Professor R. Preston McAfee
Office: Baxter 100
Office Hours: TBA or by appt
Phone: (626) 395-3476
Secretary: Sabrina Boschetti
Office: 111 Baxter
Phone: (626) 395-4228
TA: Lauren Feiler and Sarah Hill
Office: 136, 134 Baxter
Phone: (626) 395-8772,395-3794
A summary of Recent Changes to this site.
Text: Introduction to Economic Analysis by R. Preston McAfee. The text is available in pdf format here, or from Sabrina in Bax 111 for about $12, or from lulu.com.
See also this.
This course introduces the major topics of microeconomic analysis.
Economists use simple mathematical models to shed light on various economic phenomena. Economists have almost universally adopted the maximization paradigm as the primary tood for understanding human economic behavior. The maximization paradigm assumes people behave as if they maximize an objective function (happiness), and much of the course is devoted to applying that paradigm to various situations, starting with trade.
Given that I wrote the text, and the short length of the winter term, it is crucial that you read the text prior to class. It isn't so much reading, although the text has a bit of the "taking a sip from a firehose" problem in places.
Class meets Monday, Wednesday and Friday at 11AM. Some of the Friday meetings are recitation sections which will help you with the homework exercises. Three Fridays will also be regular class meetings and four of them involve economic experiments, in which you participate in experiments and then analyze the experimental data to see if it conforms with the theory or not.
Homework becomes available on a Friday, and is due the following Friday.
Handouts are in pdf format. The Foxit reader is free and much faster than Acrobat.
Martin Osborne's fine mathematical tutorial.
|Midterm:||30%||Practice Midterm, 2005, 2006 W Midterm, 2006 S Midterm|
|Eight problem sets:||40%||Includes experiment analysis; assistance in recitation|
| || ||2005 Homework with answers|
|Final:||30%||2005 Final, 2006 W Final, 2006 S Final|
For pass-fail students, a passing grade is a D or better, which is an average of 60 or more after the curve.
It is permitted (encouraged) to work together in groups, of no more than three individuals, on homeworks, but not on the midterm and final. Groups may submit a single homework solution.
|Dates are tentative; check back frequently. You should read the listed sections prior to the class.|
|Jan 3||1.1||What is Economics?|
|Major points:||Types of reasoning, models, and goals|
|Jan 5||Supply & Demand Experiment|
|Jan 8||2.1-3||Supply and Demand|
|Major points:||Demand, marginal value, consumer surplus, supply, marginal cost, profit, shifts in curves|
|Lecture:||Supply and Demand|
|Major points:||Quantifying effects|
|Lecture:||Supply and Demand|
|Jan 12||2.6, 3||International Trade & the US Economy (OK to skim ch 3)|
|Major points:||Production possibilities, comparative and absolute advantage, factors and trade|
|Fedstat||Federal Statistics Website|
|Exercises:||Homework 1 due today|
|Answers:||Homework 1 Answers|
|Jan 15||Martin Luther King Day Holiday|
|Jan 17||4.2||Competitive Dynamics|
|Major points:||Perfect competition dynamics|
|Jan 19||Entry Experiment|
|Exercises:||Homework 2 due today|
|Answers:||Homework 2 Answers|
|Jan 22||4.1||Competitive Firm|
|Major points:||Types of firms, production functions, profit maximization, costs, economies of scale|
|Major points:||Present value, NPV rule for investment, investment under uncertainty|
|Jan 26||4.3||Investment Applications|
|Major points:||Resource extraction, tree-cutting|
|Exercises:||Homework 3 due today|
|Answers:||Homework 3 Answers|
|Jan 29||5.1-2||Consumer Theory|
|Major points:||Utility maximization, substitution and income effects, backward-bending labor supply|
|Jan 31||5.2||Consumer Theory Topics|
|Major points:||Dynamic choice, risk, search|
|Feb 2||Midterm Examination Available|
|Feb 7||Midterm Examination due today 4PM|
|Feb 2||Recitation Section|
|Exercises:||Homework 4 due today|
|Answers:||Homework 4 Answers|
|Major points:||Taxes, elasticities, price floors and ceilings, quotas|
|Major points:||External effects, Pigouvian taxes, tradable permits, fishing and extinction|
|Feb 9||Prohibition Experiment|
|Feb 12||6.4||Public Goods|
|Major points:||Public goods, free-riding, local public goods|
|Major points:||Basic model, taxation, price discrimination|
|Feb 16||Recitation Section|
|Exercises:||Homework 5 due today|
|Answers:||Homework 5 Answers|
|Feb 19||President's Day Holiday|
|Major points:||Market for lemons, Myerson-Satterthwaite, Signaling|
|Feb 23||Regulating Externalities Experiment|
|Exercises:||Homework 7 ALL HOMEWORK DUE BY MARCH 9, NO EXTENSION BEYOND|
|Exercises:||Homework 6 due today|
|Answers:||Homework 6 Answers|
|Feb 26||7.1||Game Theory|
|Major points:||Matrix games, equilibrium, mixed strategies, subgame perfection, supergames, folk theorem|
|Feb 28||7.2-3||Game Theory finished, Imperfect Competition started|
|Major points:||Cournot, price dispersion|
|Mar 2||7.4-5||Imperfect Competition Continued|
|Major points:||Hotelling, agency theory|
|Exercises:||Homework 7 due today|
|Answers:||Homework 7 Answers|
|Exercises:||Homework 8 ALL HOMEWORK DUE BY MAR 9, NO EXTENSION BEYOND|
|Major points:||Laws, price-fixing, mergers|
|Major points:||English, Sealed-bid auctions, revenue equivalence, information release|
|Mar 9||Recitation Section|
|Exercises:||Homework 8 due today|
|Answers:||Homework 8 Answers ALL HOMEWORK DUE BY TODAY, NO EXTENSION BEYOND|
|MAR 9||Final is available starting today|
|Mar 14||Final Examination due today at 4PM; turn in to Sabrina Baxter 111|
Changes to this website since Jan 1, 2007