SHORT- & LONG-RUN COSTS
(B&B Chps. 7-8)
Dollars
LR Cost Minimization
Comparative Statics
A Rainbow of SR Cost
Curves
Factor Demands & Factor
Substitution
SR Cost Minimization
202 Cost Curves, Revisited
An Envelope LR Cost Curve
Output
Notes for Lectu
Three Important Tools of Economic Analysis
Notes for Lecture #2, Chapter 1
Learning Outcome from syllabus:
During this course you will learn how to use three basic tools of
economic analysis to analyze a variety of economic problems.
1) Equilibrium
2) Con
Consumer Preferences
(B&B Chapter 3)
Notes for Lecture #4
Northwestern University ECON 310-1: Microeconomic Theory Professors Braeutigam and Hornsten Winter 2016
Roadmap for Chapters 3, 4, and 5
Chapter 3: Consumer Preferences and the Concept of Utility
C
DEMAND
Income and Substitution Effects
(B&B Chapter 5)
Notes for Lecture #10
Northwestern University ECON 310-1: Microeconomic Theory Professors Braeutigam and Hornsten
1
Suppose the Consumer Experiences a Price Decrease.
Given: U = xy, Py = 1, Income = 7
INDIFFERENCE CURVES
(B&B Chapter 3)
Notes for Lecture #05
Recap of U[x,y], MUx, MRSx,y
Modeling Consumer Choice
Cobb-Douglas Utility
Quasi-Linear Utility
Perfect Substitutes
Perfect Complements
A Non-Valued Product
A Bad
The Lesser of Two Evils
A Bliss Po
ECON 310-1: Microeconomic Theory
Professors James A. Hornsten and Ronald R. Braeutigam
Northwestern University, Winter 2016
Problem Set #1: Comparative Statics, S&D Analysis, and Elasticity
Instructions: This problem set will not be collected, but we enco
Chapter 4: Consumer Choice
When you have completed this chapter, you will be able to:
Characterize a consumers budget constraint, given the
prices of goods and income
Given preferences and a budget constraint, determine a
consumers optimal choice of goods
Three Important Tools of Economic Analysis
Notes for Lecture #2, Chapter 1
Learning Outcome from syllabus:
During this course you will learn how to use three basic tools of
economic analysis to analyze a variety of economic problems.
1) Equilibrium
2) Con
Supply & Demand Analysis; Elasticity
Notes for Chapter 2
$
Q,P= -1.2
P=0.50
Studying by Tinkering
Demand Curves & Shifters
Elasticity
PED for Various Demand Curves
1m
Qty
A Back of the Envelope Trick
Supply Curves, Shifters & Elasticities
Notes for
Revealed Preference
Thus far with the theory of consumer choice, we have asked the following question:
Given preferences (indifference curves) and given a budget constraint, can we
infer what the optimal choice basket will be?
Learning Outcome: Using the
A Collection of Interesting Budget Constraints
(B&B Section 4.3)
y
etc.
The Composite Good Model
Cash Subsidy
Voucher or Grant
Club Discount
All-U-Can-Eat
Quantity Discount
Buy Some, Get Some Free
Rationing
Intertemporal Choice (rBorrow > rSave)
OR Limit
Supply & Demand Analysis; Elasticity
Notes for Chapter 2
$
Q,P= -1.2
P=0.50
Studying by Tinkering
Demand Curves & Shifters
Elasticity
PED for Various Demand Curves
1m
Qty
A Back of the Envelope Trick
Supply Curves, Shifters & Elasticities
Notes for
A Collection of Interesting Budget Constraints
(B&B Section 4.3)
y
etc.
x
Notes for Lecture #07
The Composite Good Model
Cash Subsidy
Voucher or Grant
Club Discount
All-U-Can-Eat
Quantity Discount
Buy Some, Get Some Free
Rationing
Intertemporal Choice (rB
Costs: Envelopes and Applications
(B&B Chapter 8)
Notes for Lecture #18
Learning Outcome 3.
Characterize the technology available to a firm, using production
functions, cost curves, and supply curves.
Northwestern University ECON 310-1: Microeconomic Theo
Chapter 9 Wrap-Up
Equilibrium in the Short Run and Long Run
and Producer Surplus
(B&B Chapter 9)
Notes for Lecture #21
Northwestern University ECON 310-1: Microeconomic Theory Professors Hornsten and Braeutigam
Review: Slide from last meeting
Example of B
Question 1. Suggested Solution
a)
1
1
In eqm, P S = P d = P * and Q S = Q d = Q*, so Q 2 = A 2 Q 2 Q 2 = A 2
2
2
A2
dQ*
dP * 2 21
Q* = A, and then P * = . Then
= 1 and
= A = A.
2
dA
dA 2
[Scoring: 5 points = 1 set QS=Qd, 1 Q*, 1 P*, 1 dQ/dA, 1 dP/dA]
b)
Microeconom ics m odule 3 practice problem s: indifference curves
* Exercise 3.1: Indifference Curves
An econom y has only two goods, bread and wine, both of which have positive econom ic value.
The baskets (5 bread + 2 wine) and (3 bread + 6 wine) lie on
NAME _
Northwestern University
Winter Quarter, 2014
Second Midterm
Student ID Number_
Economics 310-1
Professors Braeutigam and Hornsten
INSTRUCTIONS:
(1) Write your name and student ID number in the spaces at the top of this page.
(2) This a 50 minute, c
NAME: _
Northwestern University
Winter Quarter, 2015
Second Midterm
Economics 310-1 Microeconomics
Professors Hornsten and Braeutigam
INSTRUCTIONS:
(1) Write your name and student ID number in the spaces at the top of this page.
(2) This a 50 minute, clos
NAME _
Northwestern University
Winter Quarter, 2013
Second Midterm
Student ID Number_
Economics 310-1
Professors Hornsten and Braeutigam
INSTRUCTIONS:
(1) Write your name and student ID number in the spaces at the top of this page.
(2) This a 50 minute, c
Suggested Solutions to the Second Midterm, Winter 2016
Question 1. Suggested Solution
a) To determine the firms demand for labor, we look at the tangency condition for cost minimization:
First consider the firm producing without the wage subsidy program,
NAME _
Student ID Number_
Northwestern University
Winter Quarter, 2012
Second Midterm
Economics 310-1
Professors Hornsten and Braeutigam
INSTRUCTIONS:
(1) Write your name and student ID number in the spaces at the top of this page.
(2) This a 50 minute, c
Economics 310-1. Professors Hornsten and Braeutigam
Page 1
Second Midterm, Winter 2015
Suggested Solutions
Question 1. Suggested Solution
w
r
w r
2
=
= w = r = 0.4r . The condition for profit-maximization is
MPL MPK
2 5
5
w
r
w
$10
r
$25
. Here, we know
Profs Hornsten & Braeutigam ECON 310-1: Micro Theory Winter 2016 Week 8 Problem-Solving Session Wed, Feb 24
WINTER 2014 SECOND MIDTERM: 1) a) (10 points) This year the accounting ledger for a small carpet cleaning store shows the following
information abo
DEMAND
Income and Substitution Effects
(B&B Chapter 5)
Notes for Lecture #10
Northwestern University ECON 310-1: Microeconomic Theory Professors Braeutigam and Hornsten
1
Suppose the Consumer Experiences a Price Decrease.
Given: U = xy, Py = 1, Income = 7
Professors Jim Hornsten & Ron Braeutigam Fancy Budget Constraints
ECON 310-1: Microeconomic Theory Problem-Solving Session Notes
Northwestern University
Use the composite good model (PY=$1) to draw these fancy budget constraints:
1. A mugging reduced your