In this module students become familiar with the way of thinking of economists, facilitating an understanding of the application of microeconomics principles to environmental problems, and how economics can contribute to policy decision-making. This module will explain how markets and market failures affect the environment. Students will see economic examples in context directly linked to their interest in environmental management and policy issues.
|A||Autumn Term 2021-22 to Summer Term 2021-22|
In this module students become familiar with the way of thinking of economists, through an understanding of the approach and scope of both microeconomics and macroeconomics. The course is divided into five blocks: Block I is an introduction to the basic concepts in economics, Block II is devoted to the understanding of consumers and producers behaviours in a competitive market context, Block III introduces students to other market structures beyond perfect competition, Block IV focuses on market failures and their implications for the role of government in the economy, and finally Block V will present an introduction to macro-economic issues. This module uses applications and case studies from a variety of economic approaches – but particularly environmental economics – to introduce fundamental concepts of economics of relevance to the management of environment and natural resources.
The material of this module is delivered through lectures and small-group tutorials. Tutorials are based on problem sets and short-answer questions, which will be distributed in class prior to the tutorial and working on groups is recommended. Tutorials are design to fully understand core concepts, and help you to identify which areas you understand well, and where you may need to improve your knowledge. Extra practices and quizzes are available at the VLE.
On completion of this module, a capable student should expect to be able to do the following:
• Understand the behaviour of economic agents involved in the economy and relations between them.
• Apply theoretical representations of how the economy works.
• Understand the economic framework governing business activities: competitive market, monopoly, and oligopoly.
• Apply supply-demand analysis to evaluate the welfare effects of government interventions (e.g. price controls, taxes) on consumers and producers.
• Understand the conditions that an economy must satisfy if it is to produce and distribute goods efficiently and the key reasons markets fail to work efficiently.
• Appreciate the problem of market failures, particularly in relation to natural resources and the environment.
• Understand the concepts of economic externalities, public goods and asymmetric information.
• Understand basic concepts on economic development and growth, trade and inequality.
Generic / Employability Skills:
Part I: Basic Principles in Economics
1-. Introduction: Basic Concepts in Economics 1.1-. What is Economics? 1.2-. Economic Principles 1.3-. Economic Models 1.4-. Differences between Microeconomics and Macroeconomics 1.5-. Positive and Normative Analysis
2.- Markets: The Basics of Supply and Demand 2.1-. Competitive markets 2.2-. Demand 2.3-. Supply 2.4-. Market Mechanism and Equilibrium 2.5-. Elasticities of Supply and Demand
3.- Markets, Welfare and Government Policies 3.1-. Efficiency in Competitive Markets 3.2-. Consumer Surplus 3.3-. Producer Surplus 3.4-. Introduction to the concept of Market Failure 3.5-. Benefits and Costs of Government Intervention 3.6-. Efficiency & Equity
Part II: Consumers, Producers, and Competitive Markets
4-. Preferences, Budget and Consumer Choice 4.1-. Choice Set and Budget Constraints 4.2-. Consumer Preferences 4.3-. Optimisation: Consumer Choice
5.- Production: Technology and Returns to Scale 5.1-. Production Function 5.2-. Isoquants: Definition, Marginal Rate of Technical Substitution, Types of Isoquants. 5.3-. Average and Marginal Products: Law of Diminishing Marginal Returns 5.4-. Returns to Scale
6.- The Cost of Production 6.1-. Costs in the Short-Run 6.2-. Costs in the Long-Run: Economies and Diseconomies of scale 6.3-. Cost Minimization
7.- Profit Maximisation and Competitive Markets 7.1-. Market Power 7.1-. Competitive Markets: Total, Average, and Marginal Revenue 7.3-. Profit Maximization 7.4-. Supply Curve in a Competitive Market
Part III: Market Structure beyond Perfect Competition
8.- Monopoly 8.1-. The concept of Monopoly 8.2-. The Monopolist’s Demand and Marginal Revenue 8.3-. The Monopolist’s Profit Maximisation Output and Price 8.4-. The Welfare Costs of a Monopoly 8.5-. Price Discrimination 8.6-. Public Policy towards Monopolies 8.7-. Intro to monopolistic competition
9.- Oligopoly 9.1-. The concept of Oligopoly 9.2-. Competition and Collusion 9.3-. Non-Collusive Oligopoly
10.- Game Theory 10.1-. Economics of Cooperation 10.2-. Nash Equilibrium 10.3.- The Prisoner’s Dilemma
Part IV: Economics of the Public Sector
11.- Public Goods and Externalities 11.1-. Categories of Public Goods 11.2-. Socially Efficient Public Good Provision 11.3-. Free-rider Problem 11.4-. Inefficient use of common property resources: the tragedy of the commons
12.- Externalities 12.1-. Negative Externalities 12.2.- Positive Externalities 12.3.- Public Solutions to externalities 12.4-. The Coase Theorem
13-. Asymmetric information 13.1-. Introduction 13.2-. Adverse selection 13.3-. Acquisition and Provision of Information 13.4-. Moral Hazard
Part V: Introduction to Macroeconomics
14.- Economic growth 14.1-. Economic growth and its determinants
15.- Globalization, trade and trade policy 15.1-. Why do countries trade 15.2-. Gains from trade 15.3-. Controversies in trade policy
16.-. Poverty, equity and well-being 16.1-. Measuring inequality and sources of income inequality
|Task||Length||% of module mark|
|Task||Length||% of module mark|
Generic feedback on the progress of the students and discussion on problems and exercises will be provided during small-group tutorials. Students will be able to seek advice on good practices and improvement actions by visiting the offered office hours.
Acemoglu D. et al (2018) Microeconomics (2º ed) Pearson
Mankiw G. and Taylor M. (2008) Principles of Economics (2 º ed.) South-Western College Pub
Parking et al. (2014) Economics Pearson Education Limited
Sloman J. and Wride A. (2009) Economics (7th ed.) Prentice Hall
Berck P. and Helfand G. (2011) The Economics of the Environment, Pearson Addison-Wesley.
Krugman P. and Well R. (2012) Microeconomics (3rd ed.) Worth
Hussen A. (2000) Principles of Environmental Economics, 2nd Edition, Routledge
(Appendix A of Hussen provides a concise summary of key elements of microeconomics that could be helpful)
Blanchard O. et al. (2010) Macroeconomics (2nd ed.) Pearson
Connolly S. and Munro A. (1999) Economics of the Public Sector, Prentice Hall