Intermediate Microeconomics (Econ 301)

Overview

The course is a continuation of the study of the micro foundations of economic modeling and thinking. It covers two core topics:

1. Individual decision making with a particular focus on consumers and producers.

2. The foundation of markets and the outcomes of interaction between individuals in markets.

Consumer theory is the study of the consumption behavior of an individual with preferences for consumption goods and services. The consumption choice is subject to a budget constraint that consumption expenditure cannot exceed the individual’s endowment. This leads to detailed treatments of topics like preferences, utility, optimal choice, budget constraints, demand curves, labor supply, and choice under uncertainty.

Producer theory is the study of the transformation of factor demands like capital and labor into consumption goods and services through the process of production. Production takes place inside firms that own production technologies. The analysis studies notions like profit maximization, capital and labor demand, factor demand substitution, cost minimization.

Both consumer and producer theory are studies of choice. More often than not, the analysis assumes an environment that is constant to the agent’s choice where the behavior of other agents in the economy is reflected only in market objects such as prices. However, the course also provides an introduction to game theory where an individual’s payoff is directly affected by the actions of other agents and as a result behavior/choice is strategic.

Buyers and sellers interact in markets where they exchange goods and services. The course covers the basic concepts of exchange as the foundation of markets and considers the determination of prices as key objects that guide exchange in decentralized markets.

The course discusses efficiency of markets and three main deviations from efficiency: Market power, externalities and asymmetric information using examples like merger legislation, carbon taxation, and adverse selection/moral hazard in health insurance.

Course Learning Outcomes

Following the completion of this course, students will be able to:

• Apply economic models to understand household and firm behavior and market outcomes.

• Specify and adapt microeconomic models to analyze economic environments.

• Solve economic decision problems using tools of mathematical optimization.

• Understand the role of these models as the foundation for more advanced analysis.

Course Logistics

Enrolled students can access course materials through Canvas.