Course Description
A formal introduction to contemporary economic theories of decision making. The goal is to understand the behavior of economic agents, consumers and firms, and their interaction in various market environments. Emphasis is placed on analytical rigor and applications that motivate the use of different mathematical techniques.
Athena Title
Households Cons Econ Fin Beh
Prerequisite
Graduate student status or permission of department
Semester Course Offered
Offered fall
Grading System
A - F (Traditional)
Course Objectives
-Students will acquire a rigorous analytical understanding of the standard microeconomic models of economic agents: consumers and firms -Students will understand the methods and analytical tools of microeconomic analysis used in professional literature -Students will be able to apply economic theory to a wide variety of consumer problems and policies -Describe how economic trade-offs and social values impact public/private policy, and the success or failure of policies to achieve intended outcomes
Topical Outline
1. Overview of the course 1.1 The Minimum Wage: Review of supply and demand models 1.2 Microeconomic models, comparative statistics, and optimization 2. Choice and the theory of demand 2.1 Rationality axioms, utility, and indifference curves 2.2 Constrained utility maximization, demand functions, indirect utility, the expenditure function 2.3 Individual demand, income and substitution effects 2.4 Substitutes and complements, market demand, and elasticities 2.5. Applications: Food Stamps, Gift Giving, Consumer Price Indices 3. Choice, uncertainty, and information 3.1 Uncertainty, risk, von Neumann-Morgenstern expected utility 4. Prices, perfect competition, general equilibrium and economic efficiency 4.1 Economic efficiency and welfare analysis 4.2 General competitive equilibrium 4.3 Trade, comparative advantage, competitiveness, and redistribution 5. Deviations from perfect efficiency 5.1 Externalities, public goods and regulation 5.2 Insurance, moral hazard and adverse selection 5.3 Market signaling 6. Information and Strategy: Game Theory and Network Externalities 7. Work and leisure (labor supply) decisions 7.1 Household production function, utility maximization 7.2 Household specialization and exchange 8. Consumption and savings theory and applications 8.1 Intertemporal budget constraint, indifference curves, and equilibrium 8.2 Absolute income, permanent income, and life cycle income hypotheses