Run one quiz per lecture, then read the Weakness Dashboard.
Work one lecture page: exam sheet → concept cards → both graphs.
Clear the SRS due queue every day. Recall beats re-reading.
Timed mock exam with the marking scheme, then fix the gaps.
Microeconomics builds a market from the bottom up. Lectures 2–4 derive the demand side: rational preferences give a utility function, maximising it under a budget constraint gives optimal choices, and relabelling the two goods lets the same machinery handle time (\(1+r\) as the relative price) and risk (states of the world). Lectures 5–6 derive the supply side: a production function, cost minimisation, and the rule \(p=MC\). Lecture 7 puts the two together and proves competitive equilibrium maximises total surplus, then measures how much a tax destroys. Lecture 8 catalogues the four ways that proof fails — externalities, public goods, market power and asymmetric information — and the instrument that fixes each one.
Homework 5% · in-class quizzes & participation 16% · midterm 24% · final 55%. The final covers all topics, including pre-midterm material.
McAfee, Introduction to Economic Analysis (ESSEC edition) · CORE, The Economy 2.0 · Pindyck & Rubinfeld · Varian for the intermediate treatment.
Lecture_1…8.pdf, Lecture_6_Appendix.pdf, the syllabus, Micro_Teaching_notes.md, and the extracted slide images used in each lecture page.
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Four apparently different problems, one structure. Recognising this saves you from memorising four separate methods — and examiners reward the student who names the common logic.
\(\dfrac{MU_x}{MU_y}=\dfrac{p_x}{p_y}\) — equivalently \(\dfrac{MU_x}{p_x}=\dfrac{MU_y}{p_y}\): equal marginal utility per euro.
\(\dfrac{v'(c_1)}{\delta v'(c_2)}=1+r\) — the same rule with "tomorrow" as the second good and \(1+r\) as its relative price.
\(\dfrac{\pi_1 u'(w_1)}{\pi_2 u'(w_2)}=\dfrac{p_1}{p_2}\) — states of the world as goods; under fair insurance this forces \(w_1=w_2\).
\(\dfrac{MP_L}{MP_K}=\dfrac{w}{r}\) — equivalently \(\dfrac{MP_L}{w}=\dfrac{MP_K}{r}\): equal marginal product per euro.
\(p=MC(q)\) — the "price ratio" is now the price of output against the price of the marginal unit of cost.
\(MR=MC\) — identical logic, except the monopolist's marginal benefit from selling is \(MR<p\) because the price falls on every unit.
The rule needs an interior, differentiable optimum. Perfect substitutes give corners; perfect complements and Leontief give kinks; the falling branch of MC gives a minimum rather than a maximum. Check the second-order condition, or at least sanity-check the answer.
\(dR/dp=q(1+\varepsilon)\). Elastic ⇒ cut the price. Inelastic ⇒ raise it. Revenue peaks at \(\varepsilon=-1\).
\(\varepsilon_{ij}>0\) substitutes, \(<0\) complements. \(\varepsilon_M>0\) normal, \(<0\) inferior. Cobb–Douglas: \(\varepsilon=-1\), \(\varepsilon_M=+1\), \(\varepsilon_{ij}=0\).
Buyers' share \(=\dfrac{|\varepsilon_S|}{|\varepsilon_S|+|\varepsilon_D|}\). Perfectly inelastic demand ⇒ buyers pay everything and \(DWL=0\).
\(DWL\) rises with elasticity on both sides and with the square of the tax. Ramsey: tax inelastic bases to minimise distortion.
Lerner index \(\dfrac{p-MC}{p}=\dfrac{1}{|\varepsilon|}\). More elastic demand ⇒ smaller mark-up ⇒ smaller DWL. A monopolist never operates where \(|\varepsilon|<1\).
More elastic when: close substitutes exist, the good is narrowly defined, it is a large budget share, and more time has passed.
Elasticity is a point property, not a curve property, unless the demand function is \(q=Ap^{\varepsilon}\). On any linear curve it varies from \(-\infty\) to \(0\).
Under demand, above price. Demand is marginal willingness to pay, so the area under it is total WTP; subtract expenditure and you have the gain from trade for buyers.
Above supply, below price. Supply is marginal cost, so this is revenue minus variable cost — profit plus fixed cost in the short run.
\(W=CS+PS\) is maximised where \(p=MC\). Every unit with \(WTP>MC\) should be produced; the competitive equilibrium stops exactly there.
\(\Delta CS+\Delta PS=-(\text{revenue}+DWL)\). Revenue is a transfer; only the triangle is destroyed.
Part of CS is transferred to profit, part is destroyed. Marking schemes always want the two areas distinguished.
Loss = the triangle between MSC and MSB over the overproduced units. The Pigouvian tax removes it — and the tax revenue is again a transfer.
Counting tax revenue as a welfare loss, and forgetting that surplus analysis is silent about distribution: an efficient allocation can be deeply unequal.
Name both axes and every curve before touching anything.
Mark the initial equilibrium and write its coordinates.
Move only the curve whose determinant changed. One shock, one curve.
State the direction of every endogenous variable in one sentence.
Along: the good's own price. Shifts: income, prices of substitutes/complements, tastes, expectations, number of buyers.
Along: the good's own price. Shifts: input prices \(w,r\), technology, taxes/subsidies, number of firms.
Pivots when one price changes; shifts in parallel when income changes. Doubling all prices and income does nothing at all.
Pivots around the endowment when \(r\) changes — never a parallel shift.
A change in fixed cost moves SAC and SAFC but not SMC or SAVC. A change in the wage moves all of SMC, SAVC and SAC.
p and q move in the same direction ⇒ demand shock. Opposite directions ⇒ supply shock. Use it to check your own diagram.
L1 · Supply, demand and equilibrium
Distinguish a movement along a curve from a shift of the whole curve.
L2 · Consumer optimum
For Cobb–Douglas utility, the highest attainable indifference curve is tangent to the budget line.
L3 · Intertemporal choice
The interest rate pivots the budget line around the endowment (M₁, M₂).
L4 · Risk aversion and certainty equivalent
Concavity makes the certainty equivalent lower than expected wealth.
L5 · Isoquant and isocost
Cost minimization mirrors consumer choice: MRTS = w/r at an interior solution.
L6 · Cost curves and firm supply
The competitive firm produces where p = MC only when price covers average variable cost.
L7 · Per-unit tax, incidence and deadweight loss
The tax creates a wedge between the price paid by buyers and the price received by sellers.
L8 · Negative externality and Pigouvian tax
The unregulated market follows private marginal cost; efficiency requires social marginal cost.
L2–L3 · Income and substitution effects
A price change moves the consumer first along the original indifference curve, then between utility levels.
L4 · Insurance across states
Coverage transfers wealth from the good state to the bad state; full insurance reaches the 45° certainty line.
L7 · Entry, exit and long-run equilibrium
Entry expands market supply until price reaches minimum long-run average cost and economic profit is zero.
L8 · Market power: monopoly versus competition
A monopolist restricts quantity where MR = MC, raises price above marginal cost and destroys gains from trade.
Set a timer for the stated minutes on each part. Do not reveal anything until the timer ends. Then mark yourself against each rubric line — the rubric is where the examiner actually puts the points, and it is usually the interpretation sentence rather than the algebra.