Intermediate Microeconomics

Rose-Hulman Institute of Technology                        

Department of Humanities & Social Sciences

Kevin Christ

Spring 2012

"But what is this market that will do these wonderful things?  Who runs it?"

"Oh, nobody runs the market," we answer.  "It runs itself.  In fact, there really isn't any such thing as 'the market.'  It's just a word we use to describe the way people behave."

From Robert. L. Heilbroner and William Milberg, The Making of Economic Society, 11th ed. (©Prentice Hall, 2002)

This is a course in intermediate microeconomic theory.  It focuses mainly on individual decision making in market settings, using formal modeling techniques to analyze consumer choice and market performance.  It also introduces students to the economic treatment of uncertainty, market failure, and general equilibrium.  While the backbone of the course is the "standard" neoclassical model, the course also includes extensive discussions of recent developments in behavioral economics that sometimes seem at odds with the standard model.

This course does not cover market structure, strategic interaction, or business economics.  Students interested in those topics are encouraged to take SV353 (Industrial Organization), IA352 (Game Theory), or SV351 (Managerial Economics).

The prerequisites for this course are SV151 (Principles of Economics), and a solid grounding in algebra and differential calculus.  This course is required for the economics major, is one of two intermediate theory options for the economics minor, and is an HSS Society and Values elective.


Textbooks: Hal Varian, Intermediate Microeconomics, A Modern Approach, 8th ed. Norton (2010)


Problem Sets: Problem Set 1          Slides for Part 1

Problem Set 2          Slides for Part 2

Problem Set 3          Slides for Part 3

Problem Set 4          Slides for Part 4          Student Slides from Kahneman


Click here for a sylabus.


Topics / Exams / Related Links


March 5 Introduction / Constraints Varian, 1, 2
March 6 Constraints / Preferences Varian, 2, 3
March 8 Utility / Optimal Choice Varian, 4, 5
March 9 Demand Varian, 6
March 12 Individual Demand [Revealed Preference] Varian, 6 [7]
March 13 Substitution and Income Effects Varian, 8
March 15 Substitution and Income Effects
Two interesting posts involving S and I effects:
1.  Mankiw on labor supply
2.  Krugman on Laffer curve
Varian, 8
March 16 Buying and Selling Varian, 9
March 19 Labor-Leisure Trades and Labor Supply Varian, 9
March 20 Exam 1  
March 22 Pure Exchange Varian, 31
March 23 Pure Exchange Varian, 31
March 26 Technology Varian, 18
March 27 Profits, Costs Varian, 19, 20.1
March 29 Production Varian, 32
March 30 Welfare Varian, 33
April 9 Surplus Varian, 14
April 10 Market Demand Varian, 15
April 12 Equilibirum Varian, 16
April 13 Intertemporal Choice Varian, 10
April 16 Exam 2  
April 17 Intertemporal Choice Varian, 10
April 19 Asset Markets Varian, 11
April 20 Uncertainty Varian, 12
April 23 Uncertainty Varian, 12
April 24 Risky Assets Varian, 13
April 26 Risky Assets Varian, 13
April 27 Auctions Varian, 17
April 30 Auctions Varian, 17
May 1 Exam 3  
May 3 Behavioral Economics Varian, 30
May 4 Behavioral Economics Varian, 30; Kahneman, 25
May 7 Behavioral Economics - Student presentations Varian, 30; Kahneman, 26 - 34
May 8 Behavioral Economics - Student presentations / Applications to finance TBD
May 10 Externalities Varian, 34
May 11 Public Goods Varian, 36
May 14 Asymmetric Information Varian, 37
May 15 Asymmetric Information Varian, 37
May 17 Insurance Markets TBD
May 18 Exam 4