Chapter 4, Section 4.2, 4.4, Appendix 1; Chapter 5, Section 5.1
CONSUMER CHOICE (contd)
In all the examples considered so far, the optimal consumer basket has been interior, meaning that the
consumer purchases positive amounts of both goods. In reality, t
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 8 Solution
Cost II
Presentation schedule: two student presentations; one student presents Question 1 and
Question 2, the oth
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Homework 2 Solution
Exchange and Cost Minimization
Due date: 27 Oct 1 pm
Question 1 (4 marks) In an exchange economy, consumer A has utility f
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Homework 1 Solution
Consumer Theory
Due date: 8 Sep 1 pm
Question 1 (2 marks) A consumers utility function is U(x, y) = y x 2 . (x and y do
no
EC2101 Lecture 9
Isocost
Short run capital is fixed

Only can vary labour
Long Run

Both Labour and K are variable
o Solve for costminimizing quantity of both labor and K
How to find optimal L and K in LR?

For any output Q, need to find out the Q of
EC2101 Lecture 5
Partial vs General Equilibrium





Partial Equilibrium Analysis
o Finding equilibrium price and Q in a single market
o Price in all other markets are fixed
General Eqm Analysis
o Finding eqm P and Q in more than 1 markets simultaneo
EC2101 Lecture 4
Income and substitution effects








Change in relative price
o Budget line becomes flatter
Consumers buy more food and less clothing
Change in purchasing power
o Consumers is effectively richer
o When one item becomes cheaper
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 3
Voucher vs. Cash, Income and Substitution Effects, and Consumer
Welfare
Presentation schedule: three student presentations
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Homework 1
Consumer Theory
Due date: 8 Sep 1 pm
Question 1 A consumers utility function is U(x, y) = y x 2 . (x and y do not have to
be intege
EC2101 Lecture 6
Feasible allocation

If total consumption = total endowment
o Or if total consumption total endowment
Competitive equilibrium

A pair of prices if :
o 1 : each consumer maximizes his/her utility given budget constraint
o 2 : market for
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 5 Solution
First Welfare Theorem and Walras Law
Presentation schedule: two student presentations; one student presents Quest
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 7 Solution
Cost I
Presentation schedule: two student presentations; one student presents Question 1 and
Question 2, the othe
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 9 Solution
ShortRun Perfect Competition
Presentation schedule: Three student presentations; one student presents Question 1
Chapter 9, Section 9.19.3, 9.5 (page 307 to 310)
PERFECTLY COMPETITIVE MARKETS
*Now, we lift the assumption that Q is an exogenous value e.g. we learn how firms decide how
much Q to produce*
Fragmented
Industry
CHARACTERISTIC
Consists of many buyers and
Chapter 6, Section 6.16.3, 6.4 (does not include Elasticity of Substitution from page 181 to 183), 6.56.6
INPUTS AND PRODUCTION FUNCTIONS
Inputs/ Factors of Production: Resources, such as labour, capital equipment, raw
material and land, that are combin
Chapter 7, Section 7.3 (does not include page 219221); Chapter 8, Section 8.1 (does not include page
246248), 8.2 (does not include page 257259)
COSTS AND COST MINIMISATION
LONG RUN COSTS
In the long run, the firm Is able to vary quantity of all of its
Chapter 16, Section 16.4 (only Pulling the Analysis Together from page 575 to 578); Additional reading on IVLE
AN EXCHANGE ECONOMY (contd)
FIRST WELFARE THEOREM
The First Fundamental Theorem of Welfare Economics states that a competitive
equilibrium alloc
Chapter 16, Section 16.1, 16.4 (only Exchange Efficiency from page 566 to 571); Additional reading on IVLE
(Does not include 32.8, Monopoly in the Edgeworth Box, 32.11 or 32.13)
GENERAL EQUILIBRIUM ANALYSIS
A partial equilibrium analysis (what we previous
Chapter 5, Section 5.25.3, 5.4 (does not include Market Demand with Network Externalities from page 149 to
152)
THEORY OF DEMAND (Individual Demand) (contd)
The substitution effect and the income effect occur at the same time when the price of a good
cha
Chapter 9, Section 9.4, 9.5 (page 303 to 307), Chapter 10, Section 10.1
PERFECTLY COMPETITIVE MARKETS
LONG RUN
In the long run: (1) Number of firms in the industry is not fixed (can exit or
enter) (2) Firms can adjust all inputs
Long Run Decisions
If firm
Mathematical Appendix, Section A3A8; Chapter 3, Section 3.1 (does not include Ordinal and Cardinal Ranking on
page 63), 3.2
CONSUMER PREFERENCES
Consumer choice provides an excellent example of constrained optimization. The theory of consumer
choice focu
Chapter 7, Section 7.17.2, 7.4 (does not include More Than One Variable Input in The Short Run from
page 226 to 227); Chapter 8, Section 8.2
COSTS AND COST MINIMISATION
*For now we will assume Q is an exogenous value e.g. take Q as given without needing
Chapter 10, Section 10.1 10.310.4
COMPETITIVE MARKETS: APPLICATIONS
WELFARE
Total benefit consumers
receive: CS
Total benefit producers
receive: PS
Total benefit for market:
Total Surplus = CS + PS
Total benefit for market with
government intervention:
T
Chapter 3, Section 3.23.3; Chapter 4, Section 4.14.2
CONSUMER PREFERENCE AND UTILITY (contd)
MARGINAL RATE OF SUBSTITUTION
The marginal rate of substitution of x for y is the rate at which the consumer will give
up y to get one more of x, holding the le
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Homework 2
Exchange and Cost Minimization
Due date: 27 Oct 1 pm
Question 1 In an exchange economy, consumer A has utility function
( y A )2
A
LECTURE 9
COST IN THE LONG RUN
SHORTRUN COST VS. LONGRUN COST
April 4, 2012
Where are we?
2
ProducGon funcGon
How rms turn L and K into Q
OpGmal choice of L and K in the short run
Cost curves in the short run
OpGmal choice of L and K in th
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 4 Solution
Pareto Efficiency and General Competitive Equilibrium
Presentation schedule: two student presentations; one stude
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 3 Solution
Voucher vs. Cash, Income and Substitution Effects, and Consumer
Welfare
Presentation schedule: three student pres
National University of Singapore
Department of Economics
EC2101 Microeconomic Analysis I
Semester 1 AY 2016/2017
Practice Problems 7
Cost I
Presentation schedule: two student presentations; one student presents Question 1 and
Question 2, the other student
EC2101 Lecture 3
Revealed Preference


Analysis that enable us to infer preference based on observed prices and choice
Strictly preferred
o Higher utility from A than B > A>B
o If A is strictly preferred to B, A is also weakly to B
Weakly preferred to