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Econ-202 Intermediate Microeconomics
Campus NBS
Programs PG
Session Fall Semester 2016
Course Title Intermediate Microeconomics
Course Code Econ-202
Credit Hours 3.0
Pre-Requisutes Principles of Microeconomics
Course Objectives The course includes topics in microeconomics i.e. consumer theory, labour supply, and firm theory
Detail Content
  • The Market: Constructing a Model, Optimization and Equilibrium, The Demand Curve, The Supply Curve, Market Equilibrium, Comparative Statics, Other Ways to Allocate Apartments, The Discriminating Monopolist, The Ordinary Monopolist, Rent Control Which Way is Best?, Pareto Efficiency, Comparing Ways to Allocate Apartments, Equilibrium in the Long Run.
  • Budget Constraint: The Budget Constraint, Two Goods are Often Enough, Properties of the Budget Set, How the Budget Line Changes, The Numeraire, Taxes, Subsidies, and Rationing, Example: The Food Stamp Program Budget Line Changes.
  • Preferences: Consumer Preferences, Assumptions about Preferences, Indifference Curve, Examples of Preferences, Perfect Substitutes, Perfect Complements, Bads, Neutrals, Satiation, Discrete Goods Well Behaved Preferences, The Marginal Rate of Substitution, other Interpretations of the MRS, Behavior of the MRS.
  • Utility: Cardinal Utility, Constructing a Utility Function, Some Example of Utility Functions, Example: Indifference Curve from Utility, Perfect Substitute, Perfect complements, Quasilinear Preferences, Cobb-Douglas Preferences Marginal Utility, Marginal Utility and MRS, Utility for Commuting.
  • Choice: Optimal Choice, Consumer Demand, Some Examples Perfect Substitutes, Perfect Complements, Neutrals and Bads, Discrete Goods, Concave Preferences, Cobb-Douglas Preferences Estimating Utility Functions, Implications of the MRS Condition, Choosing Taxes.
  • Demand: Normal and Inferior Goods, Income Offer Curves and Engel Curves, Some Examples, Perfect Substitutes, Perfect Complements, Cobb-Douglas Preferences, Homothetic Preferences, Quasilinear Preferences Ordinary Goods and Giffen Goods, The Price Offer Curve and the Demand Curve, Some Examples Perfect Substitutes, Perfect Complements, A Discrete Good Substitutes and Complements, The Inverse Demand Function.
  • Revealed Preference: The Idea of Revealed Preference, From Revealed Preference to Preference, Recovering Preferences, The Weak Axiom of Revealed Preferences, Checking WARP, The Strong Axiom of Revealed Preference, How to Check SARP, Index Numbers, Price Indices, Example: Indexing Social Security Payments
  • Slutsky Equation: The Substitution Effect, Example: Calculating the Substitution Effect the Income Effect, Example: Calculating the Income Effect Sign of the Substitution Effect, The Total Change in Demand, Rates of Change, The Law of Demand, Examples of Income and Substitution Effects, Example: Rebating a Tax, Example: Voluntary Real Time Pricing Another Substitution Effect Compensated Demand Curves
  • Buying and Selling: Net and Gross Demand, The Budget Constraint, Changing the Endowment, Price Changes, Offer Curves and Demand Curves, The Slutsky Equation Revisited, Use of the Slutsky Equation, Example: Calculating the Endowment Income Effect Labor Supply, The Budget Constraint Comparative Statics of Labor Supply, Example: Overtime and the Supply of Labor.
  • Intertemporal Choice: The Budget Constraint, Preferences for Consumption, Comparative Statics, The Slutsky Equation and Intertemporal Choice, Inflation, Present Value: A closer Look, Analyzing Present value for Several Periods, Use of Present Value, Example: Valuing a Stream of Payments, Example: The True Cost of a Credit Card Bonds, Example: Installment Loans Taxes, Examples: Scholarships and Savings Choice of the Interest Rate.
  • Risky Assets: Mean-Variance Utility, Measuring Risk, Equilibrium in a Market for Risky Assets, How Returns Adjust, Example: Ranking Mutual.
  • Consumer’s Surplus: Demand for a Discrete Good, Constructing Utility from Demand, Other Interpretations of Consumer’s Surplus, From Consumer’s Surplus to Consumers’ Surplus, Approximating a Continuous Demand, Quasilinear Utility, Interpreting the Change in Consumer’s Surplus, Example: The Change in Consumer’s surplus Compensating and Equivalent Variation, Example: Compensating and Equivalent Variations, Example: Compensating and Equivalent Variation for Quasilinear Preferences Producer’s Surplus, Benefit Cost Analysis, Rationing Calculating Gains and Losses.
  • Market Demand: From Individual to Market Demand, The Inverse Demand Function, Example: Adding Up “Linear” Demand Curves Discrete Goods, The Extensive and the Intensive Margin, Elasticity, Example: The Elasticity and Revenue , Example: Strikes and Profits Constant Elasticity Demands, Elasticity and Marginal Revenue, Example: Setting a Price Marginal Revenue Curves, Income Elasticity.
  • Equilibrium: Supply, Market Equilibrium, Two Special Cases, Inverse Demand and Supply Curves, Example: Equilibrium with Linear Curves Comparative Statics, Example: Shifting Both Curves Taxes, Example: Taxation with Linear Demand and Supply Passing Along a Tax, The Deadweight Loss of a Tax, Example: The Market for Loans, Example: Food Subsidies Pareto Efficiency, Example: Waiting in Line.
  • Technology: Inputs of and Outputs, Describing Technological Constraints, Examples of Technology, Fixed Proportions, Perfect Substitutes, Cobb-Douglas Properties of Technology, The Marginal Product, The Technical Rate of Substitution, The Long Run and the Short Run, Returns to Scale.
  • Profit Maximization: Profits, The Organization of Firms, Profits and Stock Market Value, Fixed and Variable Factors, Short-Run Profit Maximization, Comparative Statics, Profit Maximization in the Long Run, Inverse Factor Demand Curve, Profit Maximization and Returns to Scale, Revealed Profitability, Example: How Do Farmers React to Price Supports? Cost Minimization.
Text/Ref Books
  • Intermediate Microeconomics: A Modern Approach (Sixth Edition) by Hal R. Varian, Publication of W.W. Norton & Company, New York, London. (Recommended)
  • Microeconomics (Seventh Edition) by R.S. Pindyck, D.L. Rubinfeld and P.L. Mehta, Published by Prentice Hall, Pearson Education, Inc. (Optional)
  • Microeconomic Theory: Basic Principles and Extensions (Eighth Edition) by Walter Nicholson, Published by South-Western, Thomson Learning Inc. (Optional)
Time Schedule Fall Semester, 2011
Faculty/Resource Person Dr. Verda Salman, Lecturer,
PhD Quaid-i-Azam University, Islamabad
Discipline: Economics
Specialization: Human Resource Development