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Microeconomics 2

Microeconomics 2. John Hey. Lecture 1: plan for today. Tutorials and teaching fellows. This lecture is about organisation and motivation. Who is John Hey ? Web site . (TFs and reps.) VLE . Introduction to module. What it is trying to achieve. Lectures. Assessment.

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Microeconomics 2

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  1. Microeconomics 2 John Hey

  2. Lecture 1: plan for today • Tutorials and teaching fellows. • This lecture is about organisation and motivation. • Who is John Hey? • Web site. (TFs and reps.) VLE. • Introduction to module. • What it is trying to achieve. • Lectures. • Assessment. • Advised study method.

  3. First a word about the module as a whole • Autumn Term – taught by me – lectures 1 to 19 excluding lecture 17 – built on my text and my website. • Spring Term – taught by Alan Krause. • Examination will have two parts corresponding to the two terms. The exam on my part will be like the exam I have set in the past. All information is on the site.

  4. Teaching Fellows/Tutors are Daniel Howdon, James Lomas, and Dominic Spengler.

  5. Teaching fellows and tutorials • TFs will have office hours each week – between them one hour a day each week. • Tutorials are in Weeks 4, 6, 8 and 10 of term 1. • Some of them may be before the relevant lectures; and this will help you to anticipate some of the lectures. • Tutorials are a mixture of things; they are not mathematical exercises. • Prepare for them in advance (as it tells you). • Actively participate in the tutorials – don’t be a free-rider. • After the tutorial do what it tells you to do, and hand in to your tutor if asked.

  6. Tutorials Autumn Term • Autumn Term Week 4: Tutorial 1: An allocation problem. • Autumn Term Week 6: Tutorial 2: Demand. • Autumn Term Week 8: Tutorial 3: Exchange. • Autumn Term Week 10: Tutorial 5: Production possibility frontiers. • (Tutorial 4, which you can find on this site, will not be covered this year.)

  7. General comments about the module • Read the introduction section on the VLE. • It is to get you thinking like economists... • We understand indifference(human beings don’t) • We know that “Everything in life is a trade off.” • Do not try and memorise things. • Try to understand concepts and ways of thinking. Develop economic intuition. • Not mathematics (though it is there if you want/like it). • Not memorisation.

  8. What do (micro) economists do? • They want to explain and predict economic behaviour; but crucially predict. • To predict we first need to explain. • To explain we need models to give structure. • Why? Because we explain using past data. There is a lot of such data; we need to decide which to use. That is the role of theory. • Theory assumes that people are rational. What does that mean?

  9. Web site • Everything that you need (and more) is there (including me and the module representatives). • Powerpoint presentations (constantly revised). One for each chapter/lecture. • Lectures in html format. One for each chapter/lecture. • Lectures in Maple format (only for the afficionados). • Tutorials. (Later ‘answers’.) • But what about VLE?

  10. Lectures • They are on the site – both powerpoint overviews and the detailed html files. • Smell both before the lecture. • Come to the lecture and participate. • Read both immediately after the lecture. • Read the corresponding chapter in the module text: Intermediate Microeconomics: People are Different. This is obtainable in the Campus bookshop, £25.

  11. The book: a bit of history • I have taught Micro 2 for a long time – both in the UK and in Italy. • I used to use Varian – he has an artist. • I evolved my own course. I wrote the book. • I (well Maple actually) drew the pictures… • … they are accurate and are based on particular preferences/technology. • Why the subtitle “People are Different”?

  12. Part 1: Economies without production • 1: Introduction • 2: Gains from Trade • 3: Discrete Goods: Reservation Prices, Demand,Supply, and Surpluses • 4: Continuous Goods: Reservation Prices, Demand and Supply, and Surpluses • 5: Preferences • 7: Demand with Money Income • 6: Demand and Supply with Income in the Form of Endowments • 8: Exchange • 9: Welfare

  13. Part 2: Economies with production • 10: Firms and Technology • 11: Cost Minimisation and the Demand for Factors of Production • 12: Cost Curves • 13: Firm Supply and the Surplus of the Firm • 14: Production Possibility Frontiers • 15: Production and Exchange

  14. Interlude • 16: Empirical Analysis of Demand, Supply and Surpluses

  15. Part 3: Applications and implications of the basic tools not taught by me this year except for chapters 18 and 19 • 17: Aggregation • 18: Revealed Preference and Revealed Technology • 19: Compensating and Equivalent Variations • 20: Intertemporal Choice • 21: The Discounted Utility Model • 22: Exchange in Capital Markets • 23: Choice under Risk • 24: Expected Utility Model • 25: Exchange in Capital Markets • 26: The Labour Market

  16. Part 4: Market inefficiencies of various types not taught by me this year • 27: Taxation • 28: Monopoly and Monopsony • 29: Natural Monopoly and Discrimination • 30: Game Theory • 31: Duopoly • 32: Externalities • 33: Public Goods • 34: Asymmetric Information

  17. Office hours and the Discussion Board within VLE • Office hours will be on the Module website. • However we feel that use should be made of the Discussion Board within VLE. • In principle it is more efficient... • ... and we, as economists, are interested in efficiency.

  18. Assessment of the Autumn Term material • The examination will be different from those before 2011-2012. • The examination will be set and marked by the computer. • The examination has been strengthened relative to 2011-2012 • There will almost certainly be a question on each lecture/chapter covered by me. So study them all! • You will be penalised for wrong answers. • There are two specimen papers on the site. We will go through them in two lectures later in the year.

  19. Advised study method • (See also what I have said about lectures.) • You learn economics by doing economics. • So the tutorials are crucial, though they are (obviously) not a direct preparation for the examination. We will do that later. • There are also Review Questions in the book. • Form study groups of you and your friends and work through things together. • Use your tutor, the student reps and me to resolve any issues.

  20. Preparation for Lecture 2 • Review definition of a Reservation Price for a buyer and for a seller. • To keep it simple, suppose the good is discrete and the buyer/seller wants to buy/sell at most one unit. • Reservation price is maximum/minimum that the buyer/seller would pay/accept. • Profit/Surplus if buyer/seller buys/sells at price below/above reservation price?

  21. Conclusions • Come to all the lectures. • Smell the lectures before the lecture and read them again afterwards. • Prepare for the tutorials, participate in them actively, and review them afterwards. • Form study groups; learn together. • Study constantly throughout the year. • Study, learn and enjoy.

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