Microeconomics

38 units · 266 lessons · Intermediate · Free

Intermediate microeconomics: choice, demand, exchange, production, monopoly, game theory, and welfare.

What the course covers

  1. Unit 1 Markets and Methodology

    Methodology of economics via the apartment market: demand, supply, equilibrium, comparative statics, and Pareto efficiency.

    1. What microeconomics studies
    2. The market for apartments
    3. Comparative statics
    4. Other ways to allocate apartments
    5. Pareto efficiency
    6. Equilibrium and Pareto efficiency
    7. The long run
    8. Methodology recap
    9. Reservation prices and demand
    10. Tax incidence with inelastic supply
    11. The discriminating monopolist revisited
    12. Capstone: what Unit 1 did for us
    Key terms

  2. Unit 2 Budget Sets and Constraints

    The budget set: how prices and income limit affordable consumption bundles. The geometric apparatus before utility.

    1. Consumption bundles and the budget set
    2. Two goods are often enough
    3. Changes in income
    4. Changes in price
    5. The numeraire good
    6. Taxes, subsidies, and rationing
    7. Endowments and the budget line
    8. Kinked budget lines
    9. Application: the food-stamp program
    10. Algebra of the budget line
    11. Multiple budget constraints
    12. Recap and bridge to preferences
    Key terms

  3. Unit 3 Consumer Preferences

    Preferences over consumption bundles: assumptions, indifference curves, the marginal rate of substitution, and canonical examples.

    1. Consumer preferences
    2. Axioms of consumer preferences
    3. Indifference curves
    4. Perfect substitutes
    5. Perfect complements
    6. Bads, neutrals, and satiation
    7. Well-behaved preferences
    8. The marginal rate of substitution
    9. MRS for canonical examples
    10. Homothetic and quasilinear preferences
    11. Non-standard preferences
    12. Why preferences matter
    Key terms

  4. Unit 4 Utility Representations

    Utility as a representation of preferences: ordinal nature, monotonic transformations, canonical functional forms, and marginal utility.

    1. Cardinal vs ordinal utility
    2. Utility functions
    3. Monotonic transformations
    4. Cobb-Douglas preferences
    5. Quasilinear utility
    6. CES utility
    7. Marginal utility
    8. Utility, MRS, and the tangency condition
    9. Constructing utility from preferences
    10. Utility under risk and uncertainty
    11. Common functional forms compared
    12. Recap and bridge to choice
    Key terms

  5. Unit 5 Optimal Choice

    Consumer optimization: combining preferences with the budget constraint to derive optimal choice — interior, corner, and kinky cases.

    1. The optimal choice problem
    2. Interior optimum and tangency
    3. Corner solutions
    4. Kinky tastes
    5. Cobb-Douglas demand
    6. Quasilinear demand
    7. Perfect substitutes demand
    8. Demand and changes in price
    9. Demand and changes in income
    10. Choice with taxes and subsidies
    11. Estimating utility from choice
    12. Recap: from preferences to demand
    Key terms

  6. Unit 6 Individual Demand

    Demand functions in detail: Engel curves, price effects, ordinary and Giffen goods, substitutes and complements.

    1. Demand functions
    2. Engel curves
    3. Normal and inferior goods
    4. Ordinary and Giffen goods
    5. Price offer curve and demand curve
    6. Substitutes and complements
    7. Inverse demand and willingness to pay
    8. Elasticities of demand
    9. Demand under different preference structures
    10. Demand and policy
    11. Aggregate demand
    12. Demand recap and bridge
    Key terms

  7. Unit 7 Revealed Preference Analysis

    Recovering preferences from observed choices: WARP, SARP, and index numbers.

    1. The idea of revealed preference
    2. Direct revealed preference
    3. Indirect revealed preference
    4. The Weak Axiom of Revealed Preference
    5. The Strong Axiom of Revealed Preference
    6. How to check WARP and SARP
    7. Index numbers
    8. Welfare comparisons via revealed preference
    9. Recovering preferences with two observations
    10. GARP and continuous choice
    11. Applications of revealed preference
    12. Recap: empirical foundation of consumer theory

  8. Unit 8 Income and Substitution Effects

    Decomposing the effect of a price change into substitution and income effects: Slutsky vs Hicks, the law of demand, and applications.

    1. Two effects of a price change
    2. Slutsky's substitution effect
    3. Slutsky's income effect
    4. The Slutsky equation
    5. Geometric Slutsky
    6. The law of demand
    7. Slutsky for Cobb-Douglas
    8. Compensated and uncompensated demand
    9. Slutsky in matrix form
    10. Application: rebates and consumption
    11. Substitution between many goods
    12. Recap of Slutsky and welfare bridge
    Key terms

  9. Unit 9 Trading from Endowments

    Choice with endowments: net demand, labor supply, the Slutsky equation for endowment economies.

    1. From cash income to endowments
    2. Price changes with endowments
    3. Slutsky equation with endowments
    4. Labor supply
    5. Comparative statics of labor supply
    6. Overtime and the budget set
    7. Sales tax vs income tax
    8. Saving and intertemporal endowment
    9. Endowment effects in welfare analysis
    10. Endowments with multiple goods
    11. Backward-bending labor supply formalized
    12. Recap: choice with endowments
    Key terms

  10. Unit 10 Choice Across Time

    Consumption and saving over time: present value, the intertemporal budget, real vs nominal interest rates, and bonds.

    1. The intertemporal budget constraint
    2. Present value
    3. Preferences for consumption over time
    4. Comparative statics: income
    5. Comparative statics: interest rate
    6. Real vs nominal interest rates
    7. Bonds and present value
    8. Taxes and intertemporal choice
    9. Multi-period extension
    10. Application: retirement and saving
    11. Behavioral departures from PIH/LCH
    12. Recap: time and choice
    Key terms

  11. Unit 11 Markets for Assets

    Asset returns, arbitrage, and present value: how different assets are priced and compared.

    1. Rates of return
    2. Arbitrage and present value
    3. Assets with consumption returns
    4. Taxation of assets
    5. Application: housing and stocks
    6. Asset-market efficiency
    Key terms

  12. Unit 12 Decisions Under Uncertainty

    Choice under uncertainty: states of the world, expected utility, risk aversion, and insurance.

    1. Contingent consumption
    2. Expected utility
    3. Risk aversion
    4. Insurance and the risk-averse consumer
    5. Diversification
    6. Allais and Ellsberg paradoxes
    Key terms

  13. Unit 13 Portfolios and Risky Assets

    Portfolio choice with risky assets: mean-variance, the Capital Asset Pricing Model, and the equity premium.

    1. Mean and variance of return
    2. The Capital Asset Pricing Model
    3. The equity premium puzzle
    4. Portfolio optimization in practice
    5. Implications for asset pricing
    Key terms

  14. Unit 14 Measuring Consumer Welfare

    Measuring welfare changes from price changes: consumer surplus, compensating and equivalent variation.

    1. From demand to consumer surplus
    2. Change in surplus from price change
    3. Compensating variation
    4. Equivalent variation
    5. Producer surplus and total welfare
    6. Welfare analysis of policy
    Key terms

  15. Unit 15 Aggregate Demand

    From individual to market demand: aggregation, elasticity, and revenue.

    1. Aggregating individual demands
    2. Elasticity of market demand
    3. Elasticity and revenue
    4. Income and cross-price elasticities
    5. Estimating demand
    6. Market demand in policy
    Key terms

  16. Unit 16 Competitive Equilibrium

    Competitive market equilibrium: supply and demand, taxes, tax incidence, deadweight loss, price controls.

    1. Supply and demand together
    2. Taxes in equilibrium
    3. Deadweight loss
    4. Subsidies and welfare
    5. Price controls
    6. Equilibrium and welfare theorems
    Key terms

  17. Unit 17 Economic Measurement

    How economists measure key quantities: GDP, CPI, inequality, and policy evaluation methods.

    1. Measuring economic output
    2. Price indices and inflation
    3. Inequality measures
    4. Policy evaluation
    5. Beyond GDP
    Key terms

  18. Unit 18 Auction Theory

    Auction theory: types of auctions, optimal bidding, revenue equivalence, and the winner's curse.

    1. Types of auctions
    2. Bidding strategies
    3. Revenue equivalence
    4. The winner's curse
    5. Auction design and applications
    Key terms

  19. Unit 19 Production Technology

    Firm technology: production functions, returns to scale, isoquants, marginal products.

    1. The production function
    2. Isoquants and the technical rate of substitution
    3. Returns to scale
    4. Diminishing marginal product
    5. Long-run vs short-run technology
    6. Technological progress
    Key terms

  20. Unit 20 Maximizing Firm Profit

    Firm profit maximization: short and long run, factor demands, the profit function.

    1. The firm's problem
    2. Short-run profit maximization
    3. Long-run profit maximization
    4. Factor demand curves
    5. Profit function and Hotelling's lemma
    Key terms

  21. Unit 21 Minimizing Production Cost

    Cost minimization: choosing inputs to produce a given output at lowest cost.

    1. The cost-minimization problem
    2. Properties of the cost function
    3. Cost minimization examples
    4. Returns to scale and costs
    5. Cost minimization in policy
    Key terms

  22. Unit 22 Cost Structure of the Firm

    Average and marginal cost curves: short-run and long-run, sunk costs, U-shape, economies of scale.

    1. Average and marginal cost
    2. Short-run cost curves
    3. Long-run cost curves
    4. Economies of scale and scope
    5. Sunk costs
    Key terms

  23. Unit 23 Supply by Competitive Firms

    Competitive firm supply: optimal output, shutdown decisions, supply curves.

    1. Competitive firm output choice
    2. The firm's supply curve
    3. Producer surplus revisited
    4. Long-run firm supply
    5. Supply elasticity and policy
    Key terms

  24. Unit 24 Industry-Level Supply

    From firm supply to industry supply: short-run and long-run, entry and exit, economic rent.

    1. Industry supply curve
    2. Entry and exit
    3. Economic rent
    4. Long-run equilibrium
    5. Energy policy and industry supply
    Key terms

  25. Unit 25 Monopoly

    Monopoly pricing: marginal revenue, markup, deadweight loss, natural monopoly.

    1. The monopoly problem
    2. Markup pricing
    3. Deadweight loss of monopoly
    4. Natural monopoly
    5. Sources of monopoly power
    Key terms

  26. Unit 26 Strategies of Monopolists

    Price discrimination, bundling, and tying — how monopolists segment markets to extract surplus.

    1. First-degree price discrimination
    2. Second-degree price discrimination
    3. Third-degree price discrimination
    4. Bundling and tying
    5. Two-part tariffs
    Key terms

  27. Unit 27 Input and Labor Markets

    Markets for inputs: marginal revenue product, labor markets, monopsony, factor income.

    1. Marginal revenue product
    2. Labor markets
    3. Monopsony
    4. Factor demand and supply
    5. Wages, inequality, and policy
    Key terms

  28. Unit 28 Oligopoly

    Strategic competition among few firms: Cournot, Bertrand, Stackelberg, collusion.

    1. Cournot competition
    2. Bertrand competition
    3. Stackelberg leadership
    4. Collusion and cartels
    5. Price leadership
    Key terms

  29. Unit 29 Game Theory

    Game theory: dominant strategies, Nash equilibrium, mixed strategies, the prisoner's dilemma.

    1. Games and strategies
    2. Nash equilibrium
    3. The Prisoner's Dilemma
    4. Mixed strategies
    5. Sequential games and subgame perfection
    Key terms

  30. Unit 30 Applied Game Theory

    Game theory in action: repeated games, evolutionary games, bargaining, coordination, and signaling.

    1. Repeated games
    2. Bargaining
    3. Coordination and signaling
    4. Evolutionary games
    5. Applications in industrial organization
    Key terms

  31. Unit 31 Behavioral Economics

    Departures from rationality: prospect theory, framing, time inconsistency, social preferences.

    1. Prospect theory
    2. Framing and mental accounting
    3. Time inconsistency and self-control
    4. Social preferences
    5. Behavioral applications
    Key terms

  32. Unit 32 Pure Exchange Economies

    Pure exchange general equilibrium: the Edgeworth box, the contract curve, and Walrasian equilibrium.

    1. The Edgeworth box
    2. The contract curve
    3. Walrasian equilibrium
    4. First and Second Welfare Theorems
    5. Trade and welfare
    Key terms

  33. Unit 33 Production in General Equilibrium

    General equilibrium with production: PPF, efficiency conditions, comparative advantage.

    1. Production possibilities
    2. General equilibrium with production
    3. Comparative advantage
    4. Robinson Crusoe economy
    5. Specialization and division of labor
    Key terms

  34. Unit 34 Welfare Economics

    Welfare economics: social welfare functions, Arrow's impossibility, fairness criteria.

    1. Aggregating preferences
    2. Arrow's impossibility theorem
    3. Fairness criteria
    4. Cost-benefit analysis
    5. Optimal taxation
    Key terms

  35. Unit 35 Externalities

    Externalities: when markets fail and how to fix them — Pigouvian taxes, the Coase theorem, tradable permits.

    1. External costs and benefits
    2. Pigouvian taxes
    3. The Coase theorem
    4. Cap-and-trade
    5. Common-pool resources
    Key terms

  36. Unit 36 Digital and Information Markets

    Economics of information goods: network effects, lock-in, two-sided markets, platforms.

    1. Information as economic good
    2. Network effects
    3. Lock-in and switching costs
    4. Two-sided markets and platforms
    5. Digital economics and policy
    Key terms

  37. Unit 37 Public Goods

    Public goods: non-rivalry, non-excludability, free-riding, and provision.

    1. Defining public goods
    2. Free-riding
    3. Optimal provision
    4. Provision mechanisms
    5. Global public goods
    Key terms

  38. Unit 38 Asymmetric Information

    Asymmetric information: adverse selection, moral hazard, signaling, screening — and market design.

    1. Lemons and adverse selection
    2. Moral hazard
    3. Signaling and screening
    4. Market design
    5. Capstone: economics with information
    Key terms

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