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Microeconomic Theory and Policy

Overview

  • Credit value: 30 credits at Level 5
  • Tutor: Dr Alastair Ball
  • Assessment: coursework (30%) and a three-hour examination (70%)

Module description

In this module we consider how microeconomic theory can help us think about policies designed to solve economic and social problems.

In the first half we discuss how consumer and producer theory can be applied to a wide range of issues, including the ‘Living Wage’, the design of student loans, and housing policy.

In the second half we introduce new concepts from microeconomic theory, with applications to public insurance (such as Obamacare in the US), the costs and benefits of free education, the problem of legislating bankers’ bonuses, and the rationale behind the nuclear deterrent.

Indicative syllabus

  • Supply and demand - applied to minimum wages
  • Consumer choice - applied to basic income
  • Choice under uncertainty - applied to health insurance
  • Cost minimisation - applied to pollution regulation
  • Firm choice and market power - applied to competition policy
  • Game theory - applied to the British nuclear deterrent
  • Asymmetric information - applied to overworking
  • Theory and policy - a look at government policy in practice

Learning objectives

By the end of this module, you should:

  • understand how microeconomic theory can help us think about policies designed to solve economic and social problems
  • understand how microeconomic theory can be used to analyse issues such as the ‘Living Wage’
  • understand how microeconomic theory can analyse the market for pay-day loans
  • understand the costs and benefits of free education and how economic theory can help improve the design of student loans
  • understand the impact of immigration on native wages
  • understand the economic case for public insurance (such as Obamacare in the US)
  • understand the problem of legislating bankers’ bonuses
  • understand the rationale behind the nuclear deterrent
  • be able to frame a diverse range of economic issues in terms of microeconomic theory, assess evidence and generate policy prescriptions.