# Spring 2015, ECONOMICS 101A – MICROECONOMIC THEORY

## Time

9:30 - 11:00 am

## Location

60 Evans Hall

Instructor:

Office:

515 Evans Hall

Office Hours:

Thursday 12:00n - 2:00pm

E-mail:

Instructor:

Office:

Please see location under office hours below

Office Hours:

Tuesday 1:00 - 2:00pm in 640 Evans Hall and
Tuesday 4:00 - 5:00pm in 542 Evans Hall

E-mail:

Instructor:

Office:

636 Evans Hall

Office Hours:

Wednesday 11:00am - 12:00n

E-mail:

## Course Description

Welcome to Economics 101A! This course is meant to introduce you to the world of formal

economic modeling. Economic models are typically made of three components:

• Consumers;

• Firms;

• A market in which consumers and firms interact.

We deal with these three components sequentially. The course starts by introducing consumer

preferences and utility function. We then move on to consider firms and production functions, and

finally we study the market-clearing conditions.

## Problem Sets and Answers

## Lecture Notes

Outline
1. Who are we?
2. Prerequisites for the course
3. A test in maths
4. Optimization with 1 variable

Outline
1. Questions on Syllabus
2. The economics of discrimination
3. Multivariate optimization II
4. Comparative Statics
5. Implicit function theorem

Outline
1. Implicit Function Theorem
2. Envelope Theorem
3. Convexity and concavity
4. Constrained Maximization

Outline
1. Constrained Maximization
2. Envelope Theorem II
3. Preferences
4. Properties of Preferences

Outline
1. Properties of Preferences II
2. From Preferences to Utility (and viceversa)
3. Common Utility Functions
4. Utility maximization

Outline
1. Common utility functions
2. Utility maximization
3. Utility maximization — Tricky Cases
4. Indirect Utility Function

Outline
1. Utility Maximization II
2. Utility maximization — Tricky Cases
3. Indirect Utility Function
4. Comparative Statics (Introduction)
5. Income Changes
6. Price Changes

Outline
1. Price Changes II
2. Expenditure Minimization
3. Slutsky Equation

Outline
1. Slutsky Equation II
2. Complements and substitutes
3. Do utility functions exist?
4. Application 1: Labor Supply
5. Application 2: Intertemporal choice I

Outline
1. Application 2: Intertemporal choice
2. Application 3: Altruism and charitable donations

Outline
1. Introduction to probability
2. Expected Utility
3. Risk Aversion and Lottery
4. Measures of Risk Aversion
5. Insurance

Outline
1. Mid-Term Feedback
2. Investment in Risky Asset
3. Time Consistency
4. Time Inconsistency

Outline
1. Time Inconsistency
2. Health Club Attendance
3. Production: Introduction
4. Production Function

Outline
1. Production Function II
2. Returns to Scale
3. Two-step Cost Minimization

Outline
1. Cost Minimization: Example
2. Cost Curves and Supply Function

Outline
1. Cost Curves II
2. One-step Profit Maximization
3. Second-Order Conditions
4. Introduction to Market Equilibrium
5. Aggregation
6. Market Equilibrium in the Short-Run

Outline
1. Comparative Statics of Equilibrium
2. Elasticities
3. Response to Taxes
4. Producer Surplus

Outline
1. Consumer Surplus
2. Trade
3. Rent Control
4. Market Equilibrium in The Long-Run

Outline 1. Profit Maximization: Monopoly 2. Price Discrimination 3. Oligopoly?

Outline
1. Game Theory
2. Oligopoly: Cournot
3. Oligopoly: Bertrand

Outline
1. Oligopoly: Cournot
2. Oligopoly: Bertrand
3. Second-price Auction
4. Auctions: eBay Evidence

Outline
1. Dynamic Games
2. Oligopoly: Stackelberg
3. General Equilibrium: Introduction
4. Edgeworth Box: Pure Exchange

Outline
1. General Equilibrium: Introduction
2. Edgeworth Box: Pure Exchange
3. Barter
4. Walrasian Equilibrium

Outline
1. Walrasian Equilibrium II
2. Example of General Equilibrium
3. Existence and Welfare Theorems
4. Asymmetric Information: Introduction

Outline
1. Asymmetric Information: Introduction
2. Hidden Action (Moral Hazard)
3. The Takeover Game

Outline
1. The Takeover Game
2. Hidden Type (Adverse Selection)
3. Empirical Economics: Intro
4. Empirical Economics: Home Insurance
5. Empirical Economics: Retirement Savings
6. Some Advice
7. Course Evaluation

## Past Exams

## Past Exam Solutions

## Past Midterm Exams

## Past Midterm Exam Solutions

## Announcements

Final Exam: Wednesday 5/13/15, 11:30am - 2:30pm