Course Contents

1. Choice and Demand i. Consumer Behavior  Utility function  Indirect utility function  Expenditure function  Uncompensated and compensated demand functions  Demand Elasticities  Consumer surplus  Revealed preference  Household production model ii. Choice under Uncertainty  Random variable and probability density function  Fair gamble and the expected utility hypothesis  The Von Neumann-Morgenstern theorem  Risk aversion  Measures of risk aversion  Risk aversion and fair gambles  Risk aversion and Insurance  The State preference approach to choice under uncertainty 2. Production and Supply  Production functions  The elasticity of substitution  Cost functions  Shephard’s lemma and elasticity of Substitution 3. Markets i. Competitive Markets  Short-run Analysis  Long-run Analysis ii. Monopoly  Profit maximization and output choices  Price Discrimination iii. Oligopoly and Monopolistic Competition (Differentiated products)  Cournot model of oligopoly  Chamberlin’s version of monopolistic competition  The Hotelling model of spatial duopoly  Oligopoly and advertising  Application of game theory to oligopoly 4. Market Failure i. Asymmetric Information  Principal-Agent model  Hidden-action model  Hidden-Type Model  Market for Lemons ii. Externalities and Pubic Goods

Course Synopsis

This course is designed with special focus on analytical tools of modern microeconomics especially uncertainty, game theory, information asymmetry, externalities and public goods. The objective of this course is to well equip the students with the advanced techniques and practical application of microeconomic analysis.

Course Learning Outcomes

After accomplishment of this course students are expected to be able to:  understand the important concepts and quantitative tools in microeconomic theory.  comprehend the behavior of economic agents (consumers and producers) in the context of game theoretical framework, asymmetric information, public goods, and externalities.  shape and solve the microeconomic models for various real-life issues.  utilize quantitative tools of microeconomics to analyze the research problems