Intermediate Microeconomic Theory

This course is designed to provide a more detailed examination of the microeconomic models introduced in Eco 101. The course begins with a detailed discussion of the theory of the consumer. This portion of the class provides an indepth examination of the theory of demand. The determinants of own-price, cross-price, and income elasticity of demand are discussed in this early stage of the course. The behavior of consumers under imperfect information is introduced using a model of expected utility.

The discussion of consumer theory is followed by a careful examination of price and output determination under alternative market structures. The implications of alternative goals of the firm (such as profit maximization, sales maximization, and utility maximization) are also examined.

After examining the theory of demand and supply in the output market, the focus of the course turns to an examination of resource markets. The determination of wages, rent, interest, and profit is examined under alternative assumptions about the nature of the resource market. Particular attention is devoted to the perfectly competitive and monopsony markets of resource price determination.

The concluding section of this course examines the role of the government in the economy. This portion of the course provides an examination of the conditions under which markets achieve economic efficiency; it also examines the circumstances under which market failure occurs. Alternative methods of correcting for market failure are examined.

Prerequisite: Eco 101, 200