Institute:
Course:
Term:
Classes:
Department of Economics, University of Vienna
Introduction to Microeconomics (course number- 040184)
Winter 2015, from 1/10/2015 to 28/1/2016
Tuesdays: 8-9:30 (HS14)
Thursdays: 11:30-13:00 (HS6)
Contact:
Dr. Matan Tsur (matan.tsur @univie.ac.at)
Course webpage: http://homepage.univie.ac.at/matan.tsur/teaching.html
Course description:
This is an introductory course in microeconomics. It covers the fundamental theories of the
consumer, the firm, and the competitive market. This course serves three main purposes: (1) to
introduce students to basic microeconomic principles, (2) to equip students with technical tools
used in most economic modeling, (3) to develop students’ skills in critical thinking.
Main textbook:
David Besanko / Ronald R. Braeutigam: Microeconomics, Wiley, 4th edition.
Other textbooks:
Robert Pindyck, and Daniel Rubinfeld, Microeconomics, 7/E, Pearson Int.
Hal R. Varian, Intermediate Microeconomics, 5/E, W. W. Norton & Company.
Jeffrey M. Perloff, Microeconomics, 5/E, Pearson Int.
Grading:
Class Participation 5 bonus
Home Assignments 20 %
There will be several home assignments. Each assignment consists of 4-5 problems. Students can
work in groups of up to 3.
Midterm Exam 31%
25/11/201, 15-16:30 HS 1, 4, 6, 14
Retakes are not possible. An alternative date should be requested no later than 10 days before the
exam.
Final Exam 49%
28/1/2016, 11:30-13:00 HS 1, 4, 6, 14
The final exam covers the entire course. An alternative date should be requested no later than 2
weeks before the exam.
Help Sessions:
Every two weeks (more or less) the teaching assistant- Radostina will conduct sessions to help
student technical aspects of the problem sets. The sessions are not mandatory and are meant to
assist students.
Main Topics Covered
Week 1. Preferences and Utility Function (Chapter 3)
Readings:
3.1 Representation of Preferences;
3.2 Utility Functions;
3.3 Special Preferences.
Learning-by-doing exercises: 3.1, 3.2, 3.3
Problems with solutions: 3.4, 3.6, 3.15, 3.22
Review questions: 3.1-3.11
Week 2. Budget Constraint and Optimal Choice (Chapter 4)
Readings:
4.1 The Budget Constraint;
4.2 Optimal Choice;
4.3 Consumer Choice with Composite Goods.
Learning-by-doing exercises: 4.1, 4.2, 4.4
Problems with solutions: 4.3, 4.6, 4.13
Review questions: 4.1-4.7, 4.9
Week 3. Consumer Demand (Chapter 5)
Readings:
5.1 Optimal Choice and Demand.
Learning-by-doing exercises: 5.1, 5.2
Problems with solutions: 5.6, 5.27
Review questions: 5.1-5.3, 5.5-5.6
Week 4. Income and Substitution Effects (Chapter 5)
Readings:
5.2 Change in the Price of a Good: Substitution Effect and Income Effect.
Learning-by-doing exercises: 5.4, 5.5
Problems with solutions: 5.9, 5.15
Review questions: 5.4
Week 5. Consumer Surplus and Elasticities (Chapter 5, Chapter 2)
Readings:
5.3 Change in the Price of a Good: The Concept of Consumer Surplus (excluding Compensating
and Equivalent Variation);
2.2 Price Elasticity of Demand;
2.3 Other Elasticities.
Learning-by-doing exercises: 2.5, 2.6, 5.7-5.9
Problems with solutions: 2.21
Review questions: 2.4-2.9, 5.3, 5.7
Week 6. Inputs and Production Functions (Chapter 6)
Readings:
6.1 Introduction to Inputs and Production Functions
6.2 Production Functions with a Single Input
6.3 Production Functions with more than One Input
6.5 Returns to Scale
Learning-by-doing exercises: 6.1, 6.2, 6.4
Problems with solutions: 6.5, 6.10, 6.24
Review questions: 6.1-6.6, 6.9
Week 7. Costs, Cost Minimization, Cost Curves (Chapters 7, 8)
Readings:
7.2 The cost-minimization problem
7.3 Comparative Statics Analysis of the Cost-Minimization Problem (only comparative statics
analysis of changes in input prices)
8.1 Long-run total cost curve
8.2 Short-run total cost curve
Learning-by-doing exercises: 7.2, 7.3, 7.5, 8.1-8.4
Problems with solutions: 7.8, 8.14, 8.27, 8.28
Review questions: 7.4-7.6, 8.1-8.6, 8.8-8.10
Week 8. Perfectly Competitive Markets (Chapter 9)
Readings:
9.1 What is Perfect Competition?
9.2 Profit Maximization by a Price-Taking Firm
9.3 How the Market Price is Determined: Short-Run Equilibrium
9.4 How the Market Price is Determined: Long-Run Equilibrium
9.5 Economic Rent and Producer Surplus (except “Economic Rent”)
Learning-by-doing exercises: 9.1-9.5
Problems with solutions: 9.9, 9.10, 9.24, 9.35
Review questions: 9.1-9.6, 9.8, 9.10
Week 9. Monopoly and Capturing Surplus (Chapters 11, 12)
Readings:
11.1 Profit maximization by a monopolist
11.5 The welfare economics of monopoly
11.6 Why do monopoly markets exist
12.1 Capturing Surplus
12.2 First-Degree Price Discrimination: Making the Most from Each Consumer
12.3 Second-Degree Price Discrimination: Quantity Discounts
12.4 Third-Degree Price Discrimination: Different Prices for Different Market Segments.
Learning-by-doing exercises: 11.1, 12.1-12.5
Problems with solutions: 11.1, 11.12, 11.26, 12.1, 12.2, 12.14
Review questions: 11.1-11.3, 11.5, 11.9, 12.1-12.8
Week 10. Market Structure and Competition (Chapter 13)
Readings:
13.1 Describing and Measuring Market Structure
13.2 Oligopoly with Homogeneous Products
13.4 Oligopoly with Horizontally Differentiated Products
Learning-by-doing exercises: 13.1, 13.2
Problems with solutions: 13.5, 13.10, 13.25, 13.29
Review questions: 13.1-13.4, 13.8