Fall 2017 - 61030 - PA 393K - Applied Microeconomics for Policy Analysis

Applied Microeconomics for Policy Analysis

This is a graduate level introduction to microeconomics for policy analysis. For two-thirds of the semester, the primary organizing theme is the neoclassical framework of rational choice and policy solutions to market failure within that framework. The remainder of the semester covers history of economic thoughts, institutional structure, political decision making, and other views in economic analysis.

Students completing this course successfully will have acquired the basic logic of economic thinking, some experience in using this logic for policy analysis, and an appreciation of the limitation of the logic.

Structure of Content 

This course includes an independent research component and a classroom instruction component. Class members will form project teams, with each team doing independent research on the economic analysis of a policy topic. The classroom component of the course is organized into three parts:

  • Overview (two weeks) - big picture summary of history of economic thoughts, the basic logic of economic thinking, and the U.S. economic context.
  • The Neoclassical Story of the Market (six weeks)—neoclassical models of consumer choice, firm production, and market equilibrium.
  • Market Failure and Institutional Design (four weeks)—reasons for market failure, justification for policy interventions, and design of non-market approaches to address resource allocation and distribution.
  • Integrative Applications (three weeks)—use of economic logic to understand substantive real-life topics, taught by teams of class members.

Learning Experiences 

There will be six projects spread throughout the semester, covering the progress from (a) historical perspective to (b) mechanics of mathematical analysis of economic concepts to (c) more complex economic modeling and creative policy application.

  • Project 1: Analytic Problem-Solving Exercise (consumer choice theory)
  • Project 2: Analytic Problem-Solving Exercise (firm production theory)
  • Project 3: Friday Learning Experience (all issues in neoclassical logic)
  • Project 4: Policy Briefing Paper (topic of team research)
  • Project 5: Teaching Session (topic of team research)
  • Project 6: Reaction Paper (integrative essay)

There is a weekly tutorial held every Wednesday evening, from 5:30 to 7 p.m. Attendance at that session is expected in the first two weeks, optional the rest of the semester.


This course is taught with mathematics as analytic language. Proficiency in algebra and differential calculus and concurrent enrollment in IEM are expected. Previous background in microeconomics is not required. Class members are asked to refrain from note-taking in class.

SRH 3.316/3.350