Principles of Economics and Management I

Syllabus and Course Information · 2026/2027

Author
Affiliation

Paulo Fagandini

Faculty of Sciences, University of Lisbon (FCUL)

🇵🇹 Português

General Information

Course leader Paulo Fagandini
Email (to be defined, FCUL institutional email)
Institution Faculty of Sciences, University of Lisbon (FCUL)
Master Applied Mathematics for Economics and Management (MMAEG)
Academic year 2026/2027
Schedule Wednesdays, 19:00-22:00
Teaching period 16 September to 16 December 2026
Language English (see the Language section)
Format 12 lecture sessions + midterm test (the final test is held in the exam period)

Goals

This course is aimed at students with a strong background in mathematics and statistics (mathematics, physics, engineering, etc.) entering the Master in Applied Mathematics for Economics and Management (MMAEG), with no prior training in economics, who will go on to work in banking, insurance and investment firms.

The goal is to give students economic intuition and vocabulary so they can communicate effectively with colleagues, understand the logic behind organizational decisions, and apply their quantitative skills to economic problems with confidence.

Course Approach

The course takes a principles approach with quantitative treatment. The breadth of topics is that of an introductory economics course; the treatment takes advantage of the class’s mathematical training. Optimal choices are presented as constrained optimization problems, elasticities as derivatives, debt dynamics as a recurrence relation. The time that would otherwise go into introducing the mathematics is spent here on the economics: on what the results mean, on European data, and on exercises worked in class.

Each session covers a single theme. The load per session was deliberately reduced to leave room for exercises worked together, which is where the intuition sticks.

The OpenStax textbooks (open access) serve as the accessible narrative and first reading; Varian and Blanchard provide the formal treatment for those who want to go deeper. Data and examples are European: the ECB and the Eurosystem, Eurostat and INE, the euro area and the Stability and Growth Pact.

The lecture notes and slides are the primary reference. No textbook is mandatory reading.

Programme

Each session covers one theme, with exercise blocks worked in class.

Block 1 · Microeconomics (Sessions 1-6)

Session 1 · Economic Thinking and Scarcity. What economics is, and the distinction between microeconomics and macroeconomics. Scarcity, opportunity cost and trade-offs. The production possibility frontier and social choices. The marginal principle: marginal benefit and marginal cost, and the optimal decision as a first-order condition. Sunk costs. How economists think differently, and the key vocabulary for finance professionals.

Session 2 · Consumer Choice. Preferences and the assumptions behind them. Utility as a representation of a ranking, and why the number it takes carries no information. The budget set. Maximizing utility subject to the budget constraint, solved with the Lagrangian; the multiplier as the marginal utility of income, that is, as a shadow price. The solution as a function of prices and income: Marshallian demand, worked through the Cobb-Douglas case and its comparative statics. Corners and kinks: perfect substitutes and perfect complements.

Session 3 · Demand and Elasticity. From the individual optimum to market demand. Price elasticity of demand and supply; income and cross-price elasticity. Point versus arc elasticity, what makes demand elastic, and constant-elasticity demand. Elasticity and revenue, and the link to marginal revenue. Consumer surplus. Applications: pricing power and the pass-through of cost shocks.

Session 4 · Production, Costs and Market Structures. Production function and profit maximization. Fixed, variable, average and marginal costs, and why marginal cost crosses average cost at its minimum. The supply curve as marginal cost; producer surplus and the shutdown condition. Perfect competition. Market power: monopoly, the markup, and its link to elasticity. Applications: firm valuation and industry analysis.

Session 5 · Market Equilibrium and Taxes. Equilibrium from demand and supply. Total surplus, and why equilibrium maximizes it; shortages and gluts out of equilibrium. Comparative statics: shifts of the curves versus movements along them, and the four cases. Taxes: the wedge, incidence and who really pays, and the deadweight loss. Applications: European goods markets, and the interest rate as the price of credit.

Session 6 · Uncertainty, Risk and Asymmetric Information. Choice under uncertainty: expected utility, risk aversion and the risk premium. Risky assets and diversification. Imperfect and asymmetric information: adverse selection and moral hazard. Insurance and imperfect information. Applications: insurance underwriting and pricing, credit granting and counterparty risk.

Block 2 · Macroeconomics (Sessions 8-13)

Session 8 · GDP, Measurement and Growth. National accounts and the measurement of Gross Domestic Product. Adjusting nominal values to real values; the deflator. GDP as a (limited) measure of well-being. Growth accounting and the Solow model as intuition only, without full derivation: savings, investment, steady state. Eurostat and INE data.

Session 9 · Unemployment, Inflation and the Labor Market. Labor supply and demand. Defining and computing the unemployment rate; frictional, structural and cyclical unemployment. Wage rigidity. Measuring inflation and the cost of living: the Harmonised Index of Consumer Prices. Phillips curve intuition. Euro area and Portuguese data.

Session 10 · Money, Banking and Inflation. The functions of money and the monetary aggregates (currency, M1, M2). How banks create credit; the money multiplier. Quantity theory of money. Inflation: causes, measurement and costs. The Eurosystem as a system of central banks and the 2% target. Relevance: bond pricing, real versus nominal returns.

Session 11 · Monetary Policy. European Central Bank objectives and tools. Interest rate setting and the Taylor rule. Transmission mechanism to the economy. Quantitative easing. Banking regulation; limits and risks of monetary policy. Relevance: understanding ECB decisions and their impact on portfolios.

Session 12 · Fiscal Policy. Government budget, revenue, spending and taxes. Deficits and public debt dynamics. Fiscal multipliers. Ricardian equivalence, and why it fails in practice. The EU Stability and Growth Pact. Relevance: sovereign debt, credit ratings and fiscal sustainability.

Session 13 · Open Economy. Absolute and comparative advantage. Exchange rate determination: purchasing power parity and interest rate parity. The foreign exchange market and the euro. Current account and capital account, balance of payments and the savings-investment identity. Relevance: FX risk, international portfolio diversification, carry trade.

Assessment

Periodic assessment (tests), with two in-person written tests:

Test Session Date Content Weight
Midterm 7 04/11/2026 Block 1, Microeconomics 50%
Final · normal exam period Block 2, Macroeconomics 50%

The final test does not take up a teaching session: it is held on the date set for this course in the normal exam period (5-19 January 2027), to be fixed in the FCUL exam calendar.

To pass: final grade \(\ge\) 10 out of 20. The final grade is the weighted average of the two tests, rounded to the nearest integer (FCUL Assessment Regulation, Deliberação 1279/2020, art. 7(3)), so an average \(\ge\) 9.50 means a pass.

Exam Regime

Students who do not take the periodic assessment are assessed by a single written exam (100%) in the normal period of January, held on the same date as the final test and covering the whole semester.

The resit period (22 January to 5 February 2027) is open to all students, including those under periodic assessment who did not pass (FCUL Pedagogical Council norm of 5/7/2023).

Exam Rules

  • Calculator: only a basic scientific calculator is allowed; graphing calculators are not permitted.
  • Electronic devices: using earphones, headphones, a smartwatch, smartphone or any electronic device during the test is considered fraud.

Schedule

Classes on Wednesdays, 19:00-22:00. Dates in day/month format (2026).

# Date Session
1 16/09 Economic Thinking and Scarcity
2 23/09 Consumer Choice
3 30/09 Demand and Elasticity
4 07/10 Production, Costs and Market Structures
5 14/10 Market Equilibrium and Taxes
21/10 no class, FCUL Research Day
6 28/10 Uncertainty, Risk and Asymmetric Information
7 04/11 Midterm (Block 1, Microeconomics)
8 11/11 GDP, Measurement and Growth
9 18/11 Unemployment, Inflation and the Labor Market
10 25/11 Money, Banking and Inflation
11 02/12 Monetary Policy
12 09/12 Fiscal Policy
13 16/12 Open Economy
Jan/27 Final test (Block 2, Macroeconomics), in the normal exam period

Schedule notes:

  • Start of the FCUL academic year: 14/09/2026. This course’s classes begin on 16/09.
  • 21/10/2026: no class (FCUL Research Day; master’s students are excused from the remaining activities).
  • Exam period: 5-19 January 2027. Resit period: 22 January to 5 February 2027.
  • The final test is held on this course’s date in the normal exam period, to be fixed in the FCUL exam calendar.

Bibliography

Supporting references. None is mandatory reading; the lecture notes and slides are the primary reference.

Introductory reading (open access, CC BY):

  1. OpenStax, Principles of Microeconomics, 3rd ed. (Shapiro, MacDonald, Greenlaw), Rice University.
  2. OpenStax, Principles of Macroeconomics, 3rd ed. (Greenlaw, Shapiro et al.), Rice University.

Formal treatment, for going deeper:

  1. Varian, H. R., Intermediate Microeconomics: A Modern Approach, 9th ed., W. W. Norton.
  2. Blanchard, O., Amighini, A., Giavazzi, F., Macroeconomics: A European Perspective, 3rd ed., Pearson.

Chapter references are to these editions; section and page numbering may vary across editions. Examples and data are reframed for the European context (ECB and Eurosystem, Eurostat, INE, euro area).

Reading Map by Session

For each session, the corresponding introductory reading and formal treatment.

Session Topic OpenStax (Micro / Macro) Varian / Blanchard
1 Economic Thinking and Scarcity Micro 1, 2 Varian 1
2 Consumer Choice Micro 6 Varian 2, 3, 4, 5, 6, 8
3 Demand and Elasticity Micro 5, 6 Varian 6, 15
4 Production, Costs and Market Structures Micro 7, 8, 9 Varian 18, 19, 20, 21, 22, 23, 24, 25
5 Market Equilibrium and Taxes Micro 3, 4 Varian 1, 16; Blanchard 3
6 Uncertainty, Risk and Asymmetric Information Micro 16 Varian 12, 13, 37
8 GDP, Measurement and Growth Macro 6, 7 Blanchard 1, 2, 10, 11
9 Unemployment, Inflation and Labor Market Macro 8, 9 Blanchard 6, 7, 8; Varian 9 (optional)
10 Money, Banking and Inflation Macro 14 Blanchard 4, 14, 17
11 Monetary Policy Macro 15 Blanchard 4, 5, 21, 22
12 Fiscal Policy Macro 17, 18 Blanchard 3, 5, 22, 23
13 Open Economy Macro 10, 16, 20 Blanchard 17, 18, 19, 20

Language of Instruction

The language of instruction is English, at least at the start of the semester. All written materials (slides, problem sets and assessments) are in English and stay in English for the whole semester.

If, and only if, every enrolled student understands Portuguese, the spoken classes may switch to Portuguese from some point onward. The written materials do not change in that case: they remain in English, so that nobody is put at a disadvantage and the course stays accessible to international students.

This syllabus is available in English and Portuguese. The English version is the primary one, since it matches the language of instruction.

Slides

Slides for each session, in projector and scrollable web versions.