LLEF10218U Consumer economics and policy

Volume 2013/2014
Content
The aim of the course is to give an introduction to the concepts of microeconomic theory, and thereby give a deeper understanding of consumer and producer behaviour in relation to economic decision making. Particularly the theory behind demand for certain goods and possible regulation of this demand is of importance to the course. During the course the aims and arguments for regulation in a broader perspective and in particular in relation to public food policy will be discussed.

The course consists of three main parts:

1. The economic part.
This is the theoretical part of the course. It focuses on consumer and producer behaviour. A central theme of the course is the behaviour of consumers and their decision making. The underlying assumptions about the consumers decision making are discussed thoroughly including the importance of the concepts of utility maximization, budget constraints, demand functions, prices and income.The firms’ production decisions are also discussed thoroughly during the course and concepts such as profit maximization and the equimarginal principle are introduced. In order to obtain a comprehensive picture of how different markets work, we include markets characterized by perfect competition, monopoly and oligopoly. Initially, demand and supply of goods and services are introduced together with the conditions for market equilibrium. Effects of taxes are studied and how they affect the behaviour of consumers and producers. Also, the distributional effects of taxes on consumers and producers are studied. The theory of comparative advantage and gains form trade is discussed, and shows that everybody benefits when each specializes in his area of comparative advantage and then engages in trade.

2. The welfare economic part.
The economic rationale for regulation is discussed and some of the mostly used policy instruments are examined. These instruments include:
- Change in prices through taxes, which change the behaviour of the consumers and producers.
- Information as a policy instruemnt. In basic economics it is often assumed that people possess perfect information, and that all available information is used in the utility maximizing process. This is of course not always the case, which is why information is another strong policy instrument.
- Other instruments such as direct regulation, public support and public control will also be discussed during the course.

3. Case studies. Relevant cases will be examined concernng food policy, food safety, food security, obesity, optimal nutrition etc. Consumer or producer behaviour in different cases will be examined using an economic appraoach and the optimal choice of policy instrument will be discussed.
Learning Outcome
The aim of the course is to give an introduction to the concepts of microeconomic theory, and thereby give a deeper understanding of consumer behaviour in relation to economic decision making and of economic policy instruments that can be used to affect the market.

After completing the course the students should be able to:

Knowledge:
Describe the demand and supply of goods.
Describe the effects of different policy instruments aimed at affecting the demand and supply of goods.
Reflect about the welfare and distributional effects from different policy instruments.
Define central concepts within the area of microeconomics and consumer behaviour.

Skills:
Apply microeconomic theory to analyse elementary economic problems.
Communicate and discuss concrete economic problems and solutions with different target groups.

Competences:
Cooperate with fellow students in analysing and solving different economic problems in a broader perspective and also in relation to public food policy.
Independently work with economic problems related to the food market.
Literature

Text book supplemented with relevant articles

Steven E, Landsburg (2008), Price Theory and Applications, 7e, Thomson South-Western.

The course cannot be attended by students from Jordbrugsøkonomi/​Agricultural Economics - ENRE, Naturressourcer med fagpakke i miljøøkonomi
Central parts of the curriculum will be presented through traditional lectures. This knowledge will be elaborated on in theoretical exercises. The students will in groups work with different case studies. A project report has to be submitted as a requirement for the 4-hour written exam.
  • Category
  • Hours
  • Exam
  • 4
  • Guidance
  • 10
  • Lectures
  • 42
  • Practical exercises
  • 40
  • Preparation
  • 54
  • Project work
  • 20
  • Theory exercises
  • 36
  • Total
  • 206
Credit
7,5 ECTS
Type of assessment
Written examination, 4 hours under invigilation
written exam in lecturehall
Exam registration requirements
Submitted project report
Aid
Without aids
Marking scale
7-point grading scale
Censorship form
No external censorship
One internal examiner
Re-exam
If 10 or fewer register for the reexamination the examination form will be oral.
Criteria for exam assesment
To obtain the grade 12 the student has to fulfill the Learning outcom