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Facoltā di Scienze Agrarie e Alimentari Universitā degli Studi di Milano
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Code: G290JA
Teacher:  Daniele Cavicchioli
CFU subdivision: Lectures: 6
Basic aims:  The aim of the course is to introduce students to jargon and basic principles of economics and statistical sciences. The module of Economics is meant to explain laws describing behaviour and interaction among economic agents (families and firms) mainly at micro level (microeconomics) with a short outline at aggregated level (macroeconomics). The module of statistics introduces descriptive statistics and treats some topics of inferential statistics.
Acquired skills:  Students should be able to understand economic information (about production, consumption and food markets dynamic) presented both on newspapers and reviews of food science. Students should be able to correctly understand and represent statistical data both in tabular and graphical form.
Part I - Economics Consumption and demand: Consumer optimum; demand elasticity. Markets and their adjustments over time. Production and supply: function adn factors of production, scale economies, production costs, supply curve, profit maximisation (primal form). Market equilibrium and market strucures: perfect competition, monopoly, monoplistic competition and oligopoly.
Program:  1) INTRODUCTION. The economic problem, field of study and classification of economic science. Macroeconomics and microeconomics, definitions and domain of inquiry. The opportunity cost and the Production Possibility Frontier. Monetary economics and income circular flow . Economic systems: planned economy, free market economy and intermediate forms. The price mechanism. product markets, factor markets and their interactions. Advantages and disadvantages of free market economy

2) DEMAND, SUPPLY AND MARKET EQUILIBRIUM. demand law, substitution and income effects. Demand function in tables and graphs. Individual and market demand. Demand shifters other than price. Shifts of the demand curve and shifts along the demand curve. Supply function, individual and market supply. Supply shifters other than priced. Shifts of the Supply curve and shifts along the Supply curve. Shifts of supply function, graphical and analytical examples. Price and quantity equilibrium, exercises in graphical and analytical form.

3) DEMAND AND CONSUMER. Consumer theory, budget constraint given prices of goods and consumer income, graphical and analytical representation (budget line). budget line shifts as a consequence of price and income change (graphical and analytical examples).Consumer preferences' representation: indifference curves and their characteristics. Marginal Rate of Substitution, complement and substitute goods. Conditions for consumer optimum. Change in consumer optimum as income change: income expansion path, the Engel curve, normal and inferior goods . Change in consumer optimum as price change: income and substitution effect for normal, inferior and Giffen goods. Price expansion path and derivation of individual demand curve. Market demand curve for aggregation of individual demand. Inverse demand function as a measure of willingness to pay for a good. Consumer and producer surplus.

4) ELASTICITY. Own price elasticity, definition, calculation; computation of middle point (arch elasticity) elasticity and point elasticity. own price elasticity, its determinants, relationship between elasticity and consumers expense and firm total revenue . Exercises on own demand elasticity using middle point elasticity. Supply elasticity, definition, determinants, exercises. Income elasticity, determinants, necessary, inferior, normal and luxury goods, exercises. Cross price elasticity, computation, interpretation and sign; complementary and substitute goods. Examples of cross price elasticity among factors and products. Exercises.

PRODUCTION AND SUPPLY. Definition of profit, total revenue, total cost, variable cost and fixed cost. Definition of production function, short and long run. Short run production function (one variable input only). Total, average and marginal product functions, graphical representation. Long run production function, isoquant and its characteristics, Marginal Rate of Technical Substitution. Fixed cost, total and variable cost functions, characteristics, computation and graphical representation. average, marginal, average fixed and average variable cost functions, characteristics, computation and graphical representation. Break even price and shut-down price. Long run production function: isoquant. Optimal allocation of production factors in the long run. Return to scale, Long run average costs, scale economies, scale diseconomies. External scale economies and diseconomies. Minimum efficient production dimension and the relationship between long and short run average costs. Total, average and marginal revenue when the individual firm is price taker. Total, average and marginal revenue when the individual firm is price maker. Distinction between profit and extra-normal profit.

6) MARKET STRUCTURES. Parameters according to which market structures are defined. Perfect competition, monopoly, monopolistic competition and oligopoly. Perfect competition, characteristics, short run equilibrium, profit maximisation conditions. Break-even and Shut-down prices and the derivation of firm supply function. Exercises on perfect competition. Monopoly characteristics and entry barriers. Profit maximisation and equilibrium in Monopoly. Comparison between monopoly and perfect competition assuming identical cost structures. Graphical and numerical exercises on monopoly, computing profits, total, average and marginal costs and revenues. Computation of total costs using average and marginal values. How to find profit maximization quantities (using marginal or total costs and revenues), total revenue maximizing quantities(using marginal or total values) and maximum quantity can be sold without deficit budget. Monopolistic competition, long run and short run equilibrium. comparison between perfect competition and monopolistic competition in the long run, the excess of productive capacity. Common features and differences among perfect competition, monopoly and monopolistic competition. Oligopoly and its distinctive features, the strategic interaction and entry barriers. Collusive oligopoly, equilibrium and profit maximisation of a cartel. Tacit collusion and factors facilitating its formation. Price competition. Oligopoly and game theory, example of game in dominant strategies (minmax e maximax). The kinked demand curve in oligopoly. Price discrimination
Prerequisites:  THE COURSE WILL BE DELIVERED IN ITALIAL Knowledge of basic linear algebra and analytical geometry: to be able to calculate percentage variations, to be able to represent a line on a Cartesian plan (given the equation of the line), to be able to solve a system of two equation and two unknown
Preparatory instructions:  students are highly encouraged to attend the course and to study for the math exam essentials of calculus. However having passed that exam is not a strict prerequisite for attending this course.
Learning materials:  Reccomended Textbook: Sloman J. (2010) Essentials of Economics, Harlow Pearson.

Supplementary text: J.M. Perloff, Microeconomics 6th or 7th edition, Pearson
ADDITIONAL MATERIAL (IN ITALIAN) ON THE ARIEL WEBSITE: http://ees.ariel.ctu.unimi.it/v3/home/Default.aspx
Other info:  The exam consists in a written test (IN ITALIAN) on the topics covered both in the economics and in the statistics classes. For each part (economics and statistics) students will face true/false question, multiple choice questions and exercises. Wrong answers does not lead to negative score. the exam mark will be the sum of economics and statistics marks.
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