Intermediate Microeconomics I

Course Description 

The course is designed to provide a sound training in microeconomic theory. Since students are already familiar with the quantitative techniques in the previous semesters, mathematical tools are used to facilitate understanding of the basic concepts. This course looks at the behaviour of the consumer and the producer and also covers the behaviour of a competitive firm.   

Course Outline 

1. Theory of Consumer Behaviour 

Preference; utility; the nature of the utility function; budget constraint; choice; demand function; Income and leisure; Substitution and Income effects; Slutsky equation.  

Topics in Consumer Behaviour

Homogeneous and Homothetic Utility Function; Indirect Consumption Function; Duality Theorem; The theory of revealed preference; choice under risk and uncertainty; intertemporal choice.   

2. Theory of the Firm: Production, Costs and Market Structure

Technology; isoquants; production with one and more variable inputs; returns to scale; short run and long run costs; cost curves in the short run and long run;   

Topics in the theory of the Firm: 

Homogeneous Production Function; CES production function; The Kuhn-Tucker condition; Duality in production; Production under uncertainty.   

Market Equilibrium: 

Assumption of Perfect Competition; Demand Function; Supply Function; Commodity Market Equilibrium; Factor Market Equilibrium; the existence and uniqueness of equilibrium; stability of equilibrium.   

Monopoly, Monopsony and Monopolistic Competition; pricing and output determination.   

Duopoly, Oligopoly and Bilateral Monopoly; competitive strategy.   

Readings: 

1. Hal R. Varian, Intermediate Microeconomics: A Modern Approach, W.W. Norton and Company/Affiliated East-West Press (India), 8thedition, 2010. The workbook by Varian and Bergstrom may be used for problems. 

2. C. Snyder and W. Nicholson, Fundamentals of Microeconomics, Cengage Learning (India), 2010. 

3. B. Douglas Bernheim and Michael D. Whinston, Microeconomics, Tata McGraw-Hill (India), 2009. 

4. James M. Henderson and Richard E. Quandt, Microeconomic Theory: A Mathematical Approach, latest Edition.