Intermediate Microeconomics
Welcome to the homepage of Intermediate Microeconomics !
Tips: “请啊, 老朋友,请吃啊! 这个菜是特别为你预备的。”
“不,我的亲爱的朋友, 吃不下了! 我已经吃得塞到喉咙口了。”
“没有关系, 才一小盆, 总吃得下去的。 味道的确好, 喝这样的鱼汤也是口福呀!”
“我已经吃过三盆哩。”
“嗳,何必计数呢?哦,你的胃口太差劲! 吃了有好处的,吃完它吧! 凭良心说,真香,真稠,在盆子里凝结起来了, 简直跟琥珀一样。请啊,老朋友,替我吃完它!喏喏,这是鲈鱼,这是肚子,这是一片鲟鱼。只吃半盆,吃吧!娘子,你来敬客,客人会领你的情的。”
杰米扬就这样的款待福卡,不让他休息,不让他停止, 一股劲儿劝他吃。福卡的脸上大汗如注。不管出不出汗,他又吃了一盆,他装做吃得津津有味,把盆子吃了个干净。
“这样的朋友我才喜欢,那班吃东西挑剔的大人先生们,我就觉得惹气。”杰米扬嚷道。“吃得痛快!好,再来一盆吧!”
然而,好不奇怪,老福卡虽然喜欢吃汤, 却马上站起身来,赶紧拿起帽子、腰带和手杖,用足全力跑回家去了,再也不上杰米扬的门了。
我的作家,你不妨自认为稀有的天才,可是如果你不懂得适当的节制, 老是在人家的耳旁鼓噪不休, 久而久之,你的诗歌和散文,就要比杰米扬更加令人讨厌。
——《克雷洛夫寓言》
Course Introduction
Course Number:09010240 Credits:3
The teaching content of this course is as follows:
| Week | Content |
|---|---|
| 1 | Course Introduction and Math Review |
| 2 | Consumer Theory 1 |
| 3 | Consumer Theory 2 |
| 4 | Consumer Theory 3 |
| 5 | Consumer Theory 4 |
| 6 | Producer Theory 1 |
| 7 | Producer Theory 2 |
| 8 | Producer Theory 3 |
| 9 | Midterm Exam |
| 10 | Markets and Market Failure 1 |
| 11 | Markets and Market Failure 2 |
| 12 | Markets and Market Failure 3 |
| 13 | Markets and Market Failure 4 |
| 14 | Markets and Market Failure 5 |
| 15 | Asymmetric Information 1 |
| 16 | Asymmetric Information 2 |
Course Resourse
Textbook of Intermediate Microeconomics
All rights reserved by 格致出版社/上海三联书店/上海人民出版社.
Courseware of Intermediate Microeconomics
02_1 Introduction & Budget Constraints.
02_2 Preference & Utility & Choice.
02_3 Choice & Demand.
02_4 Slutsky Equation.
02_5 Buying and Selling.
02_6 Intertemporal Choice & Uncertainty.
02_7 Consumer Surplus & Market Demand & Equilibrium & Measurement.
02_8 Technology.
02_9 Profit Maximization.
02_10 Cost Minimization and Cost Curve.
02_11 Cost Curve & Firm Supply & Industrial Supply.
02_12 Monopoly & Monopoly Behavior.
02_13 Oligopoly & General Equilibrium And Exchange.
All rights reserved by Professer Chen Ziyang.
Quizs of Intermediate Microeconomics
Problem Set 1
Q1
Suppose Jurgen consumes two goods $(x_1, x_2)$. The price of good $x_1$ is $p_1 = 2$, the price of good $x_2$ is $p_2 = 1$, and Jurgen’s income is $I = 50$.
(a)
Draw a graph of Jurgen’s budget set. Write down an equation describing the budget line.
(b)
If Jurgen spends all of his money on $x_1$, what is the largest amount he can buy? If he spends all of his money on $x_2$, what is the largest amount he can buy? Label these points on your graph from part (a).
(c)
What is the opportunity cost of good $x_1$—that is, starting from some bundle with $x_2 > 0$, if the consumer would like an additional unit of $x_1$, how many units of $x_2$ will he need to give up? What is the slope of the budget line?
(d)
Plot the bundles $(15, 15)$, $(20, 20)$, and $(20, 10)$ on your graph from part (a). For each of these, determine if the bundle is:
- (i) on the budget line;
- (ii) in the consumer’s budget set, but not on the budget line;
- (iii) not in the budget set.
Q2
Suppose that a consumer’s preference relation over bundles of goods $(x, y)$ is both rational and (strictly) well-behaved. The consumer faces a budget constraint, where the price of good $x$ is $p_x = 2$, the price of good $y$ is $p_y = 3$, and the total available income is $I = 60$.
(a)
Is it possible that the bundle $(10, 10)$ is the most preferred for this consumer among all of the bundles in her budget set? If so, explain why. If not, suggest a bundle in the budget set that is necessarily more preferred.
(b)
Suppose it is known that the consumer (strictly) prefers the bundle $(12, 12)$ to the bundle $(21, 6)$. Can you determine whether the consumer prefers the bundle $(12, 12)$ to the bundle $(21, 5)$? Explain your answer in detail.
(c)
Suppose this consumer’s preferences over consumption bundles $(x, y)$ are characterized by utility function $u(x, y) = x^{\frac{1}{3}} y^{\frac{2}{3}}$. Show that this consumer’s preferences satisfy strict monotonicity and strict convexity.
Q3
Erling’s preferences over goods $(x_1, x_2)$ are represented by the utility function: \(u(x_1, x_2) = \sqrt{x_1} + x_2\) Suppose the market prices are $p_1 = 3$ and $p_2 = 4$, and that Erling’s income is $m$ (assume $m > 0$).
(a)
Write Erling’s utility maximization problem.
(b)
Start by solving for an interior solution, and find Erling’s optimal bundle $(x_1^, x_2^)$ . Note that your solution here may be a function of income $m$.
(c)
Given your results from part (b), for what values of income $m$ will Erling choose to consume $x_2^* = 0$?
Midterm Exam
Q1
Suppose Alex consumes two goods $(x_1, x_2)$ and has endowment bundle $(60, 40)$ . Market prices are $(p_1, p_2) = (2, 2)$, and Alex’s utility from the two goods is given by $u(x_1, x_2) = \sqrt{x_1 x_2}$.
(a)
Solve for Alex’s optimal bundle $(x_1^, x_2^)$. At these market prices $(p_1, p_2) = (2, 2)$, is Alex a net buyer or net seller of good 1? Please explain briefly.
(b)
Now suppose the price of good 1 decreases to $p_1’ = 1$. Solve for the substitution effect, the ordinary income effect, and the endowment income effect on Alex’s demand for good 1.
(c)
In a single graph, draw Alex’s endowment bundle, budget lines, choices (before and after change). Please label all axes, bundles, slopes, etc.
Q2
Suppose Bukayo’s utility from consumption in periods 1 and 2 is given by $u(c_1, c_2) = c_1 c_2$ and his endowment of income in the two periods is $(m_1, m_2) = (200, 50)$. There is a positive interest rate $r > 0$ at which consumers can borrow/save, and there is no inflation. Assume Bukayo maximizes his utility subject to his budget.
(a)
Write Bukayo’s intertemporal budget constraint in present value form.
(b)
Solve for Bukayo’s optimal consumption bundle as a function of the interest rate $r$.
(c)
Suppose the interest rate is $r = 0.1$. Find Bukayo’s optimal bundle, and then draw a graph of his budget constraint, endowment bundle, and optimal bundle.
Q3
An agent has a CRRA utility function $u(c) = \frac{c^{1-\theta}}{1-\theta}$. An agent has poor health, and there are two possible states $s$ she could be in: (1) $s = H$ for healthy and (2) $s = S$ for sick, each with probability $1/2$. Suppose that consumption when healthy is $c = 2$, and consumption when sick is $c = 1$. Recall from lecture that expected utility would be: \(E[u(c)] = \sum_{s \in \{H, S\}} \pi(s) u(c_s)\) Here, $\pi(s) = 1/2$ for $s = H, S$. The agent can pay for insurance which will lead consumption $c$ to be $2-p$ in both states, eliminating all risk. We can think $p$ as the cost of insurance.
(a)
What is the expected utility of the agent without insurance and with insurance?
(b)
Solve for the highest amount the agent would be willing to pay for insurance $p^*$.
Notes of Intermediate Microeconomics
Notes(LaTeX Version) by Xipingo.
Tips of Intermediate Microeconomics
We don’t recommend using Chinese translations of textbooks. Instead, you can use the translation version by Cao Qian from Southeast University. This course is not difficult.