Introduction to Microeconomics

Course Description:

Introduction to Microeconomics is an introductory undergraduate course that teaches the fundamentals of microeconomics. At MIT, this is the first course that undergraduates take in economics. For some, it may be the only course they take in the subject, and it provides a solid foundation for economic analysis and thinking that can last throughout their education and subsequent professional careers. For other students, it may provide a foundation for many years of study in economics, business, or related fields.

This course begins with an introduction to supply and demand and the basic forces that determine equilibrium in a market economy. Next, it introduces a framework for learning about consumer behavior and analyzing consumer decisions. We then turn our attention to firms and their decisions about optimal production, and the impact of different market structures on firms' behavior. The final section of the course provides an introduction to some of the more advanced topics that can be analyzed using microeconomic theory. These include international trade, the impact of uncertainty on consumer behavior, the operation of capital markets, equity vs. efficiency trade-offs in economic policy and social insurance.

By the end of the course, you will be able to understand introductory microeconomic theory, solve basic microeconomic problems, and use these techniques to think about a number of policy questions relevant to the operation of the real economy.

Course Learning Outcomes:

After completing this course, students should have developed a range of skills enabling them to understand economic concepts and use those concepts to analyze specific questions.

Students should be able to:

• Understand consumer behavior.
• Understand firm behavior.
• Analyze different types of market structures (monopoly, oligopoly and a competitive market).
• Understand how to apply economic principles to a range of policy questions.

Students should also have the skills needed to:

• Use supply and demand diagrams to analyze the impact of overall changes in supply and demand on price and quantity.
• Solve a consumer's utility maximization problem mathematically and graphically; analyze the impact of changes in price and income on a consumer's decision via shifting income and substitution effects.
• Understand the consumer's labor supply decision.
• Solve a firm's cost minimization problem mathematically and graphically.
• Analyze the behavior of firms in a perfectly competitive market in the short-run and the long-run.
• Calculate producer and consumer surplus.
• Analyze the behavior of firms in a monopoly or oligopoly, and calculate the resulting changes in producer or consumer surplus.
• Understand consumer behavior under uncertainty.
• Use economic tools to analyze economic policies.