Intermediate Microeconomics
ECON 281 Fall Term
Intermediate Microeconomic theory I
University of Alberta XiaoGang Che
Chapter One Overview
1. Defining Microeconomics and Macroeconomics 2. Microeconomic Modeling Tools • Constrained Optimization • Equilibrium Analysis • Comparative Statics 3. The Types of Microeconomic Analysis • Positive Analysis • Normative Analysis
Chapter One
2
Microeconomics Defined
Microeconomics is the study of how individual economic decision-makers such as consumers, workers, firms allocate scarce resources among alternate uses.
This study involves both the behavior of these economic agents on their own and the way their behavior interacts to form larger units, such as markets.
Chapter One
3
Macroeconomics Defined
Macroeconomics analyzes how an entire national economy performs, including aggregate levels of income and employment, the levels of interest rates and prices, the rate of inflation, and the nature of business cycles in a national economy. In this term, we focus on Microeconomics.
Chapter One
4
Key Societal Questions
Societies must answer these questions that relate to microeconomics:
1. What goods and services will be produced and in what quantities 2. Who will produces these services and how will they produce them 3. Who will receive these goods and services and how will they get them Summary: how can we (a consumer/a firm) allocate the limited resources optimally?
Chapter One
5
Microeconomic Modeling
Models are used to analyze decision making problems for a consumer or a firm in a market.
Examples: Demand-Supply Model, Job Search Model, Bargaining Model, Auctions …..
Given assumptions in a model, we derive the equilibrium outcome and do comparative statics.
Chapter One
6
Exogenous & Endogenous Variables
Defined:
Variables that have values taken as given in the analysis are exogenous variables. Variables that have values determined as a result of the model’s workings are endogenous
Intermediate Microeconomic theory I
University of Alberta XiaoGang Che
Chapter One Overview
1. Defining Microeconomics and Macroeconomics 2. Microeconomic Modeling Tools • Constrained Optimization • Equilibrium Analysis • Comparative Statics 3. The Types of Microeconomic Analysis • Positive Analysis • Normative Analysis
Chapter One
2
Microeconomics Defined
Microeconomics is the study of how individual economic decision-makers such as consumers, workers, firms allocate scarce resources among alternate uses.
This study involves both the behavior of these economic agents on their own and the way their behavior interacts to form larger units, such as markets.
Chapter One
3
Macroeconomics Defined
Macroeconomics analyzes how an entire national economy performs, including aggregate levels of income and employment, the levels of interest rates and prices, the rate of inflation, and the nature of business cycles in a national economy. In this term, we focus on Microeconomics.
Chapter One
4
Key Societal Questions
Societies must answer these questions that relate to microeconomics:
1. What goods and services will be produced and in what quantities 2. Who will produces these services and how will they produce them 3. Who will receive these goods and services and how will they get them Summary: how can we (a consumer/a firm) allocate the limited resources optimally?
Chapter One
5
Microeconomic Modeling
Models are used to analyze decision making problems for a consumer or a firm in a market.
Examples: Demand-Supply Model, Job Search Model, Bargaining Model, Auctions …..
Given assumptions in a model, we derive the equilibrium outcome and do comparative statics.
Chapter One
6
Exogenous & Endogenous Variables
Defined:
Variables that have values taken as given in the analysis are exogenous variables. Variables that have values determined as a result of the model’s workings are endogenous