# Intermediate Microeconomics Video Handbook, IM6 Faculty, 2014

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1 A. MATH TOPICS 1. Calculus Review Machina 2. Elasticity Machina 3. Level Curves Machina a. Level Curves of a Function Machina b. Slopes of Level Curves Machina 4. Scale Properties of Functions a. Scale Properties of Functions Machina b. Scale Properties of Functions (Calculus Applications) Machina 5. Solving Optimization Problems a. General Structure of Optimization Problems Machina b. Unconstrained Optimization Machina c. Constrained Optimization Machina d. Lagrangians (Calculus) Machina e. Corner Solutions Machina 6. Comparative Statics a. Comparative Statics of Solution Functions (Calculus) Machina b. Comparative Statics of Optimal Values: The Envelope Theorem (Calculus) Machina 7. Interest Rates and the Discounted Present Value Machina B. BASICS 1. Circular Flow of Economic Activity Machina 2. Stocks, Flows and the Dimensions of Economic Activity Machina 3. Supply, Demand and Markets Machina C. THEORY OF THE CONSUMER 1. Preferences, Utility Functions and Indifference Curves a. Commodities and Commodity Bundles Famulari b. Preferences and Properties of Preference Rankings Famulari c. Utility Functions Famulari d. Monotonic Transformations of Utility Famulari e. Marginal Utility Famulari f. Marginal Utility (Calculus) Famulari g. Indifference Curves Famulari h. Properties of Indifference Curves Famulari i. Marginal Rate of Substitution Famulari j. Marginal Rate of Substitution (Calculus) Famulari k. Common Types of Preferences Famulari 2. Utility Maximization Subject to a Budget Constraint a. Budget Constraints Famulari b. Utility Maximization Subject to a Budget Constraint Famulari c. Utility Maximization Subject to a Budget Constraint (Calculus) Famulari d. General Properties of Ordinary Demand Functions and Indirect Utility Functions Famulari e. Ordinary ( Marshallian ) Demand Curves Famulari f. Demand Functions for Cobb-Douglas Preferences Famulari g. Demand Functions for Perfect Complements Famulari h. Demand Functions for Perfect Substitutes Famulari i. Utility Maximization with Corner Solutions Famulari j. Budget Constraints with Kinks Famulari k. Utility Maximization with Kinked Budget Constraints Famulari l. Budget Constraints with Endowments Famulari 3. Comparative Statics of Demand: Income Changes a. Comparative Statistics of Demand: Income Changes Famulari by IM6 Group (Cullen, Famulari, Galperti, Machina, Niehaus, Watson)

2 b. Income-Consumption Locus, Engel Curves Famulari c. Income Elasticity Famulari d. Comparative Statics of Demand: Income Changes (Calculus) Famulari 4. Comparative Statics of Demand: Price Changes Famulari a. Price-Consumption Locus and Ordinary Demand Curves Famulari b. Own Price Elasticity Famulari d. Comparative Statics of Demand: Own Price Change (Calculus) Famulari e. Comparative Statics of Demand: Cross-Price Changes Famulari 5. Compensated Price Changes, Compensated ( Hicksian ) Demand Curves and Demand Functions a. Compensated Price Changes Famulari b. Compensated Price Change (Calculus) Famulari c. Compensated Price Change Example: Cobb-Douglas Preferences Famulari d. Compensated Price Change Example: Perfect Complements Preferences Famulari e. Compensated Price Change Example: Perfect Substitutes Famulari 6. The Slutsky Equation a. Income and Substitution Effects Machina b. The Slutsky Equation Machina c. Proof of the Slutsky Equation (Calculus) Machina d. Applications from the Slutsky Equation Machina 7. Consumer Surplus, Equivalent and Compensating Variation a. Equivalent and Compensating Variation Famulari b. Consumer Surplus Famulari 8. Supply of Labor: The Labor-Leisure Decision a. Consumption-Leisure Indifference Curves Famulari b. Consumption-Leisure Budget Constraint and Optimal Supply of Labor Famulari c. Analysis of the Optimal Supply of Labor (Calculus) Famulari d. Comparative Statics of Labor Supply: Income and Substitution Effects Famulari e. Backward Bending Labor Supply Curves Famulari 9. Supply of Saving: The Consumption-Savings Decision a. Intertemporal Income and Consumption Streams Famulari b. The Consumption-Savings Decision Famulari c. Analysis of the Consumption-Savings Decision (Calculus) Famulari d. Comparative Statics of Consumption and Savings: Income and Substitution Effects Famulari e. Effect of Interest Rate Increase on Consumer Who is Saving Famulari f. Effect of Interest Rate Increase on Consumer Who is Borrowing Famulari g. Consumption-Savings: Borrow at Higher Interest Rates Famulari 10. Decision Making Under Uncertainty a. Expected Value and the St. Petersburg Paradox Machina b. Expected Utility Machina c. Risk Aversion Machina d. Demand for Insurance Machina e. Demand for Risky Assets (Calculus) Machina f. Measures of Risk Aversion (Calculus) Machina D. THEORY OF THE FIRM 1. The Firm and Production a. Firms as Production Technologies Watson b. Total Product Watson c. Average Product Watson d. Marginal Product Watson e. Properties of Average and Marginal Product Watson f. Formal Definition of Marginal Product and Examples (Calculus) Watson g. A Note on Timing and Inputs Watson h. Isoquants Watson by IM6 Group (Cullen, Famulari, Galperti, Machina, Niehaus, Watson)

3 i. Marginal Rate of Technical Substitution Watson j. Formal Definition of Marginal Rate of Technical Substitution (Calculus) Watson k. Examples of MRTS Calculations (Calculus) Watson l. Sufficient Conditions for Diminishing MRTS (Calculus) Watson m. Returns to Scale and Homogeneity Watson 2. Cost Functions a. Derivation of Cost Watson b. Long-Run and Short-Run Decisions Watson c. Short-Run Cost Watson d. Short-Run Cost Functions: Examples Watson e. Long-Run Cost Minimization Watson f. Long-Run Cost Minimization in Standard Cases Watson g. The Lagrangian Approach to Long-Run Cost Minimization (Calculus) Watson h. Long-Run vs. Short-Run Costs Watson i. Marginal and Average Cost Watson j. Formal Definition of Marginal Cost (Calculus) Watson k. Examples of Cost Function Calculations (Calculus) Watson l. Economies of Scale Watson 3. Optimal Supply in Competitive Markets a. The Notion of Supply and the Supply Curve Watson b. Marginal Conditions for Profit-Maximizing Output Choices Watson c. First- and Second-Order Conditions for Supply (Calculus) Watson d. Effect on Profit of a Price Change (Calculus) Watson e. Shut-Down and Exit Decisions Watson f. Supply Curve Watson g. Short-Run Supply: Numerical Example Galperti h. Long-Run Supply: Numerical Example Galperti i. Market Supply Curve Galperti j. Caveats for Long-Run Supply Galperti k. Demand for Factors of Production Galperti E. EQUILIBRIUM IN COMPETITIVE MARKETS 1. Competitive Equilibrium in a Market a. The Notion of Partial Equilibrium - A Single Market Watson b. Short-Run vs. Long-Run Equilibrium Watson c. Aggregate Supply and Equilibrium: Numerical Example - SHORT RUN Galperti d. Aggregate Supply and Equilibrium: Numerical Example - LONG RUN Galperti e. Comparative Statics in Competitve Markets: Supply and Demand Shifts Galperti f. Welfare in Partial Equilibrium Galperti g. Competitive Equilibrium and Efficiency Galperti h. Taxes as Market Distortions Galperti i. Market Distortions Not Involving Taxes Galperti j. Taxes: Numerical Example Galperti 2. General Welfare Analysis a. The Concept of General Equilibrium Galperti b. The Edgeworth Box Galperti c. Examples of the Edgeworth Box Galperti d. Pareto Efficiency Galperti e. The Contract Curve Galperti f. Example of Calculating a Contract Curve (Calculus) Galperti g. Demand and Trade in Edgeworth Box Galperti h. Equilibrium in the Edgeworth Box Galperti i. Examples of Equilibrium in the Edgeworth Box (Calculus) Galperti j. The First Welfare Theorem Galperti by IM6 Group (Cullen, Famulari, Galperti, Machina, Niehaus, Watson)

4 k. The Second Welfare Theorem Galperti l. Edgeworth Box with Two Firms Galperti m. General Equilibrium with Firms and Consumers Galperti F. BEYOND THE NEOCLASSICAL MODEL 1. Monopoly Definition and Origins Cullen 2. Monopoly Uniform Pricing a. Monopoly Uniform Pricing: Marginal Revenue Cullen b. Monopoly Uniform Pricing: Derivation of Marginal Revenue (Calculus) Cullen c. Monopoly Uniform Pricing: Profit Maximization Cullen d. Monopoly Uniform Pricing: Analysis of Profit Maximization (Calculus) Cullen e. Monopoly Uniform Pricing: Market Power Cullen f. Monopoly Uniform Pricing: Inefficiency Cullen g. Monopoly Uniform Pricing: Analysis of Inefficiency (Calculus) Cullen 3. Monopoly and Government Interventions a. Regulating a Monopolist Niehaus b. Taxing and Subsidizing a Monopolist Niehaus c. Analysis of Taxes and Subsidies (Calculus) Niehaus 4. Price Discrimination a. Price Discrimination: Definition and Types Cullen b. First Degree Price Discrimination Cullen c. Analysis of First Degree Price Discrimination (Calculus) Cullen d. Second Degree Price Discrimination Cullen e. Analysis of Second Degree Price Discrimination (Calculus) Cullen f. Third Degree Price Discrimination Cullen g. Analysis of Third Degree Price Discrimination (Calculus) Cullen h. Two-Part Tariff Pricing Cullen i. Analysis of First-Degree Price Discrimination with a Two-Part Tariff (Calculus) Cullen j. Analysis of Second-Degree Price Discrimination with a Two-Part Tariff (Calculus) Cullen k. Price Discrimination through Bundling Cullen 5. Game Theory - Overview a. Strategic Settings and the Definition of Game Theory Watson b. Normal Form and Extensive Form Representations Watson c. Strategy Definition and Beliefs Watson d. Behavioral Theories and Solution Concepts Watson 6. Static Games a. Dominance Watson b. Common Knowledge c. Iterated Dominance Watson d. Nash Equilibrium Watson e. Mixed Strategy Nash Equilibrium Watson f. Examples of Dominance and Nash Equilibrium Watson 7. Sequential Games a. Notes on Normal and Extensive Forms Watson b. Nash Equilibria and Incredible Threats Watson c. Subgame Perfect Nash Equilibrium and Backward Induction - The Basics Watson d. Examples of Backward Induction and Subgame Perfect Equilibrium Watson e. First-Mover Advantage/Disadvantage Watson 8. Repeated Games a. Finitely Repeated Games - Rudimentary Analysis Watson b. Infinitely Repeated Games - Rudimentary Analysis Watson 9. Oligopoly Definitions and Overview of Models (Calculus) Niehaus 10. Oligopoly Models with Homogenous goods a. Cartel Model Niehaus by IM6 Group (Cullen, Famulari, Galperti, Machina, Niehaus, Watson)

5 b. Analysis of the Cartel Model (Calculus) Niehaus c. Cournot Duopoly Model (Calculus) Niehaus d. Cournot Duopoly Example (Calculus) Niehaus e. Cournot Model with N Firms (Calculus) Niehaus f. Stackelberg Model (Calculus) Niehaus g. Stackelberg with Entry Deterrence (Calculus) Niehaus h. Graphical Comparison of Models (Calculus) Niehaus i. Bertrand Price Competition Niehaus 11. Oligopoly Models with Product Differentiation a. Direct and Inverse Demand Systems with Product Differentiation Niehaus b. Cournot Model with Product Differentiation (Calculus) Niehaus c. Bertrand Model with Product Differentiation (Calculus) Niehaus d. Comparing Cournot and Bertrand Soltutions with Product Differentiation (Calculus) Niehaus 12. Externalities a. Externalities: Definition and Typology Cullen b. Externalities: Inefficiency of Market Outcomes Cullen c. Externalities: Role of Market Structure Cullen d. Solutions: Mergers - Solving Externalities through Mergers (Calculus) Cullen e. Solving Externalities by Establishing Property Rights Cullen f. Solving Externalities Through Price and Quantity Regulation Cullen g. Analysis of Cap and Trade Regulation (Calculus) Cullen 13. Public Goods a. Public Goods: Definition and Efficient Provision Cullen b. Analysis of Efficient Public Goods Provision (Calculus) Cullen c. Analysis of Private Provision of Public Goods (Calculus) Cullen d. Analysis of Public Good Provision via Benefit Taxation (Calculus) Cullen e. Analysis of Public Good Provision via Political Competition (Calculus) Cullen 14. Asymmetric Information: Adverse Selection a. Definition and Efficiency Consequences of Adverse Selection Niehaus b. Screening as a Solution to Adverse Selection Niehaus c. Signaling as a Solution to Adverse Selection Niehaus 15. Asymmetric Information: Moral Hazard a. Definition and Consequences of Moral Hazard Niehaus b. The General Principal-Agent Problem (Calculus) Niehaus c. Monitoring as a Solution to Moral Hazard Niehaus d. Incentive Contracts as a Solution to Moral Hazard (Calculus) Niehaus e. Optimal Contract with Moral Hazard and Risk Aversion (Calculus) Niehaus by IM6 Group (Cullen, Famulari, Galperti, Machina, Niehaus, Watson)

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