Introduction to Microeconomics
Michigan State University
This course is a basic introduction to principles of microeconomics, and it
comprises six parts.
An introductory part sets out the basic concepts and tools of
economics, including scarcity, opportunity sets, opportunity cost, and rational
Next, we move on to the study of property rights and markets.
examine the gains from trade, international trade policy, the efficiency of markets,
and problems with government interventions.
In this part we introduce the
concept of general equilibrium and use it to gain an understanding of the
workings of stock markets.
The third part sets out a model of household decision-making that gives us
a better understanding of the demand for products and the supply of labor and
We use this model to discuss the possibilities of improving public
policy, specifically, tax reform, Social Security and Welfare reform.
Part IV introduces the idea of market failure, where private markets do a
poor job when left alone.
We explore some environmental problems and learn
about some relatively simple solutions offered by economists.
We look at
pollution, resource exhaustion, global environmental problems, congestion and
the problem of so-called open access resources, sometimes referred to as the
tragedy of the commons.
Market structure, which is the organization of one side of the market,
forms the fifth part.
We begin with the competitive model, where private markets
Although it is an idealization, this model is essential for
understanding broadly defined issues, such as the pattern of trade, the distribution
of income, tax incidence, stock markets and growth.
It also provides the
benchmark for evaluating the more common cases of imperfect competition.
Then, we look at its opposite, monopoly, where one firm dominates the market.