Economic Decision Making
Lecture 7: Theory of the Market
Go from utility maximization to market demand
Understand price elasticity of demand .
Characterize Market equilibrium
Turn in HW
Market demand: Quasi-linear utility
p = u(x1)
If u(x1) = 5x-x^2

Economic Decision Making
Lecture 3: Profit Function
Define and analyze profit maximization problem for price-
taking firm.
Apply envelope theorem and comparative statics.
Homework: Homework: 1.3, 2.2, 2.7 PLUS a problem to
be downloaded. Due Fri. Feb.

Economic Decision Making
Lecture 5: Cost continued
Apply Kuhn-Tucker Theorem
Name properties of cost function
Envelope theorem for constrained maximization
Browse the available models to help choose a topic.
Finalized groups will be announced by next

Economic Decision Making
Lecture 4: Cost Function
Brief intro to models for project
Define and analyze cost minimization problem.
Perform constrained optimization. (Lagrangian).
Apply the Kuhn-Tucker Theorem
Homework Due Today!
Read Chapters 3,4,5 A

Economic Decision Making
Lecture 3: Profit Function
Define and analyze profit maximization problem for price-
taking firm.
Apply envelope theorem and comparative statics.
Returns to scale: one input
Short run vs. Long run
In the short run some inputs m

Economic Decision Making
Lecture 6: Theory of Consumer
Solve utility maximization problem
Homework #2 due today
Homework #3: 7.2 (first part of question only); 7.5 b;
9.10a; 10.2 (just try to figure it out, you dont need to know
about compensating or e

Economic Decision Making
Lecture 4: Cost Function
Brief intro to models for project
Define and analyze cost minimization problem.
Perform constrained optimization. (Lagrangian).
Apply the Kuhn-Tucker Theorem
DICE
The original IAM by Yale professor Wil

Economic Decision Making
Lecture 8: Theory of the Market
Characterize Market equilibrium
Understand pareto efficiency
Be able to explain The invisible hand
Complete IRAT
Theory of the Market
Bring together supply (theory of the firm) and demand
(theo

Economic Decision Making
Lecture 2: Technology
Define TRS (technical rate of substitution)
Define Elasticity of substitution
Define some well-known production functions
Cobb-Douglass
Leontiff
Linear
CES
Approximate real production functions with
a

Economic Decision Making
Lecture 2: Technology
Define TRS (technical rate of substitution)
Define Elasticity of substitution
Define some well-known production functions
Cobb-Douglass
Leontiff
Linear
CES
Approximate real production functions with a