AØKB08022U Microeconomics B

Volume 2013/2014
BSc. in Economics - compulsory
As in Micro A, formal mathematical analyses of microeconomic issues are central to Micro B. Micro B focuses on training the student to apply microeconomic theory in the analysis of economic problems. Micro B builds on the understanding of perfect markets in Micro A and expands on this by introducing different imperfections phenomena that can be found in the real world, but cannot be explained in perfectly competitive economies.

First, firm behaviour when they have monopoly power or can apply price discrimination to its customers. Secondly, the phenomenon of Public goods (defence, education systems etc.). Thirdly, externalities (environmental impacts etc.). And finally situations with imperfect information leading to Pricipal-agent problems.

The objective of Micro B is to provide the student with a thorough introduction to the strengths and weaknesses of the market, the advantages and disadvantages of the market. Micro B provides the theoretical foundation for economic policies and aims at making the students capable of assessing and analysing cases where imperfections have profound impacts on the functioning of the economy. Micro B is thus the methodological basis, or the essential and basic tool-box, for areas such as Industrial Organisation, Tax Policy and Public Economics, Environmental and Resource Economy, Health Economy etc.
Learning Outcome
The micro courses aim at providing the student with the ability to understand and apply the fundamental microeconomic concepts and tools. After Micro A's analysis of complete markets with perfect competition, Micro B will present a number of market imperfections present in real economies, all of them having political-economic relevance. After completing this course, the good student will, without serious mistakes or errors, be able to:

  • Analyse and understand how prices and quantities in the market are influenced by taxesas well as the distribution of effects on producers and consumers 
  • Analyse and understand how uncertainty influence consumer behaviour 
  • Analyse and derive firm behaviour if the firm has a monopoly or can apply different forms of price discrimination towards its customers 
  • Understand, analyse and derive how social decisions should be made based on different equitable or social-choice-oriented considerations 
  • Understand, analyse and derive how consumption and production externalities influence consumer and firm behaviour, as well as how policies can induce welfare improvements
  • Understand and analyse how decisions should be made in situations with public goods 
  • Understand, analyse and solve simple Principal-agent problems, where asymmetric information can cause problems for efficiency as well as equity 
  • Understand the basic concepts in behavioural economics 
  • Describe the topics covered in Micro 2 in a clear language without serious mistakes problem and to interpret the results
  • explain if a variable is exogenous or not exogenous and the reasons herefore.
  • carry out estimation for linear repeated cross section and panel data models based on data sets with two periods and to use such estimators for policy analysis.
  • be able to explain and carry out instrumental variables estimation on a specific data set
  • explain the correct use of proxy variables
  • apply econometric criteria for selecting a specific set of parameter estimates
  • be able to select and apply relevant techniques for analyzing new problems and data. This includes being able to identify characteristics of a data set, to propose and specify a relevant statistical model, to investigate to what extent the proposed statistical model give an adequate description of the data, to be able to estimate and interpret the parameters of the model, to report estimation results, to formulate economic questions as statistical hypotheses on the model parameters and to be able to test these hypotheses.


  • Thomas Nechyba: Microeconomics with Calculus, International Edition, 1. Edition. Chapters 17, 19, 21-23, 26-30
  • Birgitte Sloth: "Kontrakter med moralfare", i Grønne Undervisningsnoter nr. 85, Institute of Economics, August, 17 pages. (An English version will be provided on the course homepage)
  • Birgitte Sloth: "Kontrakter med ugunstig udvælgelse", i Grønne Undervisningsnoter nr. 85, Institute of Economics, August, 19 pages. (An English version will be provided on the course homepage)
Economics Principles A and B and Mathematics A and B.
It is a prerequisite that Micro A has been passed or comparable qualifications have been acquired elsewhere.
3 hours of lectures and 2 hours of excercises per week for 14 weeks

The syllabus is presented and perspectives given during lectures including (if possible) empirical analysis and relevant economic-political topics. The syllabus is further illustrated though exercises discussed at class teaching. There may be guest lectures given by external guests or by professors from the Institute for Economics on topics within their area of expertise. Economic Experiments to illustrate the syllabus may also be utilised.
  • Category
  • Hours
  • Class Exercises
  • 28
  • Exam
  • 3
  • Lectures
  • 42
  • Preparation
  • 133
  • Total
  • 206
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
3 hours writtten assignment taking place at Peter Bangs Vej 36.
Exam registration requirements
10 mandatory exercises and a mock test has to be approved
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % external censurship
Exam period
Will be published at the begining of the semester
Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment
The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.