ECON101: Principles of Microeconomics

The purpose of this course is to provide you with a basic understanding of the principles of microeconomics. At its core, the study of economics deals with the choices and decisions that have to be made in order to manage scarce resources available to us. Microeconomics is the branch of economics that pertains to decisions made at the individual level, i.e., by individual consumers or individual firms after evaluating resources, costs, and tradeoffs. When we talk about the economy, we are referring to the marketplace or system in which these choices interact with one another. In this course, you will learn how and why these decisions are made and how they affect one another in the economy. Each of the following units has been designed as a building block, where the concepts you learn in one unit will enable you to understand the material you discover in the next unit. By the end of this course, you will have a strong grasp on the major issues that face microeconomists, including consumer and producer behavior, the nature of supply and demand, the different kinds of markets and how they function, and the welfare outcomes of consumers and producers. You will also be able to apply the formal principles you learn to real world issues. The scope and emphasis of this course goes beyond a general understanding of microeconomics to incorporate the core concepts of the overall field of economics.

After familiarizing yourself with the following course syllabus, enroll in this course using the "Enroll me in this course” button. Once enrolled, navigate to Unit 1 of the course to read the Unit Introduction and Unit 1 Learning Outcomes. Links and instructions for all unit specific course resources will follow the introductory materials.

Before we dive into the principles of microeconomics, we need to define some of the major ideas that lie at the heart of economics. What, for example, is the economic way of thinking? What do economists mean when they throw around terms like market structure and the invisible hand? This unit will identify and define these terms before addressing the driving principle behind microeconomics: the idea that individuals and firms (economic agents) make rational choices based on self-interest. These decisions are necessary, because all resources are scarce. In other words, no good or item is infinitely available. This unit will also introduce you to a number of economic models, the assumptions and constraints associated with each, and the ways they help us better understand real-life situations.

Completing this unit should take you approximately 9 hours.

This unit will first introduce you to the ceteris paribus assumption, which is crucial to building correlations between economic variables. When using ceteris paribus, we assume that all variables - with the exception of those in explicit consideration - will remain constant. We will then examine the supply and demand models and the resulting market equilibrium that occurs where the supply curve and the demand curve intersect. We will also look at what causes movements along the curve and the set of factors that cause the curves to shift, affecting both price and quantity, before discussing the meaning and significance of elasticity.

Next, we will take a look at what happens when a market fails to produce a reasonable equilibrium. This situation typically occurs when either the market is not competitive or complete, or its participants are ill-informed. We will evaluate various ways in which the government can address these failures and begin to understand the intricate relationship between government and economics.

Completing this unit should take you approximately 18 hours.

This unit will examine the ways in which markets increase overall welfare through the concepts of consumer and producer surplus. We will discuss the concepts of marginal costs and benefits and take a look at how they affect a firm's decision on whether or not to make one more or one less product.

We have already learned that, at its most fundamental level, microeconomics is the study of how we make decisions. To expand on this point, we need to distinguish between the either/or decision and the how much decision. You will find this concept useful when looking more closely at why firms produce certain levels of output, taking into consideration opportunity cost and sunk (fixed) cost.

This unit concludes with the causes and ramifications of income inequality. While there is much debate about how to address long term inequality, economists can objectively measure the problem's scope and offer options to manage this economic phenomenon. Protracted poverty and inequality can cause long term harm to an economy's development.

Completing this unit should take you approximately 10 hours.

This unit will focus on the individual consumer and the characteristics that compel a consumer (to choose) to spend income on goods and services. The consumer experiences utility - a measure of satisfaction - with every purchase that he or she makes, and economists measure that utility in order to find a consumer's optimal rate of consumption. The Theory of Demand is derived from the Theory of Consumer Behavior presented in this unit. An individual's demand function can be explained by two approaches that help illustrate personal preferences: utility analysis and indifference analysis. You will explore these concepts more fully in this unit.

Completing this unit should take you approximately 12 hours.

In this unit, you will learn about one of the most important economic agents: the producer. The producer (firm) is responsible for creating the production function (output) and is subject to various cost measures as well as the results of diminishing returns. You will explore these ideas more fully as you delve into the relationship between quantity of input and quantity of output. This unit will discuss how and why a firm's costs may differ in the short run versus the long run.

Completing this unit should take you approximately 8 hours.

This unit will introduce the concept of perfect competition, an ideal model that serves as a benchmark against which real-world market structures are analyzed. Also known as the model of pure competition, perfect competition results in an efficient allocation of resources. In the real world, however, unregulated markets (which are central to perfect competition) may fail to create desired outcomes for a number of reasons. Economists refer to these situations as examples of imperfect competition.

In this unit, you will first study the Model of Perfect Competition and then move on to what may be considered the antithesis of perfect competition, the Monopoly Model. You will then learn about imperfect competition and the two models that fall under it: monopolistic competition and oligopoly. This unit will also touch upon game theory through the Prisoner's Dilemma Model and a discussion of the Nash Equilibrium.

Completing this unit should take you approximately 23 hours.

This unit outlines how firms decide how much they will use their resources (which include land, labor, capital, and entrepreneurial ability – all of which are required to produce the final good) and at what price. The demand for resources is derived from the demand for the final goods that are produced with them. For example, if the demand for automobiles (the final good) were to increase, the demand for steel (and any other resource used in the production of the auto) would also increase.

Completing this unit should take you approximately 3 hours.