Microeconomics 2

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18MIK2 Z,ZK 5 2P+2C Czech
Garant předmětu:
Quang Van Tran
Quang Van Tran
Department of Software Engineering

Microeconomics is a set of theories, helping us to understand process by which scarce resources are allocated among alternative uses. Microeconomics explain the role of prices and markets in this process and make clear economic agents behaviour. The lectures of Microeconomics II are oriented on Theory of Firm and Industrial Organisation.


1)Exam in MICROECONOMICS I is requiered

2)To pass successfully first and second test in Microeconomics II (from each at least 50% of all possible points )

3)To pass succesfully final oral exam.

Syllabus of lectures:

1. Introduction in the firm theory. Exchangeability of inputs and elasticity of substitution. Changes in scale and returns to scale

2. Short-run production function. Long-run versus short-run decision making. Profit maximization on production possibility set.

3. Cost: cost minimization in the long run, corner solution

4. The long-run Cost function and its properties. Shephard's lemma.

5. Expansion path of the firm and cost curves, average and marginal costs. Cost minimization in the short-run and short-run expansion path of the firm. Short-run cost.

6. Short-run cost versus long-run cost and envelope property. Cost minimization in a firm with several plants

7. Perfect competition: Assumptions. Profit and Revenue. Profit maximization and firm supply in the long run and in the short run

8. Profit function and its properties, Hotelling's lemma. Properties of supply function. Marshallian input demands

9. Market demand for Industry output under perfect competition. Industry supply in the long run and in the short run.

10. Differences in costs among firms inside the Industry. External technological diseconomies and economies to scale. External pecuniary diseconomies and economies to scale.

11. Perfect competitive markets and equilibrium, existence, stability, Walrasian versus Marshallian process. Naive versus rational expectations. Efficiency

12. Monopoly: Sources of monopoly. Price and output under monopoly. Price discrimination. Monopoly and inefficiency, measures of market power and capital concentration

13. Product differentiation and monopolistic competition. Location model

14. Oligopoly: Cournot, Stackelberg, Bertrand, Price leader, collusion, oligopoly as repeated game.

Syllabus of tutorials:

1. Different production functions (f(z)): MRTSji, MPi, elasticity of substitution, elasticity of returns to scale, homogeneous a homothetic f(z), CES function

2. Short run production function: derivation, MPi and APi , elasticity of returns to a factor. FOCs, output supply and input demands.

3. Different (f(z)): long run cost minimization, corner solution.

4. Long run cost functions derivation and checks on Shephard's lemma applications.

5. Cost curves derivation, (total, average and marginal costs), price and output elasticity of cost, examples of short run cost minimization.

6. Short run cost (FC, VC, STC, AFC, AVC, SAC) Exercising of multiplant firm cost minimization.

7. Maximization problems: profit and supply in long run and in short run.

8. Examples of problem types: derivation of profit function, checks on Hotelling's lemma applications, Marshallian demands.

10. Exercising: market demand derivation and inverse demand, residual demand.

11. Exercising: market supply derivation in the short run and in the long run.

11. Examples of perfect competitive equilibria and disequilibria, stability of equilibrium and stability of market.

12. Problems of profit maximization under monopoly, output and price setting under monopoly and under price discriminating monopoly, Lerner index, CS, PS, DWL.

13. Problem solving - monopolistic competition and location model

14. Problem solving: Cournot, Stackelberg, Bertrand, price leader, collusion, oligopoly as repeated game.

Study Objective:

Providing microeconomic insight into the production and technology to students and making them acquainted with important economic characteristics of production and technology. Explaining nature of cost and profit in economic theory to them and teaching them to apply relevant optimization methods. Students should understand the concept of market equilibrium, particular market structures and their importance for producers and customers.

Study materials:

Key references :

2. Gravelle, H. - Rees, R.: Microeconomics, Prentice Hall, third edition, 2004

Recommended references :

1. Varian H.R. Intermediate Microeconomics, A Modern Approach, Norton, sixth edition, 2002

2. Frank, Robert H.: Microeconomics and Behavior, McGraw Hill, eighth edition, 2009

Time-table for winter semester 2023/2024:
Time-table is not available yet
Time-table for summer semester 2023/2024:
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The course is a part of the following study plans:
Data valid to 2024-02-21
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