A Lecture outline of MICROECONOMICS

  

MICROECONOMICS

A Lecture Outline and its Detail Coverage

Books:

  Book 1 (B1): Besanko, David A., Braeutigam, Ronald R., Rockett Katharine,

  Microeconomics, Wiley, Fifth Edition, 2015 Book 2 (B2): Salvatore Ph.D., Dominick, Mikroekonomi, Schaum’s Outlines, Edisi keempat, 2006 (Terjemahan dalam bahasa Indonesia dari Schaum’s

  Outlines: Microeconomics, Fourth Edition, 2006)

  LECTU TOPICS BOOKS NUM RE

• WEEK

BER

  A. DEMAND, SUPPLY, MARKET

  1. Individual demand – function and curve, Market demand, The Law of demand – Move along a Book 1: 2. demand curve, Shift in demand Ch. 2

  Individual supply – function and curve, Market

  1 3. supply, The Law of supply – Move along a supply Book 2: curve, Shift in supply

  Bab 2

  4. Market and a unique market equilibrium – The Invisible hand mechanism, Comparative static market equilibrium Why demand and supply, then markets and an economy, exist or are created in every economy

  B. ELASTICITY

  1. Definition and a general formula of elasticity

  2. Signs of demand elasticity (negative – due to the law of demand) and supply elasticity (positive – due to the law of supply) Book 1:

  3. Types of elasticity (for elasticity of demand is −, Ch.2 for elasticity o supply +): inelastic (< 1), unitary elastic (= 1) and elastic (> 1), unlimited (∞) 4. Types of demand and supply curves based on 2 - 3 elasticity: inelastic and elastic

  5. The price elasticity of demand – point, arc, Book 2: 6. geometrical formula Bab.3 7. The income elasticity of demand – necessary, 8. luxury, inferior, The Gifen paradox 9. The cross-price elasticity of demand- substitutes,

  10. complements The price elasticity of supply – point, arc, geometrical formula The price elasticity of demand or supply in the long run vs. in the short run

  C. DEMAND THEORY OR CONSUMER THEORY

  1. Consumer preferences and the concept of utility: Book 1: utility, an indiference curve and the Marginal rate Ch.3,4, of substitution (MRS), 3 types of indiference

  5 2. curves, a map of indiference curves

  4

  3. Consumer budget or income Consumer choice and the demand function:

  Book 2: 4. maximizing utility subject to income (diagram and

  Bab. 4, 5. the mathematical form)

  5 The derivation of a demand curve – proving the law of demand Income and substitution efects due to a price change

  D. PRODUCTION

  1. Production function as a function of four wheels

  2. Production function with one variable: Total product (TP), Average Product (AP), Marginal Book 1: Product (MP) and the law of diminishing returns or Ch. 6, 7

  3. MP, and their characteristics Production function with more than one variable 5 - 6 (two variables): isoquant and Marginal rate of

  4. technical substitution (MRTS), 3 types of isoquant, Book 2: isocost Bab. 6

  Producer choice of inputs: minimizing cost 5. subject to the level of production (an isoquant) to 6. acquire (the diagram and the mathematical form)

  Returns to scale Elasticity of substitution

  E. REVENUE AND COSTS

  1. Revenue : Total Revenue (TR), Average Revenue (AR), Marginal Revenue (MR), and their functions

  2. A Formula of Marginal Revenue in terms of Price Book 1: (P) and the price elasticity of demand (ε) Ch. 7, 8

  3. The cost structure of any firms -- costs as

  7 functions of quantity: in total -- Total cost (TC), Total fixed cost (TFC), Total variable cost (TVC); in Book 2: per unit -- Average TC (ATC), Average FC (AFC), Bab. 7

  4. Average VC (AVC), Marginal cost (MC)

  5. Costs as a function of inputs and input prices, and isocost A requirement for maximizing profit – MR = MC, and its duality

  8 MID TERM EXAM

  F. MARKET STRUCTURE: PERFECT COMPETITION

  1. Definition and types of market structure (perfect Book 1: competition, Monopoly, Monopolistic competition, Ch. 9,

  2. Oligopoly)

  10 Characteristics of Perfect (pure) competition – 3. every competitive firm as a price taker Book 2: 7 - 9

  The demand and MR curves facing any Bab. 8 4. competitive firms: horizontal at the market price

• (D = P = AR) = MR The competitive firm choice: maximizing profit

  5. resulting in the amount of quantity to be sold (the diagram and the mathematical form) The derivation of the supply curve of the competitive firm – proving the law of supply

  G. MARKET STRUCTURE: MONOPOLY AND MONOPOLISTIC COMPETITION

  1. Characteristics of Monopoly and Monopolistic competition – each firm as a price maker Book 1:

  2. The sources of monopoly Ch. 11,

  3. The demand and MR curve facing each monopoly

  13 or monopolistic firm: negative slope -- (D = P =

  4. AR) ≥ MR 10 - 11

  Maximizing profit at MR = MC -- and (the diagram Book 2: 5. and mathematical form) Bab. 9,

  The emergence of anti trust or anti monopoly:

  10

  6. Monopolists does not operate at MR =MC, but at P 7. = AC or P < AC (loss)

  Monopoly with multiple plants and markets

  8. Measurement of the market power (Lerner index, Herfindahl index) The welfare economics of monopoly

  H. MARKET STRUCTURE: OLIGOPOLY

  1. Characteristics of oligopoly as price makers, interdependency among oligopolists Book 1:

  2. Oligopoly with homogeneous products: the Ch. 13 11 - 12 Cournot model, the Bertrand model, the

  3. Stackelberg model Book 2:

  4. Dominant firm markets Bab. 10 Oligopoly with horizontally diferentiated products: the Bertrand model

  I. GAME THEORY

  1. Strategy, pay of Book 1:

  2. The Nash equilibrium Ch. 14

  3. The Prisoners’ dilemma, the repeated Prisoners’ 4. dilemma

  Book 2: 13 - 14 5. Dominant and dominated strategies Bab.

  6. Sequential-move games and strategic moves – 11, 12

  7. Game tree Games with more than one Nash equilibrium Games with a pure strategy and a mixed strategy

  J. OTHER PRICING MODELS Book 1:

  1. Peak-load pricing Ch. 12

  15

  2. Cost-plus pricing Book 2:

  3. Price discrimination Bab.11, FINAL EXAM

  16