cost Theory: Discuss the relevant costs that a firm faces in its decision making.
Compare and contrast the four different market structures in a market economy.
Explain in what sense the demand for labour is “derived” demand and the key factors that influence this demand.

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The course on principles of microeconomics is generally taught by teachers through a combination of multiple choice questions, detailed question answers in formative and summative styles, Discussion based questions that synthesize overall ideas learnt throughout the course as well as numerical homework problems based on consumer theory, cost theory as well as market structures.

Supply and Demand Analysis

The course on Principles of Microeconomics generally begins with an introduction to Demand and Supply with further comparative static analysis and extensions of Demand and Supply Analysis. In understanding this unit on demand and supply analysis in microeconomics, students are required to understand the concepts such as

Distinguish between changes in demand and changes in quantity
Distinguish between changes in supply and changes in quantity supplied.
Describe how the interaction of demand and supply determines the equilibrium price and quantity.
Evaluate the effects of changes in demand and supply on the market
Describe the rationing function of prices.
Explain the effects of price ceilings and price floors on equilibrium price and equilibrium quantity demanded and quantity sold in the market. Also students are taught about real life situations of price ceilings and price floors.

Market failure, Externalities, Taxation & Public Goods

In the units that deal with aspects of Public Spending and Public Choice & Demand and Supply Elasticity, students are expected to learn about market failures, such as externalities, and justify the economic functions of government. Students also learn to distinguish between private goods and public goods. In public goods analysis, the principles of microeconomics course deals with explaining about the nature of the free-rider problem and the role of government.

In the part that deals with analysis of demand and supply elasticity,

Describe the relationship between the price elasticity of demand and total revenues.
Describe the cross price elasticity of demand and how it may be used to indicate whether two goods are substitutes or complements.
Explain the income elasticity of demand in the face of normal and inferior goods.

Consumer theory: From utility to choice and demand

The unit on theory of Consumer Choice answers questions such about rational consumer behaviour and microeconomic choices such as

Law of diminishing marginal utility: Discuss why marginal utility first rises but ultimately tends to decline as a person consumes more of a good or service.
Consumer Problem optimization exercise : Explain why an individual’s optimal choice is where equalizing the marginal utility per dollar spent across all goods and services (law of equimarginal utility)
Contrast the substitution and real-income effects of a price change on the quantity demanded of a good or service through indifference curve analysis.
Derive the demand curve and explain the law of demand

Cost Curves

The theory of cost deals with derivation and computation of costs faced by a firm and the industry in its operation. After studying the theory of cost for firms, students are able to differentiate between the short run and the long run from the perspective of a firm for doing profit analysis

The cost theory also deals with the law of diminishing marginal physical product of inputs in the short run as well as the relation between the average physical product and the marginal physical product. Students are taught about the shape of the marginal physical product curve of the inputs as well as how to calculate marginal physical product and average physical product from total physical product of inputs that are variable, This section of cost theory answers questions related to fixed inputs, variable inputs as well as the law of diminishing marginal product of labour that is why the marginal physical product of labour eventually declines as more units of labour are employed.

Other learning objectives for cost theory in microeconomics includes:

Identify situations of economies and diseconomies of scale, and define a firm’s minimum efficient scale.
Explain the ideas of returns to scale such as increasing returns to scale, constant returns to scale as well as decreasing returns to scale.

Market Structures: Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly

In the theory of market structure in microeconomics, students are taught four main forms of market structure in economics, perfect competition, monopoly, monopolistic competition and oligopoly. Under the theory of Perfect Competition students are taught about the following aspects of profit maximization by firms in a perfect competitive market:

Identify the characteristics of a perfectly competitive market structure in the short run and long run.
Discuss the process by which a perfectly competitive firm decides how much output to produce.
Explain how the equilibrium price is determined in a perfectly competitive market.

The theory of monopoly is based on describing the demand and marginal revenue conditions a monopolist faces as well as discussing how a monopolist determines how much output to produce and what price to charge. Under profit maximization in a monopoly, we learn to evaluate the profits earned by a monopolist and how price discrimination affects these profits. Students are also taught about monopoly related practices such as dumping and different forms of price discrimination such as first degree price discrimination, second degree price discrimination and third degree price discrimination through perfect discrimination as well as concepts of peak-load pricing and bundling.

Under the modules of Monopolistic Competition & Oligopoly and Strategic Behaviour, principles of microeconomics course deals with differentiation between monopoly, perfect competition as well as monopolistic competition. For studying about profit maximization techniques under monopolistic competition, students have to learn to Contrast the output and pricing decisions of monopolistically competitive firms with those of perfectly competitive firms as well as to Contrast the output and pricing decisions of monopolistically competitive firms with those of a monopoly.

In monopolistic competition market forms, the importance of product differentiation and advertising revenue and chamberlain’s model of monopolistic competition is also taught to explain why brand names and advertising are important features of monopolistically competitive industries.

Oligopoly and Strategic Choice

The theory of market forms of oligopoly and oligopolistic competition outlines the fundamental characteristics of oligopoly and describe how to apply game theory to evaluate the pricing strategies of oligopolistic firms. Oligopolies also deal with strategic pricing, first mover advantage, and Identify features of an industry that help or hinder efforts to form a cartel that seeks to restrain output and earn economic profits as well as Bertrand competition. Elements of game theory for economics in principles of microeconomics include prisoner’s dilemma, zero sum game, the concept of Nash equilibrium, dominant strategies and dominated strategies, evaluating player’s pay-offs and best outcomes and pure strategy Nash equilibria as well as Mixed equilibrium.

The theory of inputs of labour deals with the description of the marginal revenue product of labour and calculation of the value of marginal revenue product of labour. It also explains why a firm’s marginal revenue product curve is its labour demand curve. At the end of this module, students should be able to

Explain in what sense the demand for labour is “derived” demand and the key factors that influence this demand.
Describe how equilibrium wage rates are determined for perfectly competitive firms
Theories of efficiency wage and education as signalling device.

Books to study Principles of Microeconomics

Following books are useful for students taking a principles of microeconomics course at graduate and undergraduate levels:

Case, K. E., & Fair, R. C. (2007). Principles of Economics. Pearson Education International.
Case, K. E., Fair, R. C., & Oster, S. M. (2013). Principles of Economics (10th ed.). Pearson.
Lipsey, R., & Chrystal, A. (2011). Economics (12th ed.). Oxford University Press.
Mankiw, G. (2007). Principles of Economics. (Vol. 1). South-Western Cengage Learning.
Mankiw, N. G. (2015). Principles of Economics (7th ed.). Cengage Learning.
Miller, R. (2014). Economics today (17th ed.). Upper Saddle River, NJ: Pearson Education.