Course: Bachelors of Economics and Management

Subject: Intermediate Microeconomics

1. Unit Details
FACULTY   MNU Business School
SUBJECT  CODE   ECO1--
SUBJECT  NAME   Intermediate Microeconomics
CREDIT HOURS &
CREDIT POINTS 15 150
LEARNING HOURS
MODE(S) OF DELIVERY Lectures/Tutorials
MINIMUM QUALIFICATION AND
EXPERIENCE REQUIRED BY Bachelor’s degree or higher
INSTRUCTORS/LECTURERS
PRE-REQUISITES& CO-REQUISITES Nil

150 hours/15 points

Classes are timetabled for 4 hours of class
Time Commitment
contact per week for 14 weeks

YEAR      2019 SEMESTER 3

2. Synopsis 
This subject is designed to provide an analysis of the way in which the market system functions as a
mechanism for coordinating the independent choices of individual economic agents. It develops a
basis for evaluating the efficiency and equity implications of competition and other market
structures, and a perspective on the appropriate role of government. The subject includes the study of
consumer choice, production and cost, market structure, and market failure. This subject puts more
emphasis on the mastery of theoretical concepts and analytical tools, although their application to
real world problems remains an important part of the course.

Core Text:
Intermediate Microeconomics: A Modern Approach. Hal R. Varian. (2014) 9th Edition.
W.W.Norton
 2. Expected Learning Outcomes 
Learning Outcomes

On completion of this subject, students will be able to:

 Explain consumers’ and firms’ behavior using mathematical tools
 Apply economic theory to diverse real world situation
 Analyse economic problems and prescribe solutions
 Model economic situations in a logical, rigorous, and precise manner

3. Unit Schedule
Week/Topic   Objectives  Essential and
recommended
readings  
Week 1: Budget Constraints, Lecture session (2 hours) Chapter 2,3
Preferences, Axioms  Understand budget line and
budget constraints
 Define consumer preferences,
assumptions regarding
preferences

Tutorial session (2 hour)

 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 2: IC, MRS and Utility Lecture session (2 hours) Chapter 3, 4
and Specific Cases of Utility  Understand Indifference curves
 Understand Marginal Rate of
substitution and its behaviour
 Explain Different types of Utility
and how to construct a utility
function; some examples
 Relationship between Marginal
Utility and Marginal Rate of
Substitution

Tutorial session (2 hour)

Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the week’s
lecture

Week 3: Choice, Demand Lecture session (2 hours) Chapter 5, 6

 Understand Optimal choice,
consumer demand and how
substitutes and complements
 impact demand
 Implications of the MRS
condition
 Define normal and inferior
goods
 Understand Income offer curves
and engel curves with examples
 Define ordinary goods and giffen
goods
 Understand the price offer curve
and the demand curve
 Define Substitutes and
Complements
 Understand the Inverse demand
function
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 4: Slutsky Equation Lecture session (2 hours) Chapter 8
 Define and be able to calculate
the substitution effect and the
income effect
 Understand the total change in
demand and rates of change
 Understand the law of demand
and how income and
substitution effect impact, using
different examples
 Understand the Slutsky Equation
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 5: Consumer surplus, Lecture session (2 hours) Chapter 14, 15, 16
Market demand and Equilibrium  Describe Consumer surplus
 Understand Quasilinear Utility
 Understand Producer surplus
and costs benefit analysis
 Understand the change from
individual to market demand
and how the different demand
functions aggregate
 Understand elasticity and
demand, elasticity and revenue
and elasticity and marginal
revenue
 Understand the market
equilibrium situation and the
 concepts of deadweight loss and
pareto efficiency

Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 6: Profit maximization, Lecture session (2 hours) Chapter 19,
 Explain short run and long run
profit maximization
 Understand profit maximization
and returns to scale

Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 7: Cost Minimization Lecture session (2 hours) Chapter 20, 21, 22,
Cost Curves, Firm Supply  Understand cost minimization
 Explain cost minimization and
returns to scale
 Understand LR and SR costs,
fixed and quasi fixed costs, sunk
costs
 Understand AC, MC, VC, LR and
SR implications
 Understand how firms decide
their supply decision, with
different market structures
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 8 : Monopoly, Monopoly Lecture session (2 hours) Chapter 25, 26
Behaviour,  Explain how monopolies come
into existence and monopoly
behaviour
 Understand Price and product
discriminating monopolies

Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 9: Oligopoly Lecture session (2 hours) Chapter 28
 Understand oligopolies and how
they choose strategies, and the
workings of these strategies
 Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 10: Game Theory Lecture session (2 hours) Chapter 29
 Understand Nash Equilibrium,
Payoff matrixes and other
concepts of game theories

Tutorial session (2 hour)

 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 11: Behavioural Lecture session (2 hours) Chapter 31
Economics  Distinguish the different
framing effects in consumer
choice
 Understand the concept of
uncertainty and individual
decision making
 Explain strategic interactions
and social norms
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 12: Exchange Lecture session (2 hours) Chapter 32
 Define the Edgeworth box,
pareto efficient allocations,
trade and market trade
 Understand the Walras’ Law
and relative prices
 Implications of the welfare
theorems
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 13: Production and Lecture session (2 hours) Chapter 33/34
Welfare  Explain the Robinson crusoe
economy
 Understand the firm and the
robinsons problem
 Understand the production and
the different welfare theorems
 Pareto efficiency and
decentralized resource
 allocation
 Understand social welfare
functions, welfare
maximization, individualistic
socal welfare functions
 Understand fair allocation,
envy and equity
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture
Week 14: Externalities Lecture session (2 hours) Chapter 36
 Describe quasilinear
preferences and the coarse
theorem
 Understand production
externalities and market
signals
Tutorial session (2 hour)
 Tutorials will be based on essay type questions, case study
applications or multiple choice questions based on the
week’s lecture

4. Assessment of Learning
Assessment Task Length Weight Due Date
Every Week except week
Assessment 1: Tutorial Quizzes 1 (10 quizzes which
(individual) MCQ’s 15%
student scores highest
will be used)
Assessment 2: Individual Mathematical
Assignment and short 25% Week 10
discussion
Examination 3 hours 60% Examination Week.

Assessment Details

Assessment 1: Tutorial Quizzes - 15%

Weekly-except week 1
The tutorial quizzes component of the assessment will be based on marks received for short
quizzes that will occur in each tutorial (except for the tutorials in week1). Only the best ten of
thirteen quizzes will count.

Assessment 2: Individual Assignment – 25%

Due Date: Week 10
This assignment will assess the topics of the first 7 weeks. It will consist of mathematical problems,
and short discussion questions.

Final Exam - 60% 

Exam Week
This will be a 3 hour exam. The final exam is comprehensive, i.e. it can cover ALL the topics of this
course. It will consist of mathematical problems and short answer questions, and may also include
multiple choice questions.

Late Application of Assignment

Assignments are due at 2.00 pm on the date specified and must be professionally presented (i.e.,
word processed, stapled, spell-checked, etc) and submitted in hard-copy form. Except where an
extension has been granted on medical or compassionate grounds, deadlines for all material
submitted for assessment must be adhered to strictly. The penalty for late submission of items
for assessments is 5% of the maximum mark for each day late. Any assignment submitted 5 days
after the due date will NOT be accepted. If for any valid reason a student will not be able to turn
assignments in on time s/he has to make special arrangements with the lecturer. In such cases
the lecturer should be notified of any requests for extensions before and NOT after the due date.
No consideration will be given to requests that come after the due date.

5. Academic Honesty and Plagiarism

Plagiarism is copying the thoughts or work of another as one’s own and presenting it as
such. At MNU plagiarism is considered to be a form of academic misconduct and is
viewed very seriously. Students may be given zero for the whole subject or an
assignment depending on the seriousness of the plagiarism involved. Further
information on plagiarism is available at: www.mnu.edu.mv.