Prelims Microeconomics

Scheduling: Ordinarily, classes will be held on Mondays at 4:00--6:00pm, Group 1 (Zaid, Luke, Celine and James) meets at 3:30--4:50 and Group 2 (Nicole, Isha and George) meets at 5:00--6:20 in the PPE Suite (FB1 Rm 10). Our first meeting is in week 2. I may decide in some weeks to divide the seven of you up into two or three smaller groups; the earlier of these groups may meet at 3:30pm, so please ensure that you are free from that time onward.

Problem sets: Each week -- no later than Tuesday evening -- I shall assign a subset of the problems from the tutorial worksheets posted on the course weblearn page. These must be submitted to me, via the Lodge, by 5pm on Saturday. I may not grade your answers to all the problems that have been assigned, but possibly only a certain subset of these (to be decided upon after you have submitted your solutions); in the classes I shall give priority to going through the solutions to those questions that I do not grade.

I shall also assign readings to complement the lecture slides: generally these will be drawn from Varian, Intermediate Microeconomics (8th or 9th ed.) and Perloff, Intermediate Microeconomics with Calculus (2nd or 3rd ed.) [In most cases, the two overlap considerably, and it is probably necessary to read only one of these.]

Format: While the classes will focus mostly on covering the solutions to the problem sets, I am very happy to discuss any questions you may have about the lecture material (and assigned readings). It would help if you could email me any questions that arise in advance of our meeting, so I have a chance to think about them.

Tutorial 1 (Week 2)

Problems: 1, 2, 3, 5, 6, 7

Readings: I think Perloff Ch 1 ('Introduction'), Ch 2.1--2.5 ('Supply and Demand'), and Ch 7.1 ('Measuring Costs'), should be sufficient for this week. The same material is covered in Varian, but is not quite as readily accessible: Ch 1 ('The Market') gives a basic overview; Ch 15 ('Market Demand') covers demand and elasticities (you might skip 15.7, 15.9 and 15.10); Ch 16 ('Equilibrium'), specifically Sections 16.1--16.5, covers equilibrium and comparative statics. (If you find Ch 15 and 16 a bit too advanced at this stage, that is fine, just stick to Perloff this week.)

Tutorial 2 (Week 3)

Problems: 1c, 1d, 2, 3, 4, 5

Readings: Perloff Ch 2.6--2.8 ('Supply and Demand'), Ch 5.1 ('Consumer Welfare'), Ch 5.3 ('Market Consumer Surplus'), and Ch 10.4 ('Production and Trading' -- but only the subsection 'Comparative Advantage'; note there is some material on marginal rates of substitution at the very end of this section which will not be intelligible to you yet). Varian Ch 16.6-16.9 ('Equilibrium') also has a good coverage of taxes and welfare; Ch 33 ('Production') has a good coverage of trade and comparative advantage, but is probably too advanced for you at this stage, so I may suggest taking a look at it later in the course.

Tutorial 3 (Week 4)

This week you will be divided into two groups: Group 1 (Zaid, Luke, Celine and James) meets at 3:30--4:50; Group 2 (Nicole, Isha and George) meets at 5:00--6:20.

Problems: 1, 2, 3, 4, 5

Readings: Perloff Ch 6 ('Firms and Production'), Ch 7.2--7.4 ('Costs'), and Ch 8.1--8.3 ('Competitive Firms and Markets') cover very similar ground to Ian's lectures. Alternatively (or additionally), you may consult Varian Ch 19 ('Technology'), Ch 20 ('Profit Maximisation'), Ch 21 ('Cost Minimisation'), Ch 22 ('Cost Curves'), and Ch 23 ('Firm Supply').

Tutorial 4 (Week 5)

We will continue with the same arrangements (two groups) as per last week. This week only, the deadline to hand in work is by 5pm on Sunday.

Problems: 1, 2, 3 + the essay below:

Write an essay on Q4 ('Explain and compare ...'): 800--1000 words in length; the essay must be typed, with at least 1.5 spacing, and margins of at least 2cm. Accompanying diagrams are encouraged, and may be drawn by hand (but please label these 'Figure 1', Figure 2', etc., and refer to them in this manner in the text).

Readings: Perloff Ch 8.4 ('Competition in the Long Run') and Ch 9.1 ('Zero Profit for Competitive Firms ...') covers the residual material on perfectly competitive markets. [Although it does not relate directly to the material covered in this week's lectures, you might also find it useful to read the other subsections of Ch 9, which cover producer surplus and the welfare consequences of various interventions in competitive markets.] Net present value is covered in Perloff Ch 15.2 ('Capital Markets and Investing'). For relevant material on Game Theory and oligopoly, see Perloff Ch 13.1--13.2 ('Game Theory') and Ch 14.1-14.5 ('Oligopoly'). [Although I don't think we cover it in this course, you should also read Ch 14.6 ('Monopolistic Competition'), since this is a fundamentally important model of markets with differentiated products.] Comparable readings in Varian are: Ch 24 ('Industry Supply'); Ch 28 ('Oligopoly'); Ch 29 ('Game Theory'); Ch 30 ('Game Applications').

Tutorial 5 (Week 6)

Problems: 1, 2, 3, 4, 5

Readings: Perloff Ch 3 ('Consumer Theory'), Ch 4.1-4.3 ('Demand') and Ch 5.5 ('Deriving Labor Supply Curves'). Similar material is covered in Varian Ch 2--6 and 8 ('Budget Constraint', 'Preferences', 'Utility', 'Choice', 'Demand', 'Slutsky Equation'). The material covered in the lectures on demand curves for a consumer with a given endowment (the labour supply and intertemporal choice examples) is discussed in most detail in Varian Ch 9 ('Buying and Selling'); I could not find as clear a treatment of this in Perloff.

Tutorial 6 (Week 7)

Problems: 1, 2, 4, 5 [due 5pm Sat 18 Nov, as usual]

Write an essay on this question (an expanded version of a question given in the worksheet). This is due at 5pm on the following Saturday (25 Nov); we will discuss it in Week 8's tutorial. I suggest that, in addition to taking account of my comments on your previous essay, you should consult: 'Preparing for Examinations in Economics' (which has a lengthy section on how to write an economics essay) and 'Marking Criteria for Essay Questions in Economics' (but note that, at Oxford, grades in excess of 75 for an essay are almost unheard of), which can be found in the 'Examinations' section on the Undergraduate Economics weblearn site.

Readings: Perloff Ch 5.2 ('Expenditure Function and Consumer Welfare') covers equivalent and compensating variation; Ch 4.4 ('Cost-of-Living Adjustment') has a brief coverage of price indices. You should also read Ch 4.5 ('Revealed preference') and 5.4 ('Effects of Government Policies ...') even though the former goes a little beyond what was covered in lectures. From Varian, you could consult: Ch 11 ('Intertemporal choice' -- relevant to last week's material), Ch 14 ('Consumer's Surplus'), and possibly Ch 15 ('Market Demand').

Tutorial 7 (Week 8)

Problems: 1, 3, 4 [due 5pm Sat 25 Nov, along with the essay from last week]

Readings: Perloff Ch 11 ('Monopoly and Monopsony'), Ch 12.1--12.5 ('Pricing and Advertising') and Ch 17 ('Externalities and Public Goods'). Similar material is covered in Varian Ch 25 ('Monopoly'), Ch 26 ('Monopoly Behavior'), Ch 35 ('Externalities') and Ch 37 ('Public Goods').

Tutorial 8 (Hilary, Week 2): TUESDAY, 4:15--6:45pm [meet as one group]

Write an essay on Q4 ('Outline (i) how a system ...'): 800--1200 words in length. The essay must be typed, with at least 1.5 spacing, and margins of at least 2cm. Accompanying diagrams are encouraged and may be drawn by hand (but please label these 'Figure 1', Figure 2', etc., and refer to them in this manner in the text). The essay must be submitted by 10am on Friday of Week 0 [12 Jan].

We will also use the tutorial to review the Collection, which will graded and returned to you.

Readings: Perloff Ch 18 ('information'); Varian Ch 38 ('Asymmetric Information').

Revision Classes

Held on Fridays, 16:30--18:30 in the PPE Suite. In preparation for these classes, please:

• • Prepare bullet-point outline responses for each of the nominated essay questions

  • Attempt the problem questions

I would strongly advise giving priority to the essay questions, since these tend to give students the greatest difficulty.

We will start the classes by discussing the essay questions (I will be reliant on your input here, so you need to have looked at these carefully in advance of the class), before reviewing as many of the problem questions as time permits.

Revision Class 1 (Trinity, Week 5)

• • Lecture material: MT1--MT4 ('Exchange' and 'Firms')

  • Essay questions: 2017LVq8, 2016LVq7, 2016TTq7, 2015LVq7 and the following question from the 2016 Collection: "Explain the concept of Net Present Value (NPV) and how it can be used in investment appraisal. How does the choice of the interest rate influence the NPV of the project?"

  • Problems: 2017LVq2, 2016LVq3, 2017LVq3

[Note: 2017LV = 2017 Long Vac exam, etc. -- these are all available on OXAM.]

Revision Class 2 (Week 6)

• • Lecture Material: MT5--MT8 ('Individuals' and 'Market failures')

  • Essay questions: 2017LVq8, 2017LVq7, 2016LVq8, 2016TTq8

  • Problems: 2017LVq1, 2016TTq1, 2015TTq3