Econ 3012: Intermediate Microeconomics

Course description

Office hours:

Kirill Evdokimov:

Problem sets and exams:

There will be 6 problem sets, a midterm exam, and a final exam. The midterm exam will take place on October 9. There will be a review session on October 7. The final will take place on Saturday, December 7 for the 9:05 - 9:55 MWF Section, and Monday, December 14 for the 10:10 - 11:00 MWF Section. The final will be cumulative, although it will likely emphasize the material from the second part of the course.

Grading:

Problem sets and exams will not be graded on a curve. The course grade will be determined by the following weights: 20% problem sets, 30% midterm, and 50% final. I will curve the course grade.

Textbook

The official textbook is Intermediate Microeconomics: A Modern Approach by Hal Varian. However, I will not be following the textbook closely. I will be providing my own notes and problem sets. The textbook is a good resource for additional problems and examples, but it is not required.

Schedule and class notes

Week 1: Budget/Preferences

8/21: Budget sets, numeraire, taxes, subsidies, rationing
8/23: Consumer preferences, indifference curves

Week 2: Utility/Choice

8/26: Well-behaved preferences, marginal rate of substitution
8/28: Ordinal utility, monotonic transformations, cardinal utility, marginal utility
8/30: Optimal choice, consumer demand, preference maximization

Week 3: Demand/Revealed preference

9/2: Labor Day (no class)
9/4: Normal and inferior goods, income offer curve, Engel curve, Ordinary and Giffen goods
9/6: Price offer curve, demand curve, substitutes and complements, inverse demand function

Week 4: Slutsky Equation/Buying and Selling

9/9: Slutsky substitution effect, income effect, total change in demand, law of demand
9/11: Hicks substitution effect, compensated demand, net and gross demands, changing the endowment, price changes
9/13: Offer curves and demand curves, Slutsky equation, labor supply, comparative statics

Week 5: Consumer's Surplus

9/16: Constructing utility from demand, consumer's surplus and consumers' surplus, change in consumer's surplus
9/18: Compensating and equivalent variation, producer's surplus, cost-benefit analysis
9/20: From individual to market demand, inverse demand function, extensive and intensive margin, elasticity of demand

Week 6: Market Demand/Equilibrium

9/23: Elasticity and revenue, constant elasticity, elasticity and marginal revenue, income elasticity
9/25: Supply, market equilibrium, inverse supply and demand curves, comparative statics
9/27: Taxes, passing along the tax, deadweight loss of tax, Pareto efficiency

Week 7: Exchange

9/30: Edgeworth box, trade, Pareto efficient allocations, market trade
10/2: Walras law, relative prices, existence of equilibrium, First welfare theorem
10/4: Second welfare theorem

Week 8: Midterm review

10/7:
10/9:

Fall break

Week 9: Intertemporal Choice/Asset Markets

10/14: Columbus Day (no class)
10/16: Intertemporal budget constraint and preferences, comparative statics, inflation, present value
10/18: Rates of return, arbitrage, bubbles, natural resources, financial institutions

Week 10: Technology/Profit Maximization

10/21: Inputs and outputs, technological constraints, marginal product, technical rate of substitution
10/23: Diminishing marginal product, diminishing technical rate of substitution, returns to scale
10/25: Profit, fixed and variable factors, short-run profit maximization, long-run profit maximization

Week 11: Cost Minimization/Cost Curves

10/28: Cost minimization, long-run and short-run costs, sunk costs
10/30: Average costs, marginal costs, marginal costs and variable costs
11/1: Long-run costs, long-run marginal costs

Week 12: Firm Supply/Industry Supply

11/4: Market environments, competitive firms, inverse supply function, profits and producer surplus
11/6: Long-run supply curve, long-run constant average costs, short-run industry supply, industry equilibrium in the short run
11/8: Industry equilibrium in the long run, long-run supply curve, zero profit, economic rents, rent seeking

Week 13: Monopoly/Monopoly Behavior

11/11: Veterans Day (no class)
11/13: Profit maximization, linear demand curve, ineffiency, deadweight loss, natural monopoly
11/15: Price discrimination, bundling, two-part tariffs

Week 14: Externalities/Public Goods

11/18: Quasilinear preferences and Coase theorem, production externalities
11/20: Tragedy of the commons, pollution, public goods, private provision and free-rider problem
11/22: Efficiency of public good provision, the role of quasilinear preferences

Thanksgiving Holidays

Week 15: Final review

12/2:
12/4:

Problem sets

Problem set 1
Problem set 2
Problem set 3
Problem set 4
Problem set 5
Problem set 6

Sample exams

Sample midterm
Sample final

Topics that are not covered

Uncertainy, Risky assets
Auctions, Oligopoly, Game theory, Game applications, Asymmetric information
Information technology