Download ECON 3070-001 Intermediate Microeconomic Theory

r
ECONOMICS 307 0 section 1
Fall 1989
INTERMEDIATE MICROECONOMIC THEORY
PROFESSOR J. KRUSE
Office: Econ 11
Office Hours: 11:00-12.00 MTWF
Phone : 492-8736
Time: 12:00-12:50 MW F
Place: Econ 117
Required text:
Prerequisite:
Math 107, 108
or equivalent
Intermediate Microeconomics, A Modern Approach
by Hal R. Varian
Grading Policy:
Each student's course grade for Economics 3070
will be determined by the following basis:
Midterm 1
Midterm 2
Midterm 3
Final(Comprehensive)
Class activity
100
100
100
100
50
points
points
points
points
points
Minimum Percentage for each letter grade:
The following table
lists the minimum percentage. score necessary to achieve each letter
grade. I will not raise the minimum, but do reserve the right to
lower the minimum requirements.
Grade
A
AB+
B
Bc+
c
cD
Minimum Percentage
90
88
86
76
74
72
62
60
50
Class activity includes announced quizzes(worth 10 points each),
unannounced i n-class markets(worth 10 points each) and a research
grant proposal(worth 10 points and due December 3).
The 'five
highest scores from this body of work comprise the class activity
score.
Optional Final: You may choose to count 3 of the 4 exams that will
be given to calculate your percentage . This means that if you take
midterms I, II, a nd III and are satisfied with your percentage, you
may choos e not to take the final .
You must notify me of your
intentions one wee k prior to the scheduled final e x am.
Make-up Exams: Each student is expected to take all of the exams
a nd quizzes at the d es ignated time and place.
Students who miss
any exam without a university accepted excuse will receive a grade
of zero for the missed exam. MAKE UP EXAMS WILL NOT BE GIVEN. You
will count the exams you do take and the final for calculation of
your grade.
If you miss more than one exam the final exam will
assume the total point of the missed exam that cannot be dropped.
A make-up exam will be given to those students who miss the final
exam and do have a university-accepted excuse.
Students who miss an exam must provide a signed written statement
explaining the reason why they missed the exam within one week of
the exam. Otherwise, a zero will be awarded .- -·
Important dates :9-11-89 First quiz
9-29-89 Midterm I
11-3-89 Midterm II
12-8-89 Midterm II
12-11-89 Research grant proposals due (optional)
12-13-88 Last day of classes
12-20-88 8 : 30a.m .-10:30a . m. Final Exam(Comprehensive)
Schedule:
Week 1 Overview, Rewiew
Week 2 Demand, Supply & Equilibrium
Week 3 Consumer Theory, Preferences
Week 4 Consumer Theory, Consumer Choice
Week 5 Consumer Theory, Slutscky Equation
Week 6 Review, Exam I
Week 7 General Equilibrium
Week 8 Labor Supply, Intertemporal Choice
Week 9 Consumer Surplus, Market Demand
Week 10 Theory of the Firm, Technology
Week 11 Costs and Firm Supply
Week 12 Review, Exam II
Week 13 Market structure Competitive Model
Week 14 Monopoly
Week 15 Oligopoly
Chapt.
Chapt.
Chapt.
Chapt.
Chapt.
1
2
3,4
5,6
8,9
Chapt.
Chapt .
Chapt .
Chapt.
Chapt.
28
10,11
15,16,17
18.19,20*
21,22*
Chapt. 23
Chapt. 25
Chapt . 26
*Supplimental assignments will be made from other books .
This schedule is tentative. Announcements made by the instructor
in class preempts this schedule.
..
(
Econ 3070 Review Questions #1
1.
Explain why the point of intersection between a supply and
demand curve identifies the equilibrium price and quantity.
2.
The demand for good 1 is given by the following equation.
Given present consumer tastes for good 1,
q 1 = I - . 1 P 2 + . 2P3 - 2 P 1
Presently:
!:consumer income=lOO
P2 :price of good 2=10
P 3 :price of good 3= 5
a)
b)
c)
d)
e)
Plot the demand curve in P 1 , q 1 space.
Is good 2 a substitute or complement?
Is good 3 a substitute or complement?
Find the inverse demand for good 1 .
What will happen if income changes to 200?
3.
Given the present technology of production, the supply of
good 1 is gven by the following equation:
q i= Pi - . 5 ( w + r )
Presently:
w:wage rate= 10
r : rental rate on capital equipment= 6
a)Plot the supply curve in P1 , q i space.
b) Find the inverse supply for good 1.
c) What will happen if w goes up to 16?
4. Calculate the equilibrium price and quantity for the initial
supply and demand curves given in 2 and 3. Calculate equilibrium
price and quantity using the inverse demand and inverse supply
curves.
5.
Calculate the new equilibrium when 2e occurs.
Describe the
adjustment process to the new equilibrium.
Repeat this exercise
for Jc .
6.
Define budget set. Define Budget line. What does each axis
measure? What do its verticle intercept, horizontal intercept and
its slope measure?
7. A consumer spends her entire income on pizza and record albums.
Draw the budget line for each of the followi ng situations,
identifying the intercepts and the slope in each case. (Measure
pizza consumption horizontally)
a) Monthly income is 1000, the price of pizza is 8 and the price ·
of record albums i s 10.
b) Same conditions as in a, except that income is 500.
c) same conditions as in a, except that income is 2000 and pizza
i s 16
d) Same conditions as in a , except that record albums cost 5 .
e) Compare the budget lines inc and d.
8.
A consumer has income of 100.
The price of food is 10 per
unit.
Using the case of a composite good and food, graphically
analyze the effect of the following taxes and subsidies:
a) A quantity subsidy of 5 is placed on food.
b) An ad valorem tax of 20% is placed on food.
c) Consumers face a lumpsum tax of 30.
d)
Consumers are not allowed to purchase more than 8 units of
food.
\
Economics 3070 - Fall 1989
Course Outline
Week of: Topk
Exam
Ocl /fl
(kl 17
()cl,
2·l
Oct JI
#
Te:xt
1
Production theory: technology,
production, profit maximization.
Ch. 18 & 19
Production and cost theory: cost
functions , economies of scale.
Choice of inputs. Supply curves.
Ch. 20, 21 & 22
Distribution theory: derived demand
economic rent, Euler 's theorem of
Ch. 23
factor exhaustion.
Distribution theory continued. Linear
programming and duality.
Labor markets: determination of the
supply curve for labor. Capital
markets and investment choices.
.¥ov.: J.f
JV(JJ,:
21
Ch 10 & 14
Exam #2
Market theory: study of pure
competition, monopoly and regulation,
Ch. 24 & 25
price discrimination.
Market theory continued: monopolistic
competition, industrial organization,
oligopoly and duopoly. game theory. Ch. 26 & 27
flee _5
Exchange theory: the Edgeworth box.
welfare economics.
Ch. 28. 29 & 30
Dec. 12
Review session ( last day of c/asi,
n:3r
.........
Final Exam (7:30 - 10:30 am)
~,·
-?/1...·
UNIVERSITY OF COLORAuJ
Department of Economics
lntermediate Microeconomic Theory
Course Outline
Economics 3070 Section COO.:L
Fall Semester 1989
Instructor: Douglas A. Ruby (Office: Economics 309c)
Course Description: A market economy is dependent on the price system
to guide in decisions on what to produce, how to produce. and who receives
what is producedin that economy. This course will study theories of value
and distribution under conditions of varying mark.et structures. with special
reference to the contributions of modern economic theorists. This course will
be taught with equal emphisis on theory and applied tools.
Text: Varian. Hal R.. Intermediate Microeconomics-A Modern Approach.
W.W. Norton & Company, 1987.
Course Grade: Your grade will be based on your performance on two
midterm exams, a final exam, and several worksheets distributed throughout.
the semester.
Week of:
Topic
Aug .JJ
Introduction,
5'ept _5
Overview of the market economy and
the price sytem. Review of supply and
demand. A look at the principles of
Ch. 1 & 17
equilibrium and optimization.
5'ept 12
Consumer theory: concepts of utility,
preferences. and consumer
equilibrium.
5'ept 1.9
Text
Ch, 1
Ch. 2.3.4
Demand curve derivation. Types of
demand curves and measures of
elasticity. Price and income effects.
..'. ept
.
26
Ch. 5. 6 & 8
Topics in consumer theory: consumer 's
surplus, uncertainty, expenditure
functions, intertemporal choice.
Ch. 11. 13 & 15