COURSE AIMS AND OBJECTIVES:
Fundamental concepts of economic science, building of fundamental models according to which economic entities behave, equilibrium on the markets of individual factors and products, understanding of general equilibrium, understanding of relation between individual and public interest.
COURSE DESCRIPTION AND SYLLABUS:
Budget space: imaginary space and budget space, influence of economic policy on the budget space
Choice and demand theory: axiomatic derivation of utility function, utility maximization and derivation of Marshall's demand function, features of indirect utility function, expenditure minimization and derivation of Hick's demand function, features of expenditure function, Slutsky's equation, duality, integrability, discovered preference, uncertainty
Applying theory of demand: Pareto's optimal product distribution to consumers, mathematical features of Pareto's optimum, process of "groping in the dark" and general competitive equilibrium, the first theorem of welfare economics, distribution problem and the second theorem of welfare economics, volume and price indexes, taxes, subsidies, and consumer welfare.
Production function: analysis of different sections of production area, assumptions out of which smooth, differentiable, strictly increasing and strictly quasi-concave production function is derived.
Choosing an optimal combination of production factors: potential and achievable space of productive factors, production maximization under given costs and derivation of nominal demand functions for production factors, deriving cost function by minimising costs for the given level of production, production expansion path, Pareto's optimal factor distribution into products, derivation of production contingency curve.
Cost functions: economies of scale and shapes of the functions of long-term costs, variable proportion principle and shapes of curves of short-term costs, long-term cost curves as a span of short-term cost curves, comparative-static analysis of indirect function of long-term cost duality of the function of long-term total costs and of production function.