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ECON 3070-001 Intermediate Microeconomic Theory

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ECON 3070-001 Intermediate Microeconomic Theory
INTERMEDIATE MICROECONOMICS, Econ 3070-001
University of Colorado at Boulder, Fall 2005
Lectures: MWF 10:00 a.m. to 10:50 a.m. @Econ 119
Instructor: Vijaya R. Sharma, Ph.D.
Office Hours: MWF 10:30 a.m. to 12:00 noon @Econ 4A
Phone: 303-492-3021
E-mail: [email protected]
Website: http://spot.colorado.edu/~sharmav/
Textbook
Microeconomics: Theory and Applications, by Edwin Mansfield and Gary Yohe, 11th
edition, W.W. Norton Company
Course Description
This is an intermediate course open to students who have successfully completed an
introductory (Econ 1000) or principles course in microeconomics (Econ 2010) and have
also completed a mathematics course for economists (Econ 1078) or a mathematics
module course (like Econ 1050, 1080, 1100). It is essential that the students have
knowledge of basic calculus. This course discusses economic choice behavior of
consumers, producers, and such other economic agents to understand functions, successes
and failures of markets. The course also analyzes interrelations among different types of
economic agents and markets.
Tentative Schedule
Introduction, Demand and Supply (Chapter 1): Aug 22, 24
Market demand curve: time period, consumer tastes, incomes, and other prices;
Market supply curve: technology, input prices; Solving for equilibrium price and
quantity, comparative static
Homework #1 due Aug 26 (Question # 9, 11, and 12: Pages 27-28)
Consumer Preferences and Choice (Chapter 2): Aug 26, 29, 31, and Sept 2
Consumer budget line: equation, slope, shift and rotation; Nature and
determinants of preferences, Indifference curves: shapes and slopes; Utility and
marginal rate of substitution; Consumer equilibrium: graphical and mathematical
solutions, and interpretations
Homework #2 due Sep 7 (Question # 1, 2, 4, and 7: Pages 63-65; also the two
consumer equilibrium problems assigned in the class)
Individual Demand (Chapter 3): Sep 7, 9
Income-Consumption Curve, Engle Curve, Price-Consumption Curve,
Substitution and Income Effects, Normal/Inferior/Giffen Goods, Consumer
Surplus and Measurement of Benefits to Consumers
Homework #3 due Sep 14 (Question # 1, 3, and 6: Pages 109-111)
Market Demand, Firm and Industry Demand Curves (Chapter 4): Sep 12, 14, 16
Horizontal summation of individual demand curves, Price elasticity of demand:
formula, determinants, relation with expenditures; income and cross price
elasticity; Individual firm’s demand curve: shape, interpretation, marginal revenue
and total revenue under perfect competition and under monopoly
Homework #4 due Sep 19 (Question # 2, 7, 9, 10, and 11: Pages 146-148)
Choices Involving Risk (Chapter 5): Sep 19, 21, 23
Expected monetary value, expected value of perfect information, expected utility,
von Neumann-Morgenstern utility function, and preferences regarding risk
Homework #5 due Sep 23 (Question # 3, 4, 5, and 7: Pages 190-191)
Exam 1 on the above materials on Sep 26, Monday
Production Function and Isoquants (Chapter 6): Sep 28, 30, and Oct 3
Short run and Long run, Production function, Total, Average and Marginal
products and their geometry; Isoquants: shape, slope, marginal rate of technical
substitution and ratio of marginal products; Cobb-Douglas production function
and Returns to scale
Homework #6 due Oct 5 (Question # 1, 2, 3, 4, 9: Pages 231-232)
Cost Function and Choice of Inputs (Chapter 7): Oct 5, 7, 10
Isocost curve: equation, slope, shift, and rotation; Optimum input combination:
tangency rule and formula; Short run cost function: fixed and variable costs;
Average and Marginal cost, Geometry of cost curves; Long run Average Cost
Function
Homework #7 due Oct 12 (Question # 2, 3, 4, and 7: Pages 274-275)
Perfect Competition (Chapters 8 and 9): Oct 12, 17, 19, 21
Characteristics of perfect competition, Derivation of Profit Maximizing Condition,
Rule for optimal level of output, Market price and profit/loss situations, Shut-off
situation, Firm’s supply curve, Industry supply curve (horizontal summation),
Price elasticity of supply, Short run and Long run equilibrium of perfectly
competitive firms, Effect of industry expansion on input prices and long run
industry supply curve (constant cost, increasing cost, and decreasing cost cases),
Producer surplus, Total surplus, Maximization of total surplus, Effect of price
ceiling, price floor, tariffs, quotas, and excise taxes
Homework #8 due Oct 24 (Question # 1, 10, 13: Pages 317-321, and Question
# 1 and 10: Pages 351 and 354)
Monopoly and Monopolistic Competition (Chapters 10 and 11): Oct 24, 26, 28, 31
Characteristics of Monopoly Market, Monopoly’s demand curve and short run
cost curves; Price and Marginal Revenue, Marginal Revenue Function for Linear
Demand Function, Condition for Profit Maximization, Short run and Long run
Equilibrium, Multiplant Monopoly, Deadweight Loss, Monopoly Power, Price
Discrimination, Monopolistic practices, Regulation of Monopoly
Characteristics of Monopolistic Competition, Chamberlin’s Theory of
Monopolistic Competition, SR and LR Equilibrium, Excess Capacity and Product
Diversity, Mark-up Pricing
Homework #9 due Oct 31 (Question # 2, 3, 4, 6, 9, 10, and 11: Pages 396-398)
Exam 2 on the post-Exam-1 materials: Nov 2, Wednesday
Oligopoly, Game Theory, and Strategic Behavior (Chapters 12 and 13): Nov 4, 7, 9, 11
Characteristics of Oligopoly, Nash Equilibrium, Cournot Model, Cartel,
Stackelberg Model, Bertrand Model, Price Leadership Model, Game Theory:
Nash Equilibrium and Cooperative Equilibrium, Contestable Market and Limit
Pricing
Homework #10 due Nov 14 (Question # 1 (a, b), 5, 6, and 8: Pages 454-456
and Question #5: Page 486)
Input Markets (Chapter 14): Nov 14, 16, 18
Profit Maximization and Optimal Input Combination, Marginal Revenue Product
Curve, Several Variable Inputs and Input Demand Curve, Price elasticity of
demand for input; Input Supply Curves: General Supply curve, Backwardbending labor supply, Fixed Land Supply; Monopsony buyer of input,
Monopsonist’s Optimal Choice of Input
Homework #11 due Nov 21 (Question # 3, 4, 5, and 7: Pages 536-537)
Resource Allocation (Chapter 16): Nov 21, 23, 28, 30
Edgeworth Box of Exchange and Contract Curve, Edgeworth Box of Production
and Contract Curve, Derivation of PPC, Production and Exchange, Three
Conditions of Economic Efficiency, Pareto criterion, Perfect Competition and
Economic Efficiency, Utility Possibilities Curve, Equity considerations:
Egalitarian View, Competitive Market View, Social Welfare Function, John
Rawls’ Theory
Homework #12 due Dec 2 (Question # 4, 7, 8, 9, 11, and 12: Pages 624-625)
Public Goods and Externalities (Chapter 18): Dec 2, 5, 7
Characteristics of Public Goods, Efficient output of public good, Vertical
summation of demand curves, Free Riders, Provision of Public Goods; Positive
and Negative Externalities, Optimal Pollution Level and Methods of Pollution
Control (Regulation, Effluent Fees, Marketable Permits, Coase Theorem)
Exam 3 on the post-Exam-2 materials: Dec 13, Tuesday, 10:30 a.m.
Course Grading
Course grade shall be determined from performances in three examinations and the best
10 of 12 homeworks: two best exams 40% each, the worst exam 10%, and homeworks
10%. Homework schedules may be changed by the instructor if necessary, but exam
dates are firm.
Accommodations for Students with Documented Disability
If you qualify for accommodations because of a disability, please submit to the instructor
a letter from Disability Services in a timely manner so that your needs may be addressed.
Disability Services determines accommodations based on documented disabilities.
Contact: 303-492-8671, Willard 322, and www.Colorado.EDU/disabilityservices.
Absences due to Religious Observances
Campus policy regarding religious observances requires that faculty make every effort to
reasonably and fairly deal with all students who, because of religious obligations, have
conflicts with scheduled exams, assignments or required attendance. In this class if you
have any such conflict, please inform the instructor at least two weeks in advance to
make a reasonable arrangement or adjustment according to the University policy, which
can be seen at http://www.colorado.edu/policies/fac_relig.html.
Classroom Behavior Policy
Students and faculty each have responsibility for maintaining an appropriate learning
environment. Students who fail to adhere to such behavioral standards may be subject to
discipline. Faculty has the professional responsibility to treat all students with
understanding, dignity and respect, to guide classroom discussion and to set reasonable
limits on the manner in which they and their students express opinions. Professional
courtesy and sensitivity are especially important with respect to individuals and topics
dealing with differences of race, culture, religion, politics, sexual orientation, gender
variance, and nationalities. Class rosters are provided to the instructor with the student's
legal name. I will gladly honor your request to address you by an alternate name or
gender pronoun. Please advise me of this preference early in the semester so that I may
make appropriate changes to my records. See polices at
http://www.colorado.edu/policies/classbehavior.html and at
http://www.colorado.edu/studentaffairs/judicialaffairs/code.html#student_code.
Discrimination and Harassment Policy
The University of Colorado at Boulder policy on Discrimination and Harassment
(http://www.colorado.edu/policies/discrimination.html), the University of Colorado
policy on Sexual Harassment and the University of Colorado policy on Amorous
Relationships applies to all students, staff and faculty. Any student, staff or faculty
member who believes s/he has been the subject of discrimination or harassment based
upon race, color, national origin, sex, age, disability, religion, sexual orientation, or
veteran status should contact the Office of Discrimination and Harassment (ODH) at 303492-2127 or the Office of Judicial Affairs at 303-492-5550. Information about the ODH
and the campus resources available to assist individuals regarding discrimination or
harassment can be obtained at http://www.colorado.edu/odh.
Honor Code
All students of the University of Colorado at Boulder are responsible for knowing and
adhering to the academic integrity policy of this institution. Violations of this policy may
include cheating, plagiarism, and aid of academic dishonesty, fabrication, lying, bribery,
and threatening behavior. All incidents of academic misconduct shall be reported to the
Honor Code Council ([email protected]; 303-725-2273). Students who are found to
be in violation of the academic integrity policy will be subject to both academic sanctions
from the faculty member and non-academic sanctions (including but not limited to
university probation, suspension, or expulsion). Additional information on the Honor
Code can be found at http://www.colorado.edu/policies/honor.html and at
http://www.colorado.edu/academic/honorcode.
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