Econ 620: Advanced Microeconomic Theory
Instructor:
Office:
Office Phone:
Office Hours:
Otis W. Gilley
COBB 327A
257-4140
8:00 – 10:00 M-F,
Required Text:
Class Location: COBB 326
Class Time:
2:00-3:50 MW
Email:
gilley@ latech.edu
Microeconomic Theory, Basic Principles and Extentions, 11th ed., by
Walter Nicholson and Christopher Snyder. (Thomson South-Western,
2012)
Additional Resources:
(1) Fundamental Methods of Mathematical Economics, 3rd. ed., by
Alpha C. Chiang and Kevin Wainwright. (New York, NY:
McGraw-Hill Book Company, 2005).
(2) Price Theory, by Milton Friedman. (Chicago, IL: Aldine
Publishing Company, 1962).
(3) The Theory of Price, 4th ed., by George J. Stigler. (New York,
NY: Macmillian Publishing Company, 1966).
(4) Microeconomic Theory, by P.R.G. Layard and A.A. Walters.
(New York, NY: McGraw-Hill Book Company, 1978).
(5) Microeconomic Theory A Mathematical Approach, 3rd ed., by
James M. Henderson and Richard E. Quandt. (New York, NY:
McGraw-Hill Book Company, 1980).
(6) Advanced Microeconomic Theory, 2nd. ed., by Geoffrey A.
Jehle and Philip J. Reny. (Addison Wesley, 2001).
Course Purpose:
The purpose of this course is to expose doctoral students to a rigorous introduction to
microeconomic theory. The main emphasis will be learning to formulate and analyze models of
economic behavior. Since models of economic behavior (consumer and producer) form the basis
for all theoretical approaches within all the functional areas of a doctoral program in business,
these skills will assist you in reading and understanding the current literature in your area of
specialization. While the fundamental economic principles presented are important in their own
right, the major goal of the course is to improve modeling skills and the ability to grasp and use
theoretical relationships and to apply these. This course requires a working knowledge of
calculus through partial differentiation of multivariate functions.
Economics 620
Fall 2015
Course Outline:
Part 0:
Mathematical Background.
The requisite mathematical skills include fundamental calculus (univariate and
multivariate differentiation), solutions to systems of equations, and constrained and
unconstrained optimization. These skills are presumed as a prerequisite to this
course. If you are rusty on these techniques, you may make use of Chapter 2 in the
required text, Chapters 6–12 in (1), or the Appendix in (5).
Part 1:
Consumer Theory. (including risk and uncertainty)
This part of the course is an in-depth treatment of the theoretical framework
underlying the demand side of a market. We begin with a treatment of consumer
preferences and axioms of choice, and work through to a discussion of market
demand and elasticities. A key principle for this material is constrained optimization.
This module ends with a treatment of risk and uncertainty as is related to the
consumer choice problem. Read Chapters 3–7 in your text.
Part 2:
Production, Cost, and Supply.
This section of the course gives detailed consideration to the structure of a firm’s
technology, production function, and cost functions, both in the long and short run.
The firm’s supply function is derived. The emphasis will be on the relationship
between these concepts (technology, costs, and supply). This is where we learn the
critical reasoning that establishes the link between technology and the firm’s costs.
Read Chapters 9–11 in your text.
Part 3:
Price and Output Determination: Market Structures.
This section of the course deals with output and price determination of the firm under
a variety of market conditions or market structures. The emphasis will be on firm
decision making under perfectly competitive conditions and under conditions of pure
monopoly. If time permits, we will also study market models based on interdepenent
decision making using game theory (see Special Topics below). Read Chapters 12,
14 and 15 in your text. This coverage is not exhaustive and the additional chapters
will be discussed if time permits.
Part 4:
Special Topics.
If time permits, there are a number of particularly interesting special topics that may
be covered. These include asymmetric information (Chapter 18 in your text and class
notes), externalities and public goods (Chapter 19), and capital and time (Chapter 17)
and pricing in input markets (Chapter 16).
Economics 620
Fall 2015
Grading:
There will be two exams in this course. The midterm exam will count for 40% of your grade,
while the final exam will count for 50%. The midterm exam will cover Parts 1 and 2 of the
course, with the final exam covering all the material past the midterm. The additional 10% of
your grade will be determined by written summaries of several articles that you will be assigned
to read during the course of the term. These articles will be selected from the class reading list
and represent both classical developments of important ideas and concepts as well as modern or
current developments and applications.
There are problems at the end of each chapter in the text. I strongly urge you to work as many of
these problems as you can as well as any problem sets that are handed out in class. These will
not be graded due to the tight schedule, but you must realize the need to practice working with
these concepts prior to exam time. Students who do not work the majority of these exercises
will have little hope of performing well in this class.
As required by Board of Regents policy, attendance will be taken each class period. As graduate
students in a doctoral program you are not only scholars, but also future professionals in the
business or academic world. As such, you are expected to display scholarly dedication to your
work in this class. Some day you will likely be called upon to evaluate the progress of your
students or employees. You will then be faced with the difficult task of determining which have
mastered the skills to proceed and which have not. I am faced with this task in this class and I
will not hesitate to hold back those that do not master the skills offered by this course.
Students Registered with DSS
If you have special needs and are registered with DSS, please inform the instructor.
Registering with ENS and Emergency Policies
All students should enroll in the Louisiana Tech Emergency Notification System and keep their
contacts current on BOSS.
In the event of an emergency closing of the Tech campus, students are directed to the off-campus
Louisiana Tech Moodle site for all course communication and for the continuation of course
work. Information on class continuation will be available within 3 days of the closure.
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