Graduate Institute of International and Development Studies
EI037 - Fall 2023 - Course- 6 ECTS
Thursday 10:15-12:00
Lecturer: Yuan Zi
Office hours: Wednesday 10:15-12:00 (class weeks)
Course Description
This course is an introduction to the concepts and tools of Microeconomic analysis. We will start with classic topics of consumer choice, and then firm decisions about optimal production and the impact of different market structures on firms' behavior. Next, we turn our attention to supply and demand, and the basic forces that determine an equilibrium in a market economy. The final section of the course introduces some of the more advanced topics that can be analyzed using Microeconomic theory. Students should be comfortable with basic multivariable calculus, linear algebra, and real analysis.
Goals
After the course, you should have developed a range of skills enabling them to understand economic concepts and use those concepts to analyze specific questions.
By the end of this course, you should be able to:
- Understand consumer behavior.
- Understand firm behavior.
- Analyze different types of market structures.
- Understand basic aspects of general equilibrium.
- Understand basic aspects of welfare economics.
- Understand how to apply economic principles to a range of policy questions.
Main textbooks
- "Microeconomic Theory", Andreu Mas-Collel, Michael D Whinston, and Jerry R Green, Oxford University Press (1995). [MMG]
Additional textbooks
- "Microeconomic Analysis", Hal R Varian, Norton (1992).
- "A course in microeconomic theory", Kreps, David M, Princeton university press (1990).
NB: It is sufficient to understand what covers in the course, which mainly follows MMG but simplifies it. Students are encouraged to use the listed textbooks and references to enhance their understanding of course materials when needed.
We all have different backgrounds and prefer different learning styles. Student are encouraged to use google or the library for fragmented learning materials when a question arises. Don't read a whole textbook when you are confused about one particular thing - it is usually not very helpful and surely not efficient!
Undergraduate-level microeconomics, basic multivariable calculus, linear algebra, and real analysis. Math course ("bootcamp") in the Graduate Institute for students in MA Economics.
Grading
There will be a midterm exam (1/3 of the final grade), and a final exam (1/3 of the final grade), as well as 2 problem sets (2 × 1/6 of the final grade).
Outline (preliminary)
- September 21 Introduction, Preference and Choice
- September 28 Consumer Theory
- October 5 Classical Demand Theory
- October 12 Welfare Economics and Aggregate Demand
- October 19 Production Theory (changed to Oct 18, 12-14)
- October 26 Midterm Exam (changed to Oct 24, 10-12)
- November 2 Competitive Equilibrium
- November 9 Welfare Theorems
- November 16 Strategic Interactions I
- November 23 Strategic Interactions II
- November 30 Market Power: Workhorse Models I
- December 7 Market Power: Workhorse Models II
- December 14 Final Exam (changed to Dec 12, 10-12)
Mathematics Tool Box recommended by previous lecturers
Students who do not feel comfortable with calculus and standard mathematical tools for economists are strongly advised to either take the math course (choose it as part of the mandatory sequence or sit-in) or consult and work with Martin Osborne's tutorial site (the strong point of this tutorial is that it provides exercises with solutions and thus students can practice on their own).
Lectures
Lecture 1. Introduction, Preference and Choice
Reading:
- MWG (1995), Chapter 1
Additional:
- Kreps (1990), Chapters 1-2
- [Experiment we did] Nicholas G. Rupp, A Classroom Experiment Illustrating the Law of Demand.
Lecture 2. Consumer Theory
Reading:
- MWG (1995), Chapter 2
Additional:
- Kreps (1990), Chapters 2
Lecture 3. Classic Demand Theory
Reading:
- MWG (1995), Chapter 3
Additional:
- Kreps (1990), Chapter 2, Varian (1992), Chapters 7 - 8
- Becker, G.S., 1962. Irrational behavior and economic theory. Journal of political economy, 70(1), pp.1-13.
Lecture 4. Welfare Economics and Aggregate Demand
Reading:
- MWG (1995), Chapters 3.I and 4
Additional:
- Kreps (1990), Chapter 2, Varian (1992), Chapters 10
Lecture 5. Production Theory
Reading:
- MWG (1995), Chapter 5
Additional:
- Kreps (1990), Chapter 7; Varian (1992), Chapters 1-5
Lecture 6. Competitive Equilibrium
Reading:
- MWG (1995), Chapter 10 A-C
Lecture 7. The Fundamental Welfare Theorems
Reading:
- MWG (1995), Chapter 10 D-E
Lecture 8. Strategic Interactions I
Reading:
- MWG (1995), Chapter 7-9
Lecture 9. Strategic Interactions II
Reading:
- MWG (1995), Chapter 7-9
Lecture 10. Imperfect Competition: Workhorse Models I
Reading:
- MWG (1995), Chapter 12
Lecture 11. Imperfect Competition: Workhorse Models II
Reading:
- MWG (1995), Chapter 12
Resources
The Dixit-Stiglitz Model
- Solve the model step by step
- Note here
- Model properties, comparative statics and intuitions: EI037 L10.
- The basics of "Dixit-Stiglitz lite" by Jonathan I. Dingel: http://www.columbia.edu/~jid2106/td/dixitstiglitzbasics.pdf
- Competitive equilibrium vs. optimal allocation by social planer
- Note here
- Dixit, A.K. and Stiglitz, J.E., 1977. Monopolistic competition and optimum product diversity. The American economic review, 67(3), pp.297-308.
- Mankiw, N.G. and Whinston, M.D., 1986. Free entry and social inefficiency. The RAND Journal of Economics, pp.48-58.