Microeconomics II

2022/2023, Term I
Course faculty:
Professor Yulia Kuntsevych, PhD
E-mail: ikuntsevych@kse.org.ua
Course assistants: Galyna Mahova
E-mail: galyna.mahova@gmail.com
Office hours:
Amount of ECTS credits: 4
Class hours: 60 hours: approximately 38 lecture hours (2 times per week) + 22 practice hours
(1-2 times per week) + midterm and final exams, 3 hours each (length of 2 lectures)
Background and course rationale: The course examines the organization of markets from a
microeconomic perspective, the principles of microeconomic policy and the role of government
in allocating scarce resources.
Topics to be covered during course: perfect competition, monopolistic competition, oligopoly,
game theory and factor markets, general equilibrium and efficiency, markets with asymmetric
information, externalities and public goods.
Prerequisites:
● linear algebra, mathematical analysis and theory of probability
● Microeconomics I, including: consumer behaviour, intertemporal choice, uncertainty,
production, perfectly competitive markets.

Learning outcomes:
● Students will understand basic real-world microeconomic problems
● Will develop critical thinking about economic matters
● Will be able to solve stylized microeconomic models
● Will evaluate different economic policies and trace how they affect social welfare
● Understand the basic principles of strategic interaction
How we will work at this course (what kind of tasks and activities students are expected
do): This 8-week course will consist of approximately 38 (online) lectures and practice work
(problem solving sessions) twice a week. Students are highly recommended to attend all lectures
and problem-solving sessions timely.
Midterm exam will be scheduled tentatively on the 4th week, and the Final exam will tentatively
take place during 8th week of the term. Midterm and final exams will be scheduled for a length
of at least 3 hours (online formal of the exam, providing students several hours for completion)
for the time slots of lectures and practice sessions.
You will also be given at least 3 homework assignments. The TA will be responsible for grading
your homework problem sets and answering questions concerning grades and solutions.
Grading Policy: 30% homework, 30% midterm exam, and 40% final exam. Submissions after
the deadline receive at most 50 % of the full grade; submissions more than 4 days later than the
deadline receive zero grade (but you can nevertheless submit if you missed the second deadline
to obtain the feedback on your assignment. There will be no make-up for exams.
What final exam will look like: Midterm exam will be held during the first half of the course;
final exam will cover the material explained during the second half of the course.
Learning materials for the course (texts, video, audio etc):
Main book for the course:
● Microeconomics, 9th Edition - Robert Pindyck, MIT, Daniel Rubinfeld, University of
California, Berkeley
Additional books:
● Intermediate Microeconomics: A Modern Approach, Media Update, Hal R Varian

Course venue: KSE Dragon Capital Building, 3 Mykola Shpak Street, Kyiv
Academic integrity warning
Academic integrity is highly valued by the KSE community and its vast majority of students. We
do not tolerate plagiarism and cheating. Very competitive essence of the program calls for
absolutely equal treatment of all students. Even a single case of violation of academic integrity
is a serious misdemeanor which may lead to unjust redistribution of grades and, consequently,
overall rankings, possible grants, fee reductions and other merit-based awards. The minimum
penalty for a student caught cheating or plagiarizing during a quiz, a midterm or a final exam will
be a zero for this assignment with the consecutive decrease of the final course grade by at least
one letter-grade. Repetitive violation of academic integrity may lead to the dismissal of the
student from KSE, upon approval of the faculty committee. Please take this issue seriously and
responsibly.
 Course Plan
Recall from Microeconomics I (tbd):
1. Maximization of production and competitive supply
Marginal revenue, marginal cost, and profit. Maximization. Short and long term supply.
2. Analysis of the competitive market
Assessment of gains and losses from government regulation. Effectiveness of a competitive
market. Example: welfare implications of trade barriers.

Microeconomics II:

1. Market power (Microeconomics, 9th Edition - Ch 10)

Market Power: Monopoly and Monopsony. Sources of monopoly power, costs of monopoly
pricing.
2. Pricing with market power (Microeconomics, 9th Edition - Ch 11)
Price discrimination. Two-part tariff.
3.Strategic competition ( Microeconomics, 9th Edition - Ch 12)
Monopolistic competition. Oligopolistic market. Price competition. The Prisoner's Dilemma
4. Competitive strategy (Microeconomics, 9th Edition - Ch 13)
The concept of strategic interaction. Nash equilibrium. Repeated/sequential games.
5. Auctions (Microeconomics, 9th Edition - Ch 13)
Strategic interaction under uncertainty. Types of auctions.
6. Information, Market Failure (Microeconomics, 9th Edition - Ch 16 - 18)
General definitions

* Additional topics
1. Risk and financial markets
Behavioral Economics. Consumer's attitude to risk, demand for risky assets. "Bubbles"
2. Public goods
Definition of Externalities. The problem of underfunding of public goods and other examples of
“market failures”. Coase's theorem