Microeconomics Theories Models And Functions

This is an intermediate course in microeconomics. It is based on the book Intermediate Microeconomics by Hal Varian. Below contents have been covered in this course:

Chapter 1: Budget Constraint

We begin this chapter by introducing the two-goods model, a model we will work with for the first five chapters. We have two goods, two prices and one individual with income m. This chapter is about the restrictions faced by the consumer who cannot spend more than her income. The most important concept in the chapter is the budget line and we will see how to draw the budget line and how it changes when prices and/or income change.

Chapter 2: Preferences

• Total order

• Indifference curve

• More on indifference curves

• Perfect substitutes

• Perfect complements

• Neutrals and bads

• Monotonicity

• Monotonicity and indifference curves

• Convex preferences

• Marginal rate of substitution

• Marginal rate of substitution, topics

• Discrete goods

Chapter 3: Utility

• Utility function

• Demonstration of a utility function with its level curves

• Preferences relation from utility function

• Different utility functions may represent the same preferences

• Cardinal and ordinal utility

• Monotonic transformation

• Utility function when goods are perfect substitutes

• Utility function when goods are perfect complements

• Quasi-linear preferences

• Cobb-Douglas preferences

• Utility functions representing Cobb-Douglas preferences

• Marginal utility

Chapter 4: Choice and demand

• Optimal choice

• Unique optimal choice

• First order condition for optimal choice

• Mathematical formulation of optimal choice and the Lagrangian

• Three strategies for finding the optimal choice

• Optimal choice when preferences are not well behaved

• Optimal choice for discrete goods and quasi-linear preferences

• Demand functions and their dependence on income

• Income offer curve and Engel curve

• Homothetic preferences

• Homogenous of degree 1

• Examples of homothetic preferences

• Homothetic preferences: results

• Demand with quasilinear preferences

• Demand functions and their dependence on price

• Demand for discrete goods

Chapter 5: Consumer surplus and market demand

• Consumer surplus, discrete goods

• Consumer surplus with continuous demand

• The market demand model and aggregate demand

• Price elasticity of demand

• Price elasticity of demand - logs, units and elastic vs inelastic demand

• Price elasticity of demand for linear demand functions

• Revenue function

• The connection between the price elasticity of demand and changes in revenue

• The sign of the derivative of the revenue function when demand is elastic and inelastic

• Marginal revenue

• Income elasticity of demand

Chapter 6:

• Two factors production model and isoquants

• Production functions: perfect substitutes, perfect complements and Cobb-Douglas production function

• Marginal product

• Monotonic and convex technology

• Technical rate of substitution

• Long run, short run and return to scale

• Return to scale for Cobb-Douglas production function