Intermediate Microeconomic Theory Course

Lesson 1 • Utility Maximisation and Optimal Choice

Derives the interior and corner solutions to the consumer's optimisation problem. Introduces the tangency condition and Lagrangian method.

Lesson 2 • Preferences and Axioms of Rationality

Covers completeness, transitivity, and continuity axioms that underpin rational choice. Links preference ordering to the existence of a utility representation.

Lesson 3 • Utility Functions and Indifference Curves

Translates ordinal preferences into utility functions and their level-set geometry. Establishes the marginal rate of substitution as the key behavioural parameter.

Lesson 4 • Comparative Statics of Consumer Demand

Examines how optimal choices respond to income and price changes. Introduces Engel curves, normal goods, inferior goods, and Giffen goods.

Lesson 1 • Slutsky Equation and Demand Decomposition

Decomposes price effects into substitution and income components using the Slutsky equation. Connects Marshallian and Hicksian demand elasticities.

Lesson 2 • Indirect Utility and Roy's Identity

Defines the indirect utility function as the value function of the utility maximisation problem. Applies Roy's identity to recover Marshallian demand.

Lesson 3 • Welfare Measurement: CV, EV, and Consumer Surplus

Quantifies welfare changes from price shifts using compensating and equivalent variation. Compares these exact measures to the approximation of consumer surplus.

Lesson 1 • Cost Minimisation and Conditional Factor Demands

Solves the firm's cost minimisation problem to derive conditional input demands. Establishes the cost function as the value function of this problem.

Lesson 2 • Duality in Production and Cost

Establishes the duality between production technology and cost functions. Shows how technology can be recovered from observed cost data.

Lesson 3 • Short-Run vs. Long-Run Cost Structures

Distinguishes fixed and variable costs and their role in short-run decision-making. Derives short-run cost curves and their relationship to long-run envelopes.

Lesson 4 • Production Functions and Technology Sets

Defines the production function and the input requirement set. Introduces key properties including monotonicity, convexity, and free disposal.

Lesson 1 • Profit Maximisation Under Perfect Competition

Establishes the price-taking assumption and the firm's profit maximisation problem. Derives the output rule: price equals marginal cost.

Lesson 2 • Comparative Statics of Supply

Examines how input price changes and technological shifts affect supply decisions. Applies the envelope theorem to derive supply responses.

Lesson 3 • Short-Run Supply and Shutdown Decision

Derives the short-run supply curve from the marginal cost curve above average variable cost. Analyses the shutdown condition and its welfare implications.

Lesson 1 • Social Welfare Functions and Equity

Introduces social welfare functions to rank Pareto-efficient allocations by equity criteria. Compares utilitarian, Rawlsian, and Nash social welfare approaches.

Lesson 2 • Production in General Equilibrium

Incorporates firms into the general equilibrium model. Derives production possibilities frontiers and analyses profit distribution to consumers.

Lesson 3 • Exchange Economy and Edgeworth Box

Models a pure exchange economy with two agents and two goods. Uses the Edgeworth box to identify feasible allocations and the contract curve.

Lesson 4 • Walrasian Equilibrium and Existence

Defines Walrasian equilibrium as market-clearing price vectors. Outlines conditions for existence using fixed-point arguments.

Lesson 1 • Durable Goods Monopoly and Bundling

Analyses the Coase conjecture for durable goods and the time-consistency problem. Introduces bundling and tying as additional pricing strategies.

Lesson 2 • Second-Degree Price Discrimination

Examines nonlinear pricing and quantity discounts when consumer types are unobservable. Introduces screening through self-selection constraints.

Lesson 3 • Monopoly Equilibrium and Deadweight Loss

Derives the monopolist's profit-maximising output where MR equals MC. Quantifies the welfare loss relative to the competitive benchmark.

Lesson 4 • First-Degree Price Discrimination

Analyses perfect price discrimination where each unit is sold at the buyer's maximum willingness to pay. Shows that output is efficient but all surplus is extracted.

Lesson 1 • Collusion, Repeated Games, and Entry Deterrence

Analyses sustainability of collusion in repeated games using trigger strategies. Examines entry deterrence through capacity investment and limit pricing.

Lesson 2 • Game Theory Foundations for Oligopoly

Introduces normal-form games, dominant strategies, and Nash equilibrium as tools for analysing firm interaction. Covers pure and mixed strategy equilibria.

Lesson 3 • Cournot Quantity Competition

Models simultaneous quantity-setting duopoly and derives Cournot-Nash equilibrium. Compares outcomes to monopoly and perfect competition benchmarks.

Lesson 4 • Bertrand Price Competition

Analyses simultaneous price-setting and the Bertrand paradox of competitive pricing with two firms. Resolves the paradox through capacity constraints and product differentiation.

Lesson 1 • Public Goods: Definition and Underprovision

Defines non-excludable and non-rival goods and explains why markets underprovide them. Derives the Samuelson condition for optimal public good provision.

Lesson 2 • Coase Theorem and Bargaining Solutions

Presents the Coase theorem as a private bargaining solution to externalities. Analyses conditions under which bargaining achieves efficiency without government intervention.

Lesson 3 • Externalities and Inefficiency

Defines positive and negative externalities and their divergence from social optimum. Quantifies deadweight loss from unregulated externalities.

Lesson 4 • Common Pool Resources and Tragedy of the Commons

Analyses overuse of rival but non-excludable resources. Compares regulatory, privatisation, and community governance solutions.