ECON12-201: Markets and Corporate Behaviour - Solutions

This subject builds on the microeconomic principles learnt in the Principles of Economics subjects and provides an analysis of the way in which the market system functions as a mechanism for coordinating the independent choices of individual economic agents. This subject provides a practical application of microeconomic theory to enable business decision-making in the context of dynamic market conditions. More specifically, it will examine the theory of consumer choice, isoquant theory of production, allocative efficiency and competition, models of monopolistic competition and oligopoly, input pricing, pricing strategy and microeconomic policies to address problems of market failure.  Game Theory and its application to managerial decision-making is also introduced. Upon completion, students should be able to identify and evaluate consumer and business alternatives in order to achieve economic objectives efficiently. 

✔ On successful completion of this subject the learner will be able to:

• Analyse decision-making by individual consumers and producers by applying relevant theories to explain different market structures.
• Explain how firms maximise profit and conduct strategic interactions with other firms in an oligopoly environment.
• Analyse price determination in product and input markets under various conditions to explain how firms use market power to extract consumer surplus and how firms use various pricing strategies to achieve these goals in the real world.
• Evaluate the welfare effect of market externalities and policy interventions designed to address these externalities.
• Critically evaluate policies designed to affect individual behaviour and market outcomes.