This course will provide a comprehensive overview of theoretical microeconomic analysis using mathematical economic models at the graduate level. Topics covered in this course will include the following: axioms on consumer preferences, the existence of a utility function, the utility maximization problem, the expenditure minimization problem, the Slutsky equation, properties of demand functions, revealed preferences, consumer surplus, properties of expenditure functions, Shepard-McKenzie's lemma, duality in consumption, existence of competitive equilibria, the first and second theorems of welfare economics, the core convergence theorem, gross substitutability and uniqueness of equilibrium, and general equilibrium dynamics. The course will introduce basic economic concepts and then demonstrate how economically meaningful properties and results are derived and analyzed by using mathematical models. The course will conclude by discussing why market mechanisms are important and widely used.
Microeconomics is important for understanding economic phenomena, and it is essential for the studies of economics, industrial engineering, and other related fields. By combining lectures and exercises, the course aims to enable students to understand and acquire the fundamentals of analytical tools widely applicable to various economic and management situations. Mathematical approaches taught in this course are not only useful in analyzing market mechanisms, but are applicable to various other types of economic systems, and are highly effective in the field of economics and industrial engineering. Students will realize that the analytical tools acquired through this course are useful in other courses of economics and industrial engineering.
At the end of this course, students will be able to:
1) Explain basic ideas behind microeconomics and mathematical models regarding consumer and producer behavior and market mechanisms.
2) Analyze utility maximization and expenditure minimization behavior.
3) Calculate and derive demand functions, consumers' surplus, compensenting variation, and equivalent variation.
4) Explain the properties of competitive market equilibria in terms of Pareto efficiency and the core and prove the fundamental theorems of welfare economics.
5) Explain the conditions for existence, uniqueness, and stability of equilibrium and prove the theorems on existence, uniqueness, and stability.
6) Justify market mechanisms widely used in economic transactions.
Consumption Choice, Utility Maximization, Expenditure Minimization, Consumer's Surplus, Compensenting Variation, Equivalent Variation, Competitive Market Equilibrium, Pareto Efficiency, Core, Existence of Equilibrium, Uniqueness and Stability of Equilibrium
|✔ Specialist skills||Intercultural skills||Communication skills||Critical thinking skills||✔ Practical and/or problem-solving skills|
At the beginning of each class, solutions to exercise problems that were assigned during the previous class are reviewed. Towards the end of class, students are given exercise problems related to the lecture given that day to solve. To prepare for class, students should read the course schedule section and check what topics will be covered. Required learning should be completed outside of the classroom for preparation and review purposes.
|Course schedule||Required learning|
|Class 1||Introductory lecture on course objectives and microeconomics at the graduate level. Consumer Theory: 1. Axioms on consumer preferences||Explain axioms on consumer preferences.|
|Class 2||Consumer Theory 1. Existence of a utility function||Explain axioms on consumer preferences and prove the existence of a utility function.|
|Class 3||Consumer Theory 2. Consumption Choice - The utility maximization problem and the expenditure minimization problem||Explain and solve the utility maximization problem and the expenditure minimization problem.|
|Class 4||Consumer Theory 3. Important Identities: Utility Maximization and Expenditure Minimization||Prove important identities regarding utility maximaization and expenditure minimization.|
|Class 5||Consumer Theory 4. Comparative statics||Explain comparative statistics.|
|Class 6||Consumption Theory 5: Aggregate Demand and Continuity of Demand Functions||Explain aggregate demand and continuity of demand functions|
|Class 7||Consumer Theory 6. Compensating variation, equivalent variation, and consumer surplus||Compare compensating variation, equivalent variation, and consumer surplus.|
|Class 8||Competitive Markets: Competitive Firm, Market Equilibrium, and Welfare Economics||Analyze equilibria in competitive markets and their properties.|
|Class 9||Exchange Economies A: General Equilibrium Analysis and Existence of Walrasian Equilibria||Explain the conditions for existence of competitive equilibria and prove the existence theorem.|
|Class 10||Exchange Economies B: First Theorem of Welfare Economics||Explain the difference between weak and strong Pareto efficiency and prove their equivalence theorem. Prove the first theorem of welfare economics.|
|Class 11||Exchange Economies B: Second Theorem of Welfare Economics||Explain the second theorem of welfare economics and its proof.|
|Class 12||Equilibrium Analysis A: Core and Walrasian Equilibrium Allocations - The relation between the core and competitive equilibrium allocations, equal treatment in the core, and shrinking core||Explain the relation between the core and competitive equilibrium allocations and prove the core convergence theorem.|
|Class 13||Equilibrium Analysis B: Uniqueness and Stability of Equilibrium - Gross substitutes implies unique equilibrium; WARP implies stability.||Explain the conditions for uniqueness and stability of equilibrium and prove the theorems on uniqueness and stability.|
|Class 14||Production Economies: Existence of an Equilibrium, First and Second Theorems of Welfare Economics||Derive properties of competitive equilibria in production economies. Prove the first and second theorem of welfare economics in production economies.|
To enhance effective learning, students are encouraged to spend approximately 100 minutes preparing for class and another 100 minutes reviewing class content afterwards (including assignments) for each class.
They should do so by referring to textbooks and other course material.
Varian, H.R., Microeconomic Analysis, 3rd edition, Norton, 1992.
Download course materials from T2SCHOLA.
Mas-Collel, A., M.D. Whinston, and J.R. Green, Microeconomic Theory, Oxford University Press, 1995.
Takekuma, Shinichi, "Microeconmics," Shinsei-sya, 1999. (Japanese)
Nishimura, Kazuo, "Microeconmics," Tokyo Keizai Shinpou-sya, 1990. (Japanese)
Students' knowledge of consumer theory, producer theory, and market equilibrium, and their ability to apply them to problems will be assessed based on homework, reports, and exams.
Students must have successfully completed Microeconomics I and II, Non-cooperative Game Theory, and Cooperative Game Theory or have equivalent knowledge.