Price Theory

Price theory examines how the decentralised production and consumption decisions of individuals are coordinated in the market. "Production," "consumption," and "markets"should be interpreted in the broadest possible sense, so that the course applies traditional economic analysis to the study of social phenomena such as altruism, addiction, and social interactions, in addition to more classical themes like specialisation and utility and profit maximisation. The analytical tools are applied both to partial-equilibrium settings and to interdependent markets. The course also explores the welfare aspects of various governmental regulatory interventions, as well as their distributive consequences. The emphasis is on practical issues and a deep, consistent application of key concepts such as complementarity, supply and demand, and (opportunity) cost.