UNIVERSITY OF ALBERTA DEPARTMENT OF ECONOMICS
ECONOMICS 503: MICROECONOMIC THEORY I FALL 2019
Instructor: Tilman Klumpp Classes: T/Th 9:20–10:50 am
Office: Tory 9-20 Room: Tory B-60
E-mail: [email protected] Office hours: By appointment Phone: (780) 492-5437
This course is the first of two required microeconomics courses in the Economics Ph.D. core sequence; it is also a required course for all M.A. students. The course covers consumer theory, theory of the firm, choice under uncertainty, and partial as well as general equilibrium analysis. A detailed outline of all topics is on page 2.
Textbook and resources:
• A. Mas-Colell, M. Whinston, and J. Green: Microeconomic Theory. Oxford University Press, 1995 (“MWG”).
• Overhead slides will be made available online (on e-class) after each class meeting.
• A set of supplementary mathematical notes will be posted online.
Prerequisites: Econ 386/387 and Econ 481/482, or equivalent. Command of the material covered in the summer math refresher course is expected, and mathematical concepts will not be reviewed in class. If necessary, students should consult the mathematical appendix in the textbook, or my notes (see above).
Grading: Numerical grades will be calculated as follows:
Assignments 4 or 5 problem sets, throughout the term 20%
Midterm exam Thursday, October 24, 2019, 9:00–10:50 am 30%
Final exam Thursday, December 19, 2019, 9:00 am–12:00 pm 50%
Final letter grades will be assigned in accordance with university and departmental policies.
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Outline of topics:
1. Consumer theory (approx. 6 classes)
(a) Preferences and utility MWG 1.A–B, 3.B–C
(b) Utility maximization MWG 3.D
(c) Expenditure minimization and duality MWG 3.E, 3.G (d) Welfare evaluation of economic changes MWG 3.I
Applications: (i) Optimal savings; (ii) labor supply; (iii) distortionary vs.
lump-sum taxation
2. Theory of the firm (approx. 4 classes)
(a) Production technology MWG 5.B
(b) Profit maximization and cost minimization MWG 5.C
(c) Cost and supply MWG 5.D
3. Choice under uncertainty (approx. 5 classes)
(a) Preferences over lotteries MWG 6.B
(b) The expected utility theorem MWG 6.B
(c) Money lotteries and risk preferences MWG 6.C Applications: (i) Investment under uncertainty; (ii) demand for insurance
4. Equilibrium analysis (approx. 10 classes)
(a) General model of a private ownership economy MWG 10.B
(b) Pure exchange economies MWG 15.B
(c) Economies with production MWG 15.C
(d) The welfare theorems MWG 16.B–D
(e) Partial equilibrium analysis MWG 10.C–E
(f) Imperfect competition MWG 12.B–C
(g) Contingent commodities MWG 19.B–D
Applications: (i) Intertemporal trade; (ii) risk sharing
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Policies:
1. Class attendance is mandatory. In cases of potentially excusable absences due to illness or domestic affliction, notify your instructor by e-mail within two days.
Regarding absences that may be excusable and procedures for addressing course components missed as a result, consult §23.3 (1) and §23.5.6 of the University Calendar. Be aware that unexcused absences will result in partial or total loss of the grade for any exams, tests, or assignments that are not handed in or completed as a result.
2. A student who misses the final exam because of incapacitating illness, severe domestic affliction or other compelling reason (including religious conviction) may apply for a deferred exam. A deferred final exam will not be approved if a student, excluding the final exam, has completed less than half of the assigned work (Calendar §23.5.6 (2)).
The deferred final exam, should one be required, is on Wednesday, January 15, 2020, at 10:00 am (report to the Economics Department main office in 8-14 Tory).
3. All exams are closed book/closed notes.
4. Students are encouraged to collaborate on homework assignments, but only with classmates currently enrolled in this course. Each student must hand in a separate assignment and list the names of those students that he/she collaborated with on the assignment. You must not utilize answers from previous years or answers posted online, and you must not receive help from students who are not currently enrolled in this course. If I determine that you violated these conditions, you will receive zero points on the assignment or exam, and the incident will be referred to the Dean’s office for further action.
5. Audio or video recording of lectures by students is allowed only with the prior written consent of the instructor or as part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s).
6. University guidelines governing academic integrity and student behavior are in effect.
The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.ualberta.ca/secretariat/appeals.htm) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
