A listing of topics by session may be found in the calendar below.
Course Meeting Times
Lectures: 2 sessions / week, 1.5 hours / session
Recitations: 1 session / week, 1.5 hours / session
Description
This half-semester course provides an introduction to microeconomic theory designed to meet the needs of students in the economics Ph.D. program. Some parts of the course are designed to teach material that all graduate students should know. Others are used to introduce methodologies. Topics include consumer and producer theory, markets and competition, general equilibrium, and tools of comparative statics and their application to price theory. Some topics of recent interest may also be covered.
Prerequisites
Prerequisites for this course include 14.04 Intermediate Microeconomic Theory, 18.02 Multivariable Calculus, and 18.06 Linear Algebra.
Enrollment in this course is limited and permission of the instructor is required. Permission can be obtained by attending the first class meeting and providing information about previous coursework in mathematics and economics. The course assumes that students have taken undergraduate intermediate microeconomics classes. It also assumes that students are comfortable with multivariable calculus and linear algebra and have had some exposure to real analysis. Historically, many students from outside the economics department have had difficulty with the course. The enrollment limit may result in well-qualified students being turned away.
Textbooks
Mas-Collel, Andreu, Michael D. Whinston, and Jerry R. Green. Microeconomic Theory. New York, NY: Oxford University Press, 1995. ISBN: 9780195073409.
Some students have also found the following books helpful:
Jehle, Geoffrey, and Philip Reny. Advanced Microeconomic Theory. 2nd ed. Reading, MA: Addison Wesley, 2000. ISBN: 9780321079169.
Kreps, David. A Course in Microeconomic Theory. Princeton, NJ: Princeton University Press, 1990. ISBN: 9780745007625.
Varian, Hal. Microeconomic Analysis. 3rd ed. New York, NY: W.W. Norton, 1992. ISBN: 9780393957358.
Grading
The course will be graded on the basis of six problem sets and a final exam.
Problem sets will be due in class on assigned lecture dates. They will be graded on a check-, check, check+ basis. The grades are intended primarily to give you an idea of how you are doing in the course and will affect course grades only for students with borderline scores on the exam. You may work in groups, but please do the write-ups individually. We do not expect to see identical answers from different students. An optional seventh problem set will be distributed.
The final exam will be held two days after the last lecture.
Calendar
Course calendar.
| SES # | TOPICS | KEY DATES |
| Part 1: Demand theory |
| L1 | Utility theory, properties of preferences, choice as primitive, revealed preference, and Afriat's theorem | Problem set 1 out |
| L2 | Classical demand theory, Kuhn-Tucker necessary conditions, implications of Walras's law, indirect utility functions, theorem of the maximum (Berge's theorem), expenditure minimization problem, Hicksian demands, compensated law of demand, and Slutsky substitution | Problem set 2 out |
| L3 | Price changes and welfare, compensating variation, and welfare from new goods | Problem set 1 due |
| L4 | Price indexes, bias in the U.S. consumer price index, integrability, demand aggregation, aggregate demand and welfare, Frisch demands, and demand estimation | Problem set 3 out |
| Part 2: Producer theory |
| L5 | Producer theory, robust comparative statics, increasing differences, producer theory applications, the LeChatelier principle, Topkis' theorem, and Milgrom-Shannon monotonicity theorem | Problem set 2 due |
| L6 | Monopoly pricing, monopoly and product quality, nonlinear pricing, and price discrimination | |
| Part 3: Partial equilibrium competitive markets |
| L7 | Externalities, simple models of externalities, government intervention, Coase theorem, Myerson-Sattherthwaite proposition, missing markets, price vs. quantity regulations, Weitzman's analysis, uncertainty, common property externalities, optimization, and equilibrium number of boats | Problem set 3 due and problem set 4 out |
| Part 4: General equilibrium |
| L8 | General equilibrium in context, existence, welfare theorems, uniqueness and determinacy, price-taking assumption, Edgeworth box, welfare properties, Pareto efficiency, and Walrasian equilibrium with transfers | Problem set 5 out |
| L9 | Arrow-Debreu economy, welfare theorems, separating hyperplanes, and Minkowski's theorem | Problem set 4 due |
| L10 | Existence of Walrasian equilibrium, Kakutani's fixed point theorem, Debreu-Gale-Kuhn-Nikaido lemma, and additional properties of general equilibrium | Problem set 6 out |
| L11 | Microfoundations, core, and core convergence | Problem set 5 due and problem set 7 out |
| L12 | General equilibrium with time and uncertainty, Jensen's inequality, and security market economy, arbitrage pricing theory, and risk-neutral probabilities | |
| L13 | Housing markets, competitive equilibrium, one-sided matching house allocation problem, serial dictatorship, two-sided matching, marriage markets, existence of stable matchings, optimization, incentives, and housing markets core mechanism | Problem set 6 due in Ses #L13 and final exam taken 2 days after Ses #L13 |
Subscribe to the OCW Newsletter
