Course Outline
1. Optimization Concave and quasi-concave functions, constrained
maximization. The economics of shadow prices. The Envelope Theorem.
Applications: Multi product firms with joint costs. Consumer and producer
surplus. Students will use Excel to solve problems that are too big to be solved analytically 2.
Price
taking agents Laws of supply and input demand for price taking firms. Decomposition of price elasticity. Measuring the loss form a price increases as a compensated change in income. 3.
Equilibrium and
efficiency, the two fundamental welfare theorems Focus on the constant returns to scale economy to obtain insights on the impact of lowering trade barriers. 4.
Choice over
time Consumer and firm decision-making with spot and futures markets. Role of market intermediaries. 5. Choice under uncertainty Moral Hazard and adverse selection, two part pricing as
indirect price discrimination, introduction to mechanism design, auctions
Course Reading:
Extensive reading for this course
will be placed on the web.
For the second half of the course you may also wish to
read "The Analytics of Uncertainty and Information" by Sushil
Bikhchandani, J. Hirshleifer and John G. Riley Cambridge University Press Second Edition
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