中级微观经济学
Fall,2004
复习
Mission of Economists
?Gary Becker:,I believe that the main
purpose of economics is to
understand and help to alleviate
poverty”
?Who are the poor?
?How can one help?
Minimum Wage
?Symptom,Wages low for migrants
and unskilled workers
?Minimum wage law makes the firms
less willing to hire migrants and
unskilled workers,Unemployment
may rise.
Anti-Discrimination
?Women are more likely poor because
they do not receive equal pay
?Equal pay law makes women more
expensive,thus reduces jobs
available to them.
Rent Control
?The poor spend too much money on
housing
?Rent control will reduce the incentive
for landlords to upkeep and repair
the apartments,and reduce the
supply of apartments for rent.
Control Import
?Farmers are poor due to low
agricultural prices as a result of
imports
?Controlling import will raise the price
of food,hurting farmers in pasturing
areas
?Reduce demand for China’s exports
?Microeconomics theory can help us
to fight poverty by
–Understand poverty
?Education,health,migration
–Evaluate anti-poverty policies
?On the poor
?On the non-poor
The Use of Microeconomics
?Positive analysis,Why and how?
–Explain and predict the behavior of
micro agents
–Explain and predict price behavior
?Normative analysis:
–Is the equilibrium good?
–How should we achieve a better
equilibrium?
The Theory of Economics does not
furnish a body of settled conclusions
immediately applicable to policy,It is
a method rather than a doctrine,an
apparatus of the mind,a technique of
thinking which helps its possessor to
draw correct conclusions
--- John Maynard Keynes
Methodology in Microeconomics
?Optimization,Cost and benefit
analysis
–Discrete decision
–Continuous decision
?Equilibrium,Demand=Supply
?Must be clear about market
environment and institutional
constraints
Course Outline
?Consumer theory (1-15)
?Producer theory (18-27)
?Market equilibrium and properties
(16,24-25,27,28-36)
2,Budget Constraint
?Describe budget constraint
–Algebra
–Graph
?Describe changes in budget
constraint
?Government programs and budget
constraints
?Non-linear budget lines
3,Preferences
?Describe preferences
?Indifference curves (无差异曲线 )
?Well-behaved preferences
?Marginal rate of substitution (边际替
代率 )
4,Utility
? Utility function (效用函数）
– Definition
– Monotonic transformation （ 单调转换）
– Examples of utility functions and their
indifference curves
? Marginal utility （ 边际效用）
? Marginal rate of substitution 边际替代率
– MRS after monotonic transformation
5,Choice
?Rational constrained choice
?Computing ordinary demands
–Interior solution （ 内在解）
–Corner solution （ 角点解）
–“Kinky” solution
?Example,Choosing taxes
6,Demand
? Own-price changes
– Price offer curve （ 价格提供曲线）
– Ordinary demand curve
– Inverse demand curve （ 反需求函数）
? Income changes
– Income offer curve （ 收入提供曲线）
– Engel curve （ 恩格尔曲线）
? Cross-price effects
7,Revealed Preference
?Direct preference revelation
?Indirect preference revelation
?Weak axiom of revealed preference
?Strong axiom of revealed preference
8,The Slutsky Equation
?Effects of a price change
?Pure substitution effect
?Income effect
?The Slutsky Equation
?Applications of the Slutsky Equation
9,Demand with Endowment
?Endowments （ 禀赋）
?Budget constraints with endowments
?Net demands
–Price offer curve
?Example,Labor supply
–Comparative statics
?Slutsky equation revisited
10,Intertemporal Choice
?Present and future values
?Intertemporal budget constraint
?Preferences for intertemporal
consumption
?Intertemporal choice
?Comparative statics
?Valuing securities
11,Asset Market
?When to sell an asset?
–Rate-of-return
?Arbitrage
?Taxation of asset returns
?Depletable resources
?Financial intermediaries
12,Uncertainty
?State contingent consumption (依情
形而定的消费）
?Preferences under uncertainty
?Attitudes toward risk
?State-contingent budget constraint
?Choice under uncertainty
?Diversification and risk spreading
14,Consumer’s Surplus
?Money equivalent of utility gains to
trade
?Consumer’s surplus
?Changes in consumer’s surplus
?Compensating and equivalent
variations
?Producer’s surplus
15,Market Demand
?From Individual to Market Demand
Functions
?Elasticities
?Revenue and own-price elasticity of
demand
?Marginal revenue and price elasticity
17,Equilibrium
?Market equilibrium
?Quantity tax and equilibrium
?Tax incidence （ 税收分担）
?Deadweight loss （ 额外净损失）
18,Technology
? Describing technologies
– Production set or technology set
– Production function
– Isoquant
? Marginal product
? Returns to scale
? Technical rate of substitution
? Well-behaved technologies
? Long run and short run
19,Profit Maximization
?Economic profit
?Short-run profit maximization
–Comparative statics
?Long-run profit maximization
?Profit maximization and returns to
scale
?Revealed profit maximization
20,Cost Minimization
?The cost minimization problem
?Average costs
?Returns to scale and total and
average costs
?Short run and long run costs
21,Cost Curves
? Types of cost curves
– Fixed,variable and total cost functions
– Average fixed,average variable and
average cost functions
? Marginal cost functions
? Marginal and variable cost functions
? Marginal and average cost functions
? Short run and long run cost curves
22,Firm Supply
? Market environments
? Market demand for a competitive firm
? Short-run supply decision
– Upward sloping MC curve
– Shut-down condition
? Long-run supply decision
? Comparing long-run and short-run
decisions
?Producer’s surplus and profits
23,Industry Supply
?Market supply
?Short-run supply and equilibrium
?Long-run supply and equilibrium
?Long-run implications for taxation
?Fixed inputs and economic rent (经济
租金 )
24,Monopoly
?What causes monopoly
?Profit-maximizing choices of
monopoly
?Markup pricing
?Taxing a monopoly
?Inefficiency of monopoly
?Natural monopoly (自然垄断 )
25,Monopoly Behavior
?First-degree price discrimination
?Second-degree price discrimination
?Third-degree price discrimination
?Bundling
?Two-part tariff
27,Oligopoly
? Non-collusive moves
– Simultaneous moves
?Quantity competition –Cournot model
?Price competition – Bertrand model
– Sequential moves
?Quantity leadership – Stakelberg
model
?Price leadership
? Collusion
28,Game Theory
?Dominant strategy
?Nash equilibrium
?Prisoner’s dilemma and repeated
games
?Multiple equilibria and sequential
games
?Pure and mixed strategies
30,Exchange
? The Edgeworth (艾奇沃斯 ) Box
? Pareto improving trade
? Pareto Efficient Allocation
? The Core (核心 )
? Trade in a competitive market
?Walras’ Law of general equilibrium (一般均
衡 )
? First Fundamental Theorem of Welfare
Economics (福利经济学第一定理 )
? Second Fundamental Theorem of Welfare
Economics (福利经济学第二定理 )
31,Production
? A one-person economy
– Optimal outcome
– Competitive equilibrium
– Two welfare theorems
– Non-convex technologies
? Two-people economy
– Production possibility frontier
– Comparative advantage
– Pareto efficient allocation
– Competitive equilibrium
33,Externality
?Definition
?Consumption externality
?Production externality
?The tragedy of commons
35,Public Goods
? Definition
? When to provide a public good
– Efficient provision
– Private provision,free-riding
? Variable quantities of public good
– Efficient amount
– Free-riding problem
? How to provide public goods?
? Demand revelation
36,Asymmetric Information
? Adverse selection (逆向选择 )
? Signaling (信号传递 )
? Moral hazard (道德风险 )
? Incentives contracting.
Limitations of Microeconomics
?No theory is perfectly correct
?The validity of a theory depends on
whether it succeeds in explaining and
predicting the set of phenomena that it
is intended to explain and predict.
?Theories are continuously tested
against observation.
?Theories are often modified or refined
and occasionally even discarded.
Fall,2004
复习
Mission of Economists
?Gary Becker:,I believe that the main
purpose of economics is to
understand and help to alleviate
poverty”
?Who are the poor?
?How can one help?
Minimum Wage
?Symptom,Wages low for migrants
and unskilled workers
?Minimum wage law makes the firms
less willing to hire migrants and
unskilled workers,Unemployment
may rise.
Anti-Discrimination
?Women are more likely poor because
they do not receive equal pay
?Equal pay law makes women more
expensive,thus reduces jobs
available to them.
Rent Control
?The poor spend too much money on
housing
?Rent control will reduce the incentive
for landlords to upkeep and repair
the apartments,and reduce the
supply of apartments for rent.
Control Import
?Farmers are poor due to low
agricultural prices as a result of
imports
?Controlling import will raise the price
of food,hurting farmers in pasturing
areas
?Reduce demand for China’s exports
?Microeconomics theory can help us
to fight poverty by
–Understand poverty
?Education,health,migration
–Evaluate anti-poverty policies
?On the poor
?On the non-poor
The Use of Microeconomics
?Positive analysis,Why and how?
–Explain and predict the behavior of
micro agents
–Explain and predict price behavior
?Normative analysis:
–Is the equilibrium good?
–How should we achieve a better
equilibrium?
The Theory of Economics does not
furnish a body of settled conclusions
immediately applicable to policy,It is
a method rather than a doctrine,an
apparatus of the mind,a technique of
thinking which helps its possessor to
draw correct conclusions
--- John Maynard Keynes
Methodology in Microeconomics
?Optimization,Cost and benefit
analysis
–Discrete decision
–Continuous decision
?Equilibrium,Demand=Supply
?Must be clear about market
environment and institutional
constraints
Course Outline
?Consumer theory (1-15)
?Producer theory (18-27)
?Market equilibrium and properties
(16,24-25,27,28-36)
2,Budget Constraint
?Describe budget constraint
–Algebra
–Graph
?Describe changes in budget
constraint
?Government programs and budget
constraints
?Non-linear budget lines
3,Preferences
?Describe preferences
?Indifference curves (无差异曲线 )
?Well-behaved preferences
?Marginal rate of substitution (边际替
代率 )
4,Utility
? Utility function (效用函数）
– Definition
– Monotonic transformation （ 单调转换）
– Examples of utility functions and their
indifference curves
? Marginal utility （ 边际效用）
? Marginal rate of substitution 边际替代率
– MRS after monotonic transformation
5,Choice
?Rational constrained choice
?Computing ordinary demands
–Interior solution （ 内在解）
–Corner solution （ 角点解）
–“Kinky” solution
?Example,Choosing taxes
6,Demand
? Own-price changes
– Price offer curve （ 价格提供曲线）
– Ordinary demand curve
– Inverse demand curve （ 反需求函数）
? Income changes
– Income offer curve （ 收入提供曲线）
– Engel curve （ 恩格尔曲线）
? Cross-price effects
7,Revealed Preference
?Direct preference revelation
?Indirect preference revelation
?Weak axiom of revealed preference
?Strong axiom of revealed preference
8,The Slutsky Equation
?Effects of a price change
?Pure substitution effect
?Income effect
?The Slutsky Equation
?Applications of the Slutsky Equation
9,Demand with Endowment
?Endowments （ 禀赋）
?Budget constraints with endowments
?Net demands
–Price offer curve
?Example,Labor supply
–Comparative statics
?Slutsky equation revisited
10,Intertemporal Choice
?Present and future values
?Intertemporal budget constraint
?Preferences for intertemporal
consumption
?Intertemporal choice
?Comparative statics
?Valuing securities
11,Asset Market
?When to sell an asset?
–Rate-of-return
?Arbitrage
?Taxation of asset returns
?Depletable resources
?Financial intermediaries
12,Uncertainty
?State contingent consumption (依情
形而定的消费）
?Preferences under uncertainty
?Attitudes toward risk
?State-contingent budget constraint
?Choice under uncertainty
?Diversification and risk spreading
14,Consumer’s Surplus
?Money equivalent of utility gains to
trade
?Consumer’s surplus
?Changes in consumer’s surplus
?Compensating and equivalent
variations
?Producer’s surplus
15,Market Demand
?From Individual to Market Demand
Functions
?Elasticities
?Revenue and own-price elasticity of
demand
?Marginal revenue and price elasticity
17,Equilibrium
?Market equilibrium
?Quantity tax and equilibrium
?Tax incidence （ 税收分担）
?Deadweight loss （ 额外净损失）
18,Technology
? Describing technologies
– Production set or technology set
– Production function
– Isoquant
? Marginal product
? Returns to scale
? Technical rate of substitution
? Well-behaved technologies
? Long run and short run
19,Profit Maximization
?Economic profit
?Short-run profit maximization
–Comparative statics
?Long-run profit maximization
?Profit maximization and returns to
scale
?Revealed profit maximization
20,Cost Minimization
?The cost minimization problem
?Average costs
?Returns to scale and total and
average costs
?Short run and long run costs
21,Cost Curves
? Types of cost curves
– Fixed,variable and total cost functions
– Average fixed,average variable and
average cost functions
? Marginal cost functions
? Marginal and variable cost functions
? Marginal and average cost functions
? Short run and long run cost curves
22,Firm Supply
? Market environments
? Market demand for a competitive firm
? Short-run supply decision
– Upward sloping MC curve
– Shut-down condition
? Long-run supply decision
? Comparing long-run and short-run
decisions
?Producer’s surplus and profits
23,Industry Supply
?Market supply
?Short-run supply and equilibrium
?Long-run supply and equilibrium
?Long-run implications for taxation
?Fixed inputs and economic rent (经济
租金 )
24,Monopoly
?What causes monopoly
?Profit-maximizing choices of
monopoly
?Markup pricing
?Taxing a monopoly
?Inefficiency of monopoly
?Natural monopoly (自然垄断 )
25,Monopoly Behavior
?First-degree price discrimination
?Second-degree price discrimination
?Third-degree price discrimination
?Bundling
?Two-part tariff
27,Oligopoly
? Non-collusive moves
– Simultaneous moves
?Quantity competition –Cournot model
?Price competition – Bertrand model
– Sequential moves
?Quantity leadership – Stakelberg
model
?Price leadership
? Collusion
28,Game Theory
?Dominant strategy
?Nash equilibrium
?Prisoner’s dilemma and repeated
games
?Multiple equilibria and sequential
games
?Pure and mixed strategies
30,Exchange
? The Edgeworth (艾奇沃斯 ) Box
? Pareto improving trade
? Pareto Efficient Allocation
? The Core (核心 )
? Trade in a competitive market
?Walras’ Law of general equilibrium (一般均
衡 )
? First Fundamental Theorem of Welfare
Economics (福利经济学第一定理 )
? Second Fundamental Theorem of Welfare
Economics (福利经济学第二定理 )
31,Production
? A one-person economy
– Optimal outcome
– Competitive equilibrium
– Two welfare theorems
– Non-convex technologies
? Two-people economy
– Production possibility frontier
– Comparative advantage
– Pareto efficient allocation
– Competitive equilibrium
33,Externality
?Definition
?Consumption externality
?Production externality
?The tragedy of commons
35,Public Goods
? Definition
? When to provide a public good
– Efficient provision
– Private provision,free-riding
? Variable quantities of public good
– Efficient amount
– Free-riding problem
? How to provide public goods?
? Demand revelation
36,Asymmetric Information
? Adverse selection (逆向选择 )
? Signaling (信号传递 )
? Moral hazard (道德风险 )
? Incentives contracting.
Limitations of Microeconomics
?No theory is perfectly correct
?The validity of a theory depends on
whether it succeeds in explaining and
predicting the set of phenomena that it
is intended to explain and predict.
?Theories are continuously tested
against observation.
?Theories are often modified or refined
and occasionally even discarded.
