Econ 3010: Intermediate Price Theory

(Microeconomics)

Professor Dickinson

Appalachian State University

Lecture Notes outline—Section 1

Expected Background Material

Supply, Demand, and Equilibrium

Comparative Static Analysis (shifts in S&D) and elasticities

We’ll use minimal calculus that I’ll show you.

Budget Constraint The Budget Line and budget set

Changing the budget line

Odd budget lines

Preferences and Utility Preference assumptions

Representation by Utility functions and indifference curves (examples with graphs)

Marginal Utility and MRS

Optimal Consumer Choice Put preferences and constraints together

(examples)

What if preferences are not strictly convex?

Demand (more on choice) Income Changes

“Income offer” and “Engel” curves

Price Changes “Price offer” and “Demand” curves

Slutsky Equation and Consumer Surplus

Slutsky Equation Substitution and income effects

Examples of Slutsky decompositions

Consumer Surplus