Advanced Microeconomics I - xumhandy.comxumhandy.com/wp/wp-content/uploads/2017/09/00-Introduction.pdf · Martin Osborne’s math tutorial for economists: ... Why do we learn microeconomics?

Introduction

Advanced Microeconomics IFall 2016

Menghan Xu

WISE & SOEXiamen University

M Xu Adv. Micro 16F Sep 20, 2016 1 / 14

Introduction

Course Information

• Menghan Xu (许梦涵) ↑• Time

• Tuesday: 10:10am∼11:50am• Thursday: 19:10pm∼20:50pm

• Location• Economics Building N302

• Office Hour• Tuesday: 13:30pm∼14:30pm

Thursday: 21:00pm∼22:00pm

• Location: Econ Building B313-A


Introduction

Course Information

• Email: [email protected]

• Course Website: http://l.xmu.edu.cn• Search “School of Economics”• In Year 2016-17, find “Advanced Microeconomics I (Class 4)”• Enrollment key: micro16f xu

• TA Information• TBA


[email protected]

http://l.xmu.edu.cn

Introduction

Grading Policy

• Problem sets (10%)• Homework will be collected every 2 or 3 weeks.• Two will be randomly graded. (5% percent each)• You are encouraged to form study group.

• Midterm (30%)• The midterm will be held around second weekend of November.

• Final (60%)• Final will ONLY cover material after midterm.


Introduction

Course Material• Lecture Notes is the most relevant material.

• Textbooks• JR (Many homework questions are from JR.)

Jehle, A. Geoffrey and Philip J. Reny, AdvancedMicroeconomic Theory (3rd edition, 2012) China editionpublished by Pearson education Asia LTD and China RenminUniversity Press

• MWGMas-Colell, Andreu, Michael Whinston and Jerry Green,Microeconomic Theory, Oxford University Press (1995)

• NMA simplified version of MWG selected chapters - NolanMiller’s lecture notes:http://business.illinois.edu/nmiller/notes.html


http://business.illinois.edu/nmiller/notes.html

Introduction

Other References

• Varian, Hal R., Microeconomic Analysis• Simon, Carl P. and Lawrence E. Blume, Mathematics for

Economists, W. W. Norton & Company, Inc. (1994)• Martin Osborne’s math tutorial for economists:

http://www.economics.utoronto.ca/osborne/MathTutorial/index.html

• UCLA Math Camphttp://www.econ.ucla.edu/riley/200/index.htm




http://www.econ.ucla.edu/riley/200/index.htm

Introduction

Why do we learn microeconomics?

• How do individuals (household or firm) make decision facing• constraints - income, time, talent...• opportunity cost - you always have to give up something.• market frictions: information asymmetry, search cost...

• What will the market look like if aggregate individualstogether? - Equilibrium Analysis

• How prices are formed?• How large the market will be?• Does(do) equilibrium(equilibria) exist?• Is an equilibrium good? - Efficiency analysis.

• How to improve a market if the equilibrium is not efficient?• Externality - Pollution, public good...• Market Frictions• Fiscal Policy(tax,subsidy), Mechanism design


Introduction

Why do we learn microeconomics?• How do individuals (household or firm) make decision facing

• constraints - income, time, talent...• opportunity cost - you always have to give up something.

• market frictions: information asymmetry, search cost...





Introduction


• constraints - income, time, talent...• opportunity cost - you always have to give up something.• market frictions: information asymmetry, search cost...





Introduction







Introduction




• How prices are formed?• How large the market will be?

• Does(do) equilibrium(equilibria) exist?• Is an equilibrium good? - Efficiency analysis.



Introduction







Introduction





• How to improve a market if the equilibrium is not efficient?• Externality - Pollution, public good...• Market Frictions

• Fiscal Policy(tax,subsidy), Mechanism design


Introduction







Introduction

Topics covered in this course• Consumer theory

• Utility maximization with given budget• Choice under uncertainty

• Producer theory• Profit maximization/cost minimization• Factor substitution and economy of scale

• Partial equilibrium• Efficiency and welfare analysis• Market structure

• General equilibrium• Interconnection between markets• Efficiency and welfare analysis• Application in international trade and financial markets


Introduction

Micro vs. Macro

• Micro-foundation of Macroeconomics• Representative Agent

maxct ,kt+1

∞∑t=1

βtu(ct)

s.t.

ct + it = At · F (kt , it)kt+1 = it+1 + (1− δ)kt

At ∼ N(µ, σ)

• Firm dynamics: Aggregate individual firms’ entry and exit


Introduction

Micro vs. Econometrics

• Microeconomics Theory

Theoretical Model⇒ Prediction

• Applied Microeconomics

Data⇒ Confirm, test and estimate theories

• Econometrics provides tools• Identification: Is the dataset rich enough?• Test: True or false?• Estimation: Evaluate parameters


Introduction

Topics covered in this course• Mathematics Review• Consumer theory

• Utility maximization with given budget• Choice under uncertainty

• Producer theory• Profit maximization/cost minimization• Factor substitution and economy of scale

• Partial equilibrium• Efficiency and welfare analysis• Market structure

• General equilibrium• Interconnection between markets• Efficiency and welfare analysis• Application in international trade and financial markets


Introduction

Topics covered in micro II• Game Theory

• Players’ actions affect each other.• Nash Equilibrium• Dynamic Games

• Information Economics• Game with incomplete information• Adverse Selection• Moral Hazard

• Mechanism Design• Revelation Principle• Auctions

• Social choice• Individual benefit against social welfare


Introduction

Some Advice

• It is impossible to go over every detail in 14 weeks.• You may learn about 50% from lecture and digest the other

half by reading, practising and discussing with yourclassmates.

• Learn how to ask questions effectively.• Don’t hold questions - solve them ASAP!• Bad questions: What is Slusky Equation? How to do question

10 in chapter 2?• Be specific: What have you tried? What stops you from

moving on?• Talking is sometimes better than writing.


Introduction

Some Advice



• Learn how to ask questions effectively.

• Don’t hold questions - solve them ASAP!• Bad questions: What is Slusky Equation? How to do question




Introduction

Some Advice



• Learn how to ask questions effectively.• Don’t hold questions - solve them ASAP!

• Bad questions: What is Slusky Equation? How to do question10 in chapter 2?

• Be specific: What have you tried? What stops you frommoving on?

• Talking is sometimes better than writing.


Introduction

Some Advice




10 in chapter 2?

• Be specific: What have you tried? What stops you frommoving on?

• Talking is sometimes better than writing.


Introduction

Some Advice







Introduction

Some Advices

• You have quite different backgrounds. So realize your strengthand shortage.

• English is a MUST in this class• Second language - be comfortable with math notations• Economics is more than Mathematics - Never forget intuition

• Be confident: Some of you may feel that you are behindothers. But the effect of such initial difference will be lesssignificant by the end of the semester (and almost disappearby the end of the year).

• WORK HARD!


Introduction

Some Advices

• You have quite different backgrounds. So realize your strengthand shortage.

• English is a MUST in this class• Second language - be comfortable with math notations• Economics is more than Mathematics - Never forget intuition

• Be confident: Some of you may feel that you are behindothers. But the effect of such initial difference will be lesssignificant by the end of the semester (and almost disappearby the end of the year).

• WORK HARD!


Documents

Advanced Microeconomics I - xumhandy.comxumhandy.com/wp/wp-content/uploads/2017/09/00-Introduction.pdf · Martin Osborne’s math tutorial for economists: ... Why do we learn microeconomics?