Graduate Microeconomics I
Economics
7005
David Kiefer
telephone 581-7481
e-mail: kiefer@economics.utah.edu
course website: webct.utah.edu
This
is the first course in the graduate microeconomics sequence. Microeconomics is
the study of individual agents (corporations, households, unions, farmers, and
shopkeepers) in the market economy. The approach throughout is that of the
neoclassical paradigm. We begin with the discussion of the behavior of utility
maximizing consumers; a parallel theory is developed later for profit
maximizing producers. A theory of the general equilibrium of an exchange
economy is derived by combining theories of the behavior of consumers, workers
and firms.
The normative content of general
equilibrium is provided by the theorems of welfare economics concerning Pareto
efficiency. The inadequacy of the Pareto criterion as a complete rule for
social choice motivates a discussion of justice and social welfare functions.
Using the theory of consumer surplus, this function can be operationalized with
the cost-benefit method.
The
required textbook is Hal R. Varian, Microeconomic Analysis, third
edition.
The
grading scheme is:
·
Homework assignments 20%,
·
Midterm examination 35%,
·
Final examination 45%.
As
a general rule I do not give incomplete grades. Late assignments lose points; copies and exact duplicates are
unacceptable. Exams must be taken at the scheduled time.
Topic Outline and Reading List
1. Utility maximization
Properties of
preferences
Expenditure and
indirect utility functions
Duality: Marshallian
and Hicksian demand curves
Slutsky
equation
Comparative
statics
Integrability
Revealed
preferences
Varian, Analysis,
chapters 7 and 8
Brunner, Karl
and Meckling, William H., “The Perception of Man and the Conception of
Government,” Journal of Money Credit and Banking 9, 1977: 70-85
2. Demand and consumer surplus
Aggregating
individual demand curves
Compensating
and equivalent variations
Consumer
surplus
Quasilinear
utility
Varian, Analysis,
chapters 9 and 10
Freeman, A.
Merrick, The Benefits of Environmental Improvements: Theory and Practice:
chapters 3 and 7
Broome, John,
“Trying to Value a Life,” Journal of Public Economics, 1978: 91-100
3. Equilibrium and welfare
Partial and
general equilibrium
Edgeworth boxes
Existence of
equilibrium
Pareto
efficiency and welfare economics
The core of an
economy
The stability
of the equilibrium
Cost benefit
analysis
Social welfare
functions
Radford, R. A.,
“The Economic Organization of A POW Camp,” Economica (1945)
Varian, Analysis,
chapter 17, 22 and 21
Rawls, John,
“Distributive Justice,” in Economic Justice, Phelps, Edmund S. (ed.),
319-362
Bergson, Abram,
“Consumer’s Surplus and Income Redistribution,” Journal of Public Economics
14, 1980: 31-48
Kiefer, David,
Macroeconomic Policy and Public Choice, chapter 2