Intermediate Microeconomics

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Intermediate Microeconomics

• -------------Introduction

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Part 1 MICROECONOMICS AND MACROECONOMICS

• Microeconomics
• The study of how households and firms make
  decisions and how they interact in markets
• Macroeconomics
• the study of the economy as a whole and
  economy-wide phenomena, including inflation,
  unemployment, and economic growth

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Part 2 Describing the relationship(1) Economic
models

• Two key variables
• Endogenous variable Endogenous variables are
  those variables that a model tries to explain.
• Exogenous variable Exogenous variables are those
  variables that a model takes as given.

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Part 2 Describing the relationship(1) Economic
models

• Objective
• 1)Show the key relationship among endogenous
  variables and the exogenous variables that are
  given.
• 2)Comparative statics show how changes in the
  exogenous variables affecting the endogenous
  variables

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Part 2 Describing the relationship(1) Economic
models

• Assumptionsthe start of our analysis.
• A multitude of modelsWhether the underlying
  assumptions are reasonable for the problems
  facing to us?
• Two implicit and important assumptions throughout
  microeconomic and macroeconomics

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Part 2 Describing the relationship(1) Economic
models

• 1)Economic actors are fully rational.Optimizatio
  n principle
• Households and firms do the best they can for
  themselves, given their objectives and the
  constraints they face.

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Part 2 Describing the relationship(1) Economic
models

• 2)The resources are scarce.
• Scarcity means that the economy has limited
  resources and therefore cannot produce all the
  goods and services that people desire.
• Economics is the study of how society locating
  its scarce resources.

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Part 2 Describing the relationship(2)Function

• Demand function
• Utility function
• Supply function
• Cost function

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Part 3 How this semesterproceeds

• 1 . Consumer theory
• The consumers will choose the best bundles they
  can afford.( i,e. The consumers will maximize
  their utility under the budget constraints coming
  to them.)

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Part 3 How this semesterproceeds

• 2. Producer theory
• The producers will maximize their profits under
  the constraints of technology and market.

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Part 3 How this semesterproceeds

• 3 . Market demand and industry supply
• Uncertainty
• Do you know how to fix the premium in the
  perfectly competitive market?

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Part 3 How this semesterproceeds

• Game theory
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Part 3 How this semesterproceeds

• Exchange
• The Edgeworth box
• Information technology
• Asymmetric information

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Part 4 Hints

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Part 5 Example

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