SL 354

Intermediate Microeconomics
Rose-Hulman Institute of Technology                                              Department of Humanities & Social Sciences / Kevin Christ

Spring 2008

"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 theories of the firm or market structure, strategic interaction, or business economics.  Students interested in those topics are encouraged to take VA353 (Industrial Organization), SL356 (Game Theory), or SL351 (Managerial Economics).

The prerequisites for this course are SL151 (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 "Self and Society" elective.

 

Textbooks: Hal Varian, Intermediate Microeconomics, A Modern Approach, 7th ed. Norton (2006)

Richard H. Thaler, The Winner's Curse, Paradoxes and Anomalies of Economic Life, Princeton paperback (1994)

 
Problem Sets: Problem Set 1 (to be discussed in class on Friday, March 14)

Problem Set 2 (to be discussed in class on Thursday, March 27)

Problem Set 3 (to be discussed in class on Friday, April 18)

Problem Set 4 (to be discussed in class on Friday, May 2)

Problem Set 5 (to be discussed in class on Monday, Tuesday, and Thursday, May 12 - 15)

Click here for a current syllabus.

Day

Topics / Exams / Related Links

Readings
March 3 Introduction, Slides for Weeks 1 & 2 Varian, 1
March 4 Constraints Varian, 2
March 6 Preferences Varian, 3
March 7 Utility Varian, 4
March 10 Choice Varian, 5
March 11 Individual Demand [Revealed Preference] Varian, 6 [7]
March 13 Substitution and Income Effects Varian, 8
March 14 Problem Set 1 Thaler, 1 - 3
March 17 Exam 1  Sample Exam 1  
March 18 Buying and Selling  Slides for Weeks 3 & 4 Varian, 9
March 20 Buying and Selling -- labor supply Varian, 9; Thaler 8
March 21 Intertemporal Choice Varian, 10
March 24 Market demand Varian, 15
March 25 Equilibrium Varian, 16
March 27 Problem Set 2 Thaler, 8 - 9
March 28 Exam 2  
April 7 Asset Markets  Slides for Weeks 5 & 6 Varian, 11
April 8 Risk and Uncertainty Varian, 12
April 10 Risky Assets Varian, 13
April 11 Portfolio Theory TBD
April 14 Loss Aversion, Endowment Effects, etc. Thaler, 6 - 7
April 15 Asset Market Anomalies Thaler, 10 - 11
April 17 Efficient Markets Thaler, 12 and 14
April 18 Problem Set 3   
April 21 Exam 3  
April 22 Exchange  Slides for Weeks 7 & 8 Varian, 31
April 24 Exchange Varian, 31
April 25 Guest Speaker  
April 28 Technology and Profit Maximization Varian, 18 and 19
April 29 Production Varian, 32
May 1 General Equilibrium and Welfare Varian, 33
May 2 Problem Set 4  
May 5 Exam 4  
May 6 Auctions  Slides for Weeks 9 & 10 Varian, 17
May 8 Auctions Thaler, 5
May 9 No class  
May 12 Externalities (Problem Set 5, 1 - 5) Varian, 34
May 13 Externalities / Asymmetric Information (Problem Set 5, 6 - 8) Varian, 37
May 15 Asymmetric Information (Problem Set 5, 9 - 10) Varian, 37
May 16 Exam 5