ENGINEERING TRIPOS PART IIA 2011/2012

Module 3E1 – Business Economics

AIMS

This course introduces students to the use of economics to understand the operation and decisions of businesses, their industrial environment and the macroeconomy

LECTURE SYLLABUS

Microeconomics (8L)

• Markets: The supply and demand framework
• Understanding demand: The theory of the consumer
• Understanding supply: The theory of the firm and different market structures
• Strategic interaction: Game theory
• Welfare Economics: The pareto criterion, market failure and the role of government

Macroeconomics(8L)

• Conceptualising the macroeconomy
• National income determination: consumption, saving and investment
• National income determination: the government sector
• National income determination: the foreign sector
• Inflation and Unemployment
• The balance of payments and exchange rates
• Economic growth
• Europe and the Euro

OBJECTIVES

By the end of the course you should:

• Understand and be able to work with the basic theory of demand and supply and market equilibrium.
• Understand the theory of the rational consumer and the derivation of individual and market demand curves
• Understand the theory of the firm, including the various types of costs that the firm faces, the idea of profit maximisation and the equilibrium of the firm
• Understand different forms of market structure, including perfect competition, monopoly and oligopoly
• Understand simple game theory
• Understand the arguments for the efficiency of markets and the assumptions on which these arguments depend
• Understand the concepts of market failure, externalities and public goods, and the policies a government might use to deal with them
• Understand national income accounting and the standard Keynesian macroeconomic model
• Understand the main determinants of the different components of aggregate demand
• Understand the possible impacts of monetary and fiscal policy
• Appreciate the possible relationships between inflation and unemployment
• Understand the relationship between exchange rates and the balance of payments
• Appreciate some of the basic explanations of economic growth
• Understand many of the arguments for and against a single European currency

REFERENCES

Please see the Booklist for Part IIA Courses for references for this module.

Last updated: August 2011