CEU, Economics Department, Fall 2005


Instructor: Prof. Peter Grajzl
Teaching Assistant: TBA
Course: 4 credits

Course Description

Microeconomic Theory 1 is the first half of the two-semester core microeconomics sequence
in the MA program. The course aims at introducing you to graduate-level microeconomic theory.
Topics discussed include producer and consumer theory, competitive markets, monopoly, and
general equilibrium.

Class Times

Class time will be devoted to lectures and seminars. Twenty-four 75-minute lectures will be spread
over eleven weeks. This amounts to two, and in two out of eleven weeks three, lectures per week.
You will also attend six 100-minute seminars devoted to discussion of solutions to homework
assignments (see Course Requirements below) and review sessions. Seminars will be held in weeks
two, four, six, eight, ten and eleven.

Course Readings

The lectures will be based on Varian, Hal R. Microeconomic Analysis, Third Edition, W.W. Norton, 1992.
The relevant chapters from the textbook have been collected in the class reader.

Attending the lectures and reading the corresponding chapters from the textbook will help you gain understanding of the concepts. Working on the homework assignments (see Course Requirements
below) will help you make the crucial step from understanding the concepts toward being able to solve problems. Learning to solve problems is key to doing well in this course.

Course Requirements

There will be five homework assignments, a midterm exam and the final exam.

Homework assignments will consist of problems similar to those that you will encounter on the exams.
While you should tackle the assigned problems first on your own, you are encouraged to discuss them
with your fellow classmates. Each of you, however, must turn in their own copy of each homework.
Homeworks will be graded on effort. Solutions will be presented during the periodic discussion

The dates of the midterm and the final exam will be announced in class. All material covered in the class
will be pertinent for the final exam.

The course grade will be determined as a weighted average of the problem set and exam scores:

Homework assignments  10%
Midterm exam    15%
Final exam    75%

Course Outline

The following is a brief outline of topics* and relevant chapters from Microeconomic Analysis.

Producer theory
Technology      Ch. 1
Profit maximization     Ch. 2.1-2.4
Profit function     Ch. 3
Cost minimization     Ch. 4.1-4.4
Cost function      Ch. 5

Consumer theory
Utility maximization    Ch. 7
Consumer demand: comparative statics   Ch. 8.1-8.4
Consumer demand: further topics   Ch. 8.7, 9.4, 10.1-10.6
Choice under uncertainty    Ch. 11.1-11.7

Market structure
Competitive markets    Ch. 13
Monopoly     Ch. 14

General Equilibrium
Exchange economy    Ch. 17.1-17.7
Economy with production    Ch. 18.1-18.8

* I reserve the right to minor modifications of these as the semester proceeds.