About this Course
14.01 Principles of Microeconomics is an introductory undergraduate course that teaches the fundamentals of microeconomics. At MIT, this is the first course that undergraduates take in economics. For some, it may be the only course they take in the subject, and it provides a solid foundation for economic analysis and thinking that can last throughout their education and subsequent professional careers. For other students, it may provide a foundation for many years of study in economics, business, or related fields.
This course begins with an introduction to supply and demand and the basic forces that determine an equilibrium in a market economy. Next, it introduces a framework for learning about consumer behavior and analyzing consumer decisions. We then turn our attention to firms and their decisions about optimal production, and the impact of different market structures on firms’ behavior. The final section of the course provides an introduction to some of the more advanced topics that can be analyzed using microeconomic theory. These include international trade, the impact of uncertainty on consumer behavior, the operation of capital markets, equity vs. efficiency trade-offs in economic policy and social insurance.
By the end of the course, you will be able to understand introductory microeconomic theory, solve basic microeconomic problems, and use these techniques to think about a number of policy questions relevant to the operation of the real economy.
Prerequisites and Preparation
This course will include some basic uni-variate calculus material, as taught in the MIT course 18.01 Single Variable Calculus or in a comparable high-school calculus course. There are no other prerequisites.
Visit 18.01SC Single Variable Calculus to learn or review this material.
Course Goals
After completing this course, students should have developed a range of skills enabling them to understand economic concepts and use those concepts to analyze specific questions.
By the end of this course, students should be able to:
- Understand consumer behavior.
- Understand firm behavior.
- Analyze different types of market structures (monopoly, oligopoly and a competitive market).
- Understand how to apply economic principles to a range of policy questions.
Students should also have the skills needed to:
- Use supply and demand diagrams to analyze the impact of overall changes in supply and demand on price and quantity.
- Solve a consumer’s utility maximization problem mathematically and graphically; analyze the impact of changes in price and income on a consumer’s decision via shifting income and substitution effects.
- Understand the consumer’s labor supply decision.
- Solve a firm’s cost minimization problem mathematically and graphically.
- Analyze the behavior of firms in a perfectly competitive market in the short-run and the long-run.
- Calculate producer and consumer surplus.
- Analyze the behavior of firms in a monopoly or oligopoly, and calculate the resulting changes in producer or consumer surplus.
- Understand consumer behavior under uncertainty.
- Use economic tools to analyze economic policies.
Course Components and Requirements
- Assigned readings
- Recitations
- Lectures
- Nine problem sets
- Two midterm exams
- Final Exam
Assigned Readings
Readings are assigned for each lecture, and should be completed prior to watching the lecture videos and completing subsequent activities.
TEXTBOOK | DESCRIPTION |
---|---|
[Perloff] = Perloff, Jeffrey M. Microeconomics. 5th ed. Addison Wesley, 2008. ISBN: 9780321558497. | This is the official textbook used by students enrolled in the class at MIT. While OCW cannot provide online access to this book, we provide “For Further Study” links to supplemental materials. |
[R&T] = Rittenberg, Libby, and Timothy Tregarthen. Principles of Microeconomics (PDF - 15.1MB). 2009. (Courtesy of Libby Rittenberg, Timothy Tregarthen, and the Saylor Foundation.) | This Creative Commons-licensed text is a free online alternative to Perloff text used in the class at MIT. |
Recitations
In Recitations, students meet with a Teaching Assistant in a smaller group to go over problem set and exam solutions, review key concepts, and occasionally learn new material. A selection of recitation notes is included throughout this course and highlights some of the key teachings of 14.01.
Deliverables and Grading
There will be nine mandatory problem sets which will be individually graded. At the end of the term students will have the best eight homework grades cumulated up and this will count for 22% of the final course grade.
There will be two midterm exams held throughout the term. These will each cover roughly one -third of the course material, will be 2 hours long, and will count as 22% (collectively 44%) of the grade.
There will also be a three hour final, which will be cumulative and cover all of the course materials. This will count as the remaining 34% of the grade.
Acknowledgements
This course includes substantial contributions from several talented 14.01SC Teaching Assistants.