BEC
384

(250)
721 8538

Course Description and Objectives
This is a course in advanced microeconomic theory. We start
out with a single economic agent (individual or firm) and the decisions she has
to make, and work our way through all the assumptions that are necessary to
make a competitive equilibrium Pareto efficient.
ECON 500 emphasizes the value added of a formal treatment of
economics as opposed to an informal treatment by means of examples and stories.
We’ll still use the stories and examples to get a first grasp at an issue, but
the rigorous treatment presented along with them will add clarity.
Economic arguments expressed by means of an example can
sometimes be misleading: For example, using quasilinear utility to capture
people’s preferences and finding that the equivalent variation, compensating
variation, and the change in consumer surplus are the same, you may wonder:
“Does the same conclusion hold if we use a different utility function/draw
different indifference curves?” In this course you will learn that the answer
to this question is “no” and also understand under what circumstances the
consumer surplus is a good approximation to a measure of welfare changes.
Understanding how economists build their formal models will
help you read economic journal articles and will enable you to follow the
academic discussions. Even in pursuing a career outside academia, evaluating
academic research may very well be part of your job description. Sound economic
policy is based on a sound understanding of economics!
Although the field of microeconomics is fascinating by
itself, the formal treatment of consumer, producer theory and general
equilibrium theory presented here will help you understand how theories in
general are built from a set of axioms. The same logic carries over to other
fields of study.
1. Course Outline (including
office hours, exam dates, grading policies)
Please scroll down for lecture notes, problem sets and practice exams!
2. Lecture Notes:
Consumer Theory
· Lecture 1: From Utility Maximization to Testable Restrictions on Consumer Demand
· Lecture 2: Welfare Analysis
Exchange Economy
Producer Theory
General Equilibrium Analysis
· Lecture 5: General Equilibrium with Production
Choice under Uncertainty
3. Problem Sets and Answer Keys:
· Problem Set 1 (pdf file)
· Answer Key to Problem Set 1 (pdf file)
· Problem Set 2 (pdf file)
· Answer Key to Problem Set 2 (pdf file)
· Problem Set 3 (pdf file)
· Answer Key to Problem Set 3 (pdf file)
· Problem Set 4 (pdf file)
· Answer Key to Problem Set 4 (pdf file)
· Problem Set 5 (pdf file)
· Answer Key to Problem Set 5 (pdf file)
· Problem Set 6 (pdf file)
· Answer Key to Problem Set 6 (pdf file)
· Problem Set 7 (pdf file)
· Answer Key to Problem Set 7 (pdf file)
· Problem Set 8 (pdf file)
· Answer Key to Problem Set 8 (pdf file)
· Problem Set 9 (pdf file)
· Answer Key to Problem Set 9 (pdf file)
· Problem Set 10 (pdf file)
· Answer Key to Problem Set 10 (pdf file)
4. Practice Midterm Exams and Answer Keys:
· Practice Exam for Midterm 1 (pdf file)
· Answer Key to Practice Exam for Midterm 1 (pdf file)
· Practice Exam for Midterm 2 (pdf file)
· Answer Key to Practice Exam for Midterm 2 (pdf file)
5. Practice Exam for Final Exam and Answer Key:
· Practice Exam for Final (pdf file)
· Answer Key to Practice Exam for Final (pdf file)
6. Midterm Exams and Answer Keys
·
Midterm
1 exam;
answer
key
·
Midterm
2 exam;
answer
key
Web
Resources:
· 3D models of CES Functions: http://students.washington.edu/fuleky/anatomy/anatomy2.html
· and CobbDouglas Functions: http://students.washington.edu/fuleky/anatomy/anatomy.html
·
These models also include a 3D analysis of
Utility Maximization and Expenditure Minimization.
Articles
related to Choice under Uncertainty
· The New Yoker: Neuroscience
· Alternative to Expected Utility Theory: Prospect Theory
·
Choice under Uncertainty: Problems Solved
and Unsolved