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 choice.
Next, we move on to the study of property rights and markets.
We examine the gains
from trade, international trade policy, the efficiency of markets, and problems with
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 supplies of labor and savings.
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
We begin with the competitive model, where private markets operate
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.
Finally, we explore the fascinating world of
Topics include explanations of selling tactics, such as price
discrimination, airline miles and meet-the-competition clauses to public policy issues like