THE UNIVERSITY OF THE WEST INDIES, MONA

ECON2001
Intermediate Microeconomics II
Pre-requisite: ECON2000

Lecturer: Rayon Cameron

Pre-requisites: Econ2000
Office Hours:
E-Consultation: Anytime (response rate will vary)
Email: [email protected] ; [email protected]

Description
This course is an intermediate course in microeconomic theory. During the semester, we will relax
some of the very strong assumptions of perfect competition studied in ECON2000 in both input and
output markets. This will lead us to make comparisons, between these new types of equilibrium
conditions and those we have learnt are associated with perfect competition. You will need to re-
familiarize yourself with differential calculus, as you will be expected to work with functional forms
representing the new types of markets and to derive equilibrium outcomes from them.

Learning Outcomes
Upon successful completion of the course, the student should be able to use formal calculus and other
mathematical tools to:

 Relax the assumption of freedom of entry, define the resultant market as monopoly and
analyse the new implied equilibrium quantity and price
 Compare the monopoly outcome and the perfectly competitive outcome
 Determine the emergence of deadweight loss and the changes in both consumer and producer
surplus from these changes
 Analyse the new implied equilibrium quantity demanded and supplied of the factor and the
equilibrium factor price
 Relax the assumption of many firms and homogenous goods and define the resultant market
as monopolistic competition
 Analyse the new implied equilibrium quantity demanded and supplied of the product and the
equilibrium price
 Compare the monopolistically competitive outcome and the perfectly competitive outcome
 Relax the assumption of many firms (the good may or may not be homogenous) and define
the resultant market as oligopoly
 Define equilibrium concepts under Oligopoly of:
o Nash
o Cournot
o Collusive
o Monopoly
o Stackelberg
o Bertrand
 Compare the oligopoly outcome and the perfectly competitive outcome
 Consider the implications of a market with two firms

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  Analyse the new implied equilibrium quantity demanded and supplied of the product and the
equilibrium price
 Compare the duopoly outcome and the perfectly competitive outcome
 Define market failures: externalities, public goods and asymmetric information
 Write down models that provide for their correction/reduction
 Compare the outcome under market failures and the perfectly competitive outcome
 Discuss the benefits and challenges of government intervention
 Analyse and solve both simultaneous-moves and sequential-moves games and will be
familiarized with different solution concepts like minimax, Nash equilibrium, dominant
strategy equilibrium, Subgame perfect equilibrium, etc.

Modes of Delivery
Two lecture hours and one tutorial hour per week, face to face. Problem sets (not for grading) will be
provided for practice at problem solving.

Assessment
Item Tentative Dates Weight

Two (2) Quizzes Feb 18, April 13 (10% each)

10 – 15 multiple choice questions

One (1) Mid-semester Examination Mar 16 (PROPOSED (35%)

20 - 30 multiple choice questions.

Final Examination TBA (45%).

30 - 50 multiple choice questions.

TOTAL 100

Syllabus
Perfect Competition (Brief review) (Unit 1)

 Profit Maximization at Perfectly Competitive Markets

 Marginal Revenue
 Marginal Cost
 Short-Run Supply Curve
 Long-Run Profit Maximization

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  Industry’s Long-Run Supply Curve.

Monopoly (Unit 2)

 How they arise

 Graphical Implications
 Identifying and formally computing the Solution
 DWL
 Consumer and Producer Surplus
 Price Discrimination
 Multi-Plant Monopolies
 Comparison with Perfect Competition
Monopolistic Competition (Unit 3)

 How they arise

 Graphical Implications
 Identifying the Solution
 DWL
 Consumer and Producer Surplus
 Comparison with Perfect Competition
Oligopoly (Unit 4)

 How they arise

 Graphical Implications
 Identifying the Solution – new Equilibrium concepts
 DWL
 Consumer and Producer Surplus
 Duopoly
 Comparison with Perfect Competition
Game Theory (Unit 5)

 Theory
 Simultaneous and Sequential moves (Games)
 Pure and Mixed strategies
Market Failures & Government Intervention (Unit 6)

 Externalities
 Public Goods
 Difficulties with Regulation

Resources
Prescribed
Pyndyck and Rubenfield, Microeconomics (Any Edition)
Recommended
Varian, Hal, Intermediate Microeconomics, Norton, 7th Edition

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Student Responsibility
Your regular attendance at lectures and participation in tutorials is expected. All communication about
this course will be made through the OurVLE course site and/or your official email provided by the
University. Announcements made via OurVLE and your official email are deemed to be made to the
entire class.

Weeks Beginning date Units Readings

(PR*)
1 18/01/2022 Unit 1 Chapter 8
2 25/01/2022 Unit 1/2 Chapter
8/10
3 01/02/2022 Unit 2 Chapter
10/11
4 08/02/2022 Unit 2 Chapter 11
5 15/02/2022 Unit 3 Chapter 12
6 22/02/2022 Unit 3/4 Chapter 12
7 01/03/2022 Unit 4 Chapter 12
8 08/03/2022 Unit 4
9 17/03/2022 Midterm Exam Chapter 12
( tentatively)

10 22/03/2022 Unit 5 Chapter 13

11 29/03/2022 Unit 5 Chapter 13

12 05/04/2022 Unit 6 Chapter 18

13 13/04/2022 Review/Class
presentations

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