Intermediate Micro: Basic/Review MaterialEquilibrium and Comparative Statics: BasicsExample of calculating equilibrium of Supply and Demand using algebra and graphing, and using "comparative statics": examining what changes when an exogenous variable changes the equilibrium.Add Linear Demands How to add two linear demand functions together to get a total demand function.Adding Nonlinear DemandsHere we add two Cobb-Douglas Demands and plot them using Maxima *File maxima add cd demands.wxmDemand, Marginal Revenue, and ProfitAnother example of looking at demand, along with marginal revenue. How separating markets can increase profits.Supply Shocks & Equilibrium: ANWR ExampleHere I discuss a problem similar to one in Jeffrey Perloff's Text: How could we model how drilling in ANWR could help keep prices down when a supply shock happens.Elasticity and Tax IncidenceA brief review of tax incidence, and of how price elasticity of demand and supply can predict the incidence of a per unit tax.Demand and Elasticity 1 Given two points on a demand curve, find the equation and calculate elasticities.From Elasticities to Linear Supply and DemandHere I show how to take price elasticities of supply and demand to derive plausible linear functions to represent them.Demand elasticity back of envelope Using the price elasticity of demand, price and quantity, we approximate the demand function for Jack Daniels whiskey in Virginia Intermediate Micro: Intermediate Surplus and deadweight loss analysis Cost Functions, Marginal Cost, and Perfect CompetitionHere is a basic look at cost functions, and using calculus to figure out how many units a perfectly competitive firm should produce, and its relationship to Producer Surplus.Ceiling Worst Case ScenarioWith a price ceiling, what you normally calculate in Introductory Micro is the "Best Case Scenario". Let me show you the Worst Case Scenario, or "Least efficient Outcome". Maximum Tax Revenue: Take your skills to the next levelIn this video we derive the tax-revenue maximizing per-unit tax. First with a graph, then with example equations, then derive the analytical solution. Extremely fun way to see mathematical economics in action!HandoutIntermediate Micro: Preferences, utility functions, and Indifference Curves Utility 1A look at a total and marginal Utility Function with only one variable. Using calculus, we look at what a marginal function means.Utility 2a Visualizing a 3d utility surface, thinking about marginal utility. In this video we only do visualization so that you can better understand the calculus that comes next. *File Utility.wxm*Utility2B: Marginal Utility and MRS Using calculus to find marginal utility and marginal rate of substitution for a utility function, looking at indifference curves. Utility2C: MRS for Cobb Douglas I show a trick for finding the Marginal Rate of Substitution function if you have a cobb Douglas utility function. Works for MRTS (marginal rate of technical substitution) as well.Indifference Cures: Different TypesWe look at intuition, graphs, functions of several types of preferences people could have: Cobb Douglas, Quasilinear, perfect complements/substitutes, bads, and goods we could take or leave.A few points about Indifference CurvesSome of the finer points: Why they can't slope upwards (with two GOODS), cross, be thick, there are infinitely many, and a review of MRS.Utility3: Maximizing Utility with Budget ConstraintHow to solve a constrained optimization problem with a utility function and budget constraint; maximizing utility. Just set the slope of the budget line = slope of indifference curve! Quasilinear Utility MaximizationInstead of the usual Cobb-Douglas, here I illustrate maximizing utility with a quasi-linear utility function.Equal MU per $, or Bang for Buck ruleGraphs, calculus, numbers, and discussion to explore details of the =equal marginal utility per dollar maximization condition.Utility Maximization and DemandHere we demonstrate how to show where demand curves come from, by doing several utility maximization problems.U Max and DemandNew Version! Also includes Price Consumption and Income Consumption CurvesDownload HandoutThe Dual ProblemHere we look at the DUAL problem to utility maximization. Instead of getting the highest utility with a given budget, here we find the cheapest way to attain a certain level of utility. Income and Substitution EffectsIf you already know how to maximize utility, this video shows you how to find income and substitution effects using the Slutsky Equation (Hicks' Decomposition). Income/Subs Effects, Price DecreaseHere we look at a Cobb-Douglas utility function with a price decrease.Overview: Inc/Subs/ Compensating/ Equiv. Variation. This is an overview of graphing and interpretation of income and substitution effects, and compensating and equivalent variation. A focus on graphing and interpretation, rather than on calculation. *File* INCSUBS INTERPRETWhy Subsidies Suck!Using Consumer Theory to show why subsidies are inefficient. *File* Subsidies Suck.pdfYet Another Example Utility Maximization, Price Change, Income and Substitution Effects, and Compensating Variation file: income.subs.another.example.pdf Intermediate Micro: Cost Minimization and Production FunctionsMRTS and Elasticity of SubstitutionProduction functions, non-economic regions, interpreting marginal rate of technical substitution, perfect substitutes and perfect complements (Leontief production functions), and the elasticity of substitution measure.IsoQuants and Returns to ScaleHere we look at the definition of returns to scale, isoquants, and Cobb-Douglas Production Functions. As usual, I give you the shortcuts along with the intuition and math. I briefly describe the difference between RTS and marginal returns.Production Theory: Cost Min 1*File* IM Production Theory Example Returns to scale, input demand functions, marginal rate of technical substitution, isocosts, isoquants, etc. SR vs. LR cost minimization. Production Theory: Cost Min 2Continuation of above, Returns to scale, input demand functions, marginal rate of technical substitution, isocosts, isoquants,etc.A interesting discussion of a boring problemGiven L, K, and the exponents, solve for the constant. Why would we want to do this? Here are some things to think about.
Utility Maximization: Other Interesting CasesTwo Period (Inter-temporal) We go through the basic idea of intertemporal utility maximization with two periods. We solve a basic problem with a Cobb-Douglas Utility function and an interest rate.Intertemporal: Additional ProblemsHere we see how taxes and a forced saving program affect utility and decisions.Risk Aversion and Expected UtilityAn overview of Risk aversion, visualizing gambles, insurance, and Arrow-Pratt measures of risk aversion.Principal Agent Problems: Moral Hazard Part 1We look at a model with the potential for Moral Hazard (Hidden Actions that might hurt the Principal), but first assume that you can observe the effort of the agent. We solve for the optimal contract in the next video. Handout LinkPrincipal Agent Problems: Moral Hazard Part 2 In this video we solve for the optimal contract when effort is unobservable, and take a quick look at a state-space diagram.