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Introduction
Economics for Business will extend the microeconomics and macroeconomics you learned in first year in two distinct areas.
Microeconomics. In this module you will learn about strategic behaviour and about market failure: the various real life situations in which the market does not deliver optimal outcomes. In the case of market failure, achieving an optimal outcome requires that free markets have to be supplemented by other devices or institutions. Two major sources of market failure are information asymmetry (this occurs when one party to a transaction knows more than the other party) and the existence of Externalities and Public Goods. In the case of strategic behaviour, economic outcomes depend not just on one's own actions but, also, on the actions of others. Consequently, people in economic life have to behave strategically, taking account of what others will also do. Weeks 3-6 of the module will address these issues. Weeks 1 and 2 weeks will cover more familiar microeconomic topics, relating to the consumer and the producer, with a view to refreshing, and extending, knowledge about basic concepts and material.
Macroeconomics. This module will refresh the macroeconomics you learned in first year and build on it in 3 major directions. First, the study of growth and development will be introduced via the Solow and Romer growth models. Second, we will develop an equilibrium business cycle model. Third, we will explore topics related to hyperinflation and public finance using guest lectures.
Learning Outcomes
After this module, students should be able to
- Analyse decision making under conditions of uncertainty and the role of insurance in reducing uncertainty
- Understand the issues underpinning adverse selection and the role of signaling in overcoming this problem.
- Appreciate the problem of moral hazard which underpins principal-agent relations and the importance of contract design in addressing this issue.
- Understand the economic and political issues underlying the provision and pricing of public goods.
- Understand the importance of property rights assignment in analyzing the issue of externalities.
- Understand why non-competitive markets lead to inefficient outcomes and how this may be quantified.
- Understand the factors behind Ireland's economic growth.
- Be able to describe and identify different phases of the business cycle.
- Be familiar with the workhorse models of open and closed macroeconomics.
Download the course outline in full at the link below.