This course will provide a comprehensive overview of theoretical microeconomic analyses at the undergraduate level. In every textbook on introductory economics or civics studied in junior high schools, there are figures illustrating a downward-sloping "demand curve" showing that "the demand increases as the price decreases", an upward-sloping "supply curve" demonstrating that "the supply increases as the price increases", and a "market equilibrium" at which the demand and supply curves intersect. However, demand curves illustrate the results of consumption choices, and it is not obvious what kinds of consumers' behavior lead to a downward-sloping demand curve. Similarly, supply curves demonstrate results of firms' production activities, and it is not straightforward what kinds of firms' behavior lead to a upward-sloping supply curve. In this course, we analyze economic activities behind the demand and supply curves and then examine the properties of market equilibria to clarify why market transactions with prices are effective and widely used.
Microeconomics is important for understanding economic phenomena, and it is essential for the studies of economics, industrial engineering, and other related fields. By combining lectures and exercises, the course aims to enable students to understand the basic ideas in microeconomics and acquire the fundamentals of microeconomic analytical tools widely applicable to various economic and management situations. Analytical tools taught in this course are not only useful in studying market mechanisms, but are applicable to various other types of economic systems, and are useful in other courses on economics and industrial engineering.
At the end of this course, students will be able to:
1) Explain the properties of preferences and indifference curves of consumers
2) Analyze the utility maximization problem.
3) Explain the income effect, the substitution effect, and law of demand
4) Analyze the profit maximization problem and cost minimization problem.
5) Derive the cost function and the supply function.
6) Compare perfect competition and monopoly in terms of consumer surplus, producer surplus, and social surplus.
Consumer Behavior, Demand Function, Firm Behavior, Supply Function, Competitive Market Equilibrium, Consumer Surplus, Producer Surplus, and Monopoly
|✔ Specialist skills||Intercultural skills||Communication skills||Critical thinking skills||✔ Practical and/or problem-solving skills|
At the beginning of each class, solutions to exercise problems that were assigned during the previous class are reviewed. Towards the end of class, students are given exercise problems related to the lecture given that day to solve. To prepare for class, students should read the course schedule section and check what topics will be covered. Required learning should be completed outside of the classroom for preparation and review purposes.
|Course schedule||Required learning|
|Class 1||Introductory lecture on course objectives and microeconomics. - Demand and supply curves and equilibrium||Demand and supply curves and equilibrium|
|Class 2||Consumption Choice A. Preferences and indifference curves of consumers||Explain properties of preferences and indifference curves of consumers.|
|Class 3||Consumption Choice B. Budget constraints and utility maxmization||Conduct a graphical analysis of utility maximization and compute utility maxmization points.|
|Class 4||Consumer Behavior and Demand Function A. Effects of income changes on consumption choices||Explain the effects of income changes on consumption choices|
|Class 5||Consumer Behavior and Demand Function B. Effects of price changes on consumption choices||Explain the effects of price changes on consumption choices|
|Class 6||Consumer Behavior and Demand Function C. Income effect, substitution effect, and law of demand||Conduct a a graphical analysis of the income effect and the substitution effect. Explain the law of demand.|
|Class 7||Firm Behavior and Production Function A. Production function and isoquant curve||Explain properties of the production function and isoquant curves|
|Class 8||Firm Behavior and Production Function B. Profit maxmization||Conduct a graphical analysis of profit maximization and compute profit maxmization points.|
|Class 9||Cost structure and supply function A. Cost minimization and cost function||Conduct a graphical analysis of cost minimization and compute cost minimization points. Derive the cost function.|
|Class 10||Cost structure and supply function A. Supply function of the firm||Derive the supply function and explain it by using a graph.|
|Class 11||Competitive Markets A. Competitive market equilibrium B. Consumer and producer surpluses||Explain and compute competitive market equilibria and consumer and producer surpluses|
|Class 12||Competitive Markets C. Effects of taxes and optimality of a competitive equilibrium||Conduct a graphical analysis of optimality of a competitive equilibrium and effects of taxes.|
|Class 13||Monopoly A. Monopolist's profit maximization||Explain and solve the monopolist's profit maximization problem.|
|Class 14||Monopoly B. Comparion of perfect competition and monopoly||Compare perfect competition and monopoly in terms of consumer, producer, and social surpluses.|
To enhance effective learning, students are encouraged to spend approximately 100 minutes preparing for class and another 100 minutes reviewing class content afterwards (including assignments) for each class.
They should do so by referring to textbooks and other course material.
No textbook is set. Download course materials from Tokyo Tech OCW-i.
Nishimura, Kazuo, "Introduction to Microeconmics," Iwanami Syoten, 1995. (Japanese)
Ishii, A., Saijo, T. and Shiozawa, S. "Introduction to Microeconmics," Yuhikaku, 1995. (Japanese)
Kandori, M. "Power of Microeconmics," Nihon Hyoronsha, 2014 (Japanese)
Students' knowledge of consumer behavior, firm behavior, competitive markets, and monopoly, and their ability to apply them to problems will be assessed based on homework and reports.
Being interested in economics and industrial engineering.