INTERMEDIATE MICROECONOMICS

1: Market & Efficiency

about this course; first look at rationality, equilibrium and efficiency; in-class illustration of a market (CH 1)

2: Preference & Utility

preference relations; utility representation theorem; cardinal vs ordinal utility; convex preferences (CH 3 & 4)

3: Consumer Problem I

utility maximization under budget constraints; indifference curves; marginal rate of substitutions and price ratio (CH 2 & 5)

4: Consumer Problem 2

Lagrange method; well-behaved preferences and sufficient conditions; various examples (CH 5)

5: Revealed Preference 1

weak/strong axiom of revealed preferences; rationalizable datasets; representation theorems (CH 7)

6: Revealed Preference 2

system of prices and income; SAPR and well-behaved preferences; checking weak/strong axiom; applications (CH 7)

Homework 1 (Solutions)

7: Demand Functions 

Marshallian demand; price/income changes; Giffen goods; Engle curves; homothetic preferences (CH 6)

8: Slutsky Decomposition

Slutsky's decomposition; income effects and substitution effects (CH 8)

9: Endowment

buying and selling; ordinary income effect; endowment income effect; application in labor supply (CH 9)

10: Consumer Surplus

visualizing consumer surplus; quasi-linear utility and dollar measure; compensating and equivalent variations (CH 14)

Homework 2 (Solutions)

11: Market Demand

aggregate demand; representative agent; weak axiom; elasticities; revenue maximization (CH 15)

12: Equilibrium

demand, supply, and equilibrium; taxation and subsidy; tax incidence; implications on welfare (CH 16)

Homework 3 (Solutions)

13: Technology & Profit

production; marginal rate of technical substitution; return-to-scale; marginal revenue and marginal cost (CH 19 & 20)

14: Cost

Cost minimization; Lagrange method; average cost; marginal cost; long-run/short-run; variable/fixed cost (CH 21 & 22)

15: Supply 1

supply curve; long-run vs short-run profit; producer surplus (CH 23)

16: Supply 2

cost data and supply curve; industry/aggregate supply; long-run equilibrium; free entry; economic profit and economic rent (CH 24)

Homework 4 (Solutions)

17: Monopoly 1

price as a decision variable; market power; tatal surplus; efficient output; markup; dead-weight loss (CH 25)

18: Monopoly 2 & Monopsony

markup, elasticities, and Lerner index; price control and price ceiling; marginal revenue product; factors supply (CH 25 & 27)

19: Price Discrimination

non-linear pricing; 1st degree price discrimination; surplus extraction; 3rd degree price discrimination; two-part tariffs (CH 26)

20: Screening

2nd degree price discrimination; Riley Maskin screening, menu design and incentive compatibility (CH 26)

Homework 5 (Solutions)

21: Pure Strategies 1

pure strategies; simultaneous move; Nash equilibrium; Nash bargaining; dominant strategy equilibrium (CH 29 & 28)

22: Pure Strategies 2

Cournot competition; Bertrand competition; Vickrey (second-price) auction (CH 29 & 28)

23: Mixed Strategies

randomization; expected utility; mixed strategy NE; best response correspondences; existence of NE; symmetric equilibrium (CH 30)

24: Dynamic Games

complete contingent plan; backward induction; subgame perfect NE; non-credible threat; various applications (CH 29 & 30 & 28 & 27)

25: Asymmetric Information

types; adverse selection; Akerlof market for lemons; moral hazard; work or shirk; signaling; Spence education model (CH 38)

Homework 6 (Solutions)

26: Exchange 1

Walrasian equilibrium & existence; Pareto-optimality; 1st & 2nd Welfare Theorems; Edgeworth box, contract curve, core allocations (CH 32)

27: Exchange 2 & Externalities

Pareto-optimal allocations, externalities; property rights & Coase's conjecture; production externalities; tragedy of the commons (CH 32 & 35)

28: Public Goods

Pareto-optimal level of public goods; uniqueness under quasi-linear preferences; provision decisions (CH 37)

Homework 7 (Solutions)