Instructional goals
The course aims at providing knowledge of methods and topics of advanced microeconomic theory, with focus on choices of individual economic agents (consumers, firms) in competitive environments without and with uncertainty. Some elements of competitive equilibrium analysis and welfare will also be discussed.
Prerequisites
Intermediate Microeconomics, Mathematics for Economics.
Intended learning outcomes
KNOWLEDGE AND UNDERSTANDING: The student will be able to analyze and understand the main phenomena described and analyzed during the
course, in relation to the behavior of individual economic agents and the economic mechanisms of production and exchange.
APPLYING KNOWLEDGE AND UNDERSTANDING: At the end of the course, the student must be able to use the tools of theoretical analysis for an advanced understanding of microeconomic phenomena.
MAKING JUDGEMENTS: The student will acquire the ability to judge in an autonomous way the microeconomic problems, also in relation to specific
applications.
COMMUNICATION SKILLS: The student will acquire the specific language of microeconomics in order to communicate precisely the concepts
learned.
LEARNING SKILLS: The student will learn the methodology of analysis of the main problems related to the microeconomic issues.
Course Contents
Individual decision making: Preference and Choices. Consumer Choice and Classical Demand Theory. Production Theory. Competitive markets: a partial equilibrium analysis. General Equilibrium Theory. First and Second Fundamental Theorems of Welfare Economics. Individual Decision Making under Uncertainty.
Reference Books
A. Mas-Colell, M.D. Whinston and J.R. Green, Microeconomic Theory, Oxford University Press, 1995
Varian H.R., Intermediate Microeconomics: A Modern Approach, W.W. Norton and Company Ed.
Teaching Methods
Lectures, Inverted classes, Practice Classes, Presentations. All activities are on campus.
Assessment Method
Final written exam and active partcipation in class.
Thesis assignment criteria
Genuine interest for the subject.
Week 1
Course presentation. Consumption set. Budget Set. Preferences.
Week 2
Preferences and Utility. Utility Maximisation Problem. Examples: Cobb-Douglas, Leontief, linear and quasi-linear Utility Functions.
Week 3
Walrasian Demand Correspondence. Indirect Utility Function. Exercises.
Week 4
The Expenditure Minimization Problem. The Hicksian Demand Correspondence. Exercises.
Week 5
Relation between UMP and EMP. The Kuhn-Tucker conditions (necessary and sufficient). Expenditure function. Law of demand.
Week 6
Relationship between Demand, Indirect Utility and Expenditure Function. Shepard's Lemma and Slutsky Equation.
Week 7
Utility maximization with endowments. Production set and Production Plans. Exercises. Profit maximisation and cost minimisation problems.
Week 8
Decision problem under uncertainty: states of nature and lotteries. Attitudes towards Risk.
Week 9
Certainty Equivalent and Risk Premium. Expected utility Theory. Example: the demand for insurance.
Week 10
Competitive markets in a partial equilibrium setting. Exercises.
Week 11
General Equilibrium: The Edgeworth box for an exchange economy. Exercises.
Week 12
Competitive equilibrium and Pareto optimality. The First and the Second Fundamental Theorem of Welfare Economics. Implications and Exercises.