 CZECH TECHNICAL UNIVERSITY IN PRAGUE
STUDY PLANS
2022/2023

# Microeconomics 1

The course is not on the list Without time-table
Code Completion Credits Range Language
18MIK1 Z,ZK 5 2+2 Czech
Lecturer:
Tutor:
Supervisor:
Department of Software Engineering
Synopsis:

Microeconomics is a set of theories, which help us to understand processes by which the scarce resources are allocated among alternative uses. Microeconomics explains the role of prices and markets in these processes, and makes more clear behaviour of the economic agents. This course of Microeconomics I consist of introduction in Microeconomics and Consumer Theory.

Requirements:

1)To pass successfully first and second test in Microeconomics I (from each at least 50% of all possible points )

2)To pass succesfully final oral exam.

Syllabus of lectures:

1. Nature of microeconomics.

2. Consumer's budget constraint. Preferences and preference ordering.

3. Utility, utility function and its properties. Consumer choice.

4. Comparative static: Income and price changes and demands, Engel curves and demand curves. Income elasticity and price elasticity of demand

5. Substitution and Income effects of price change.

6. Duality: Hicksian demands, expenditure function and Shephard's lemma.

7. Duality: Indirect utility function, Roy's identity and Slutski equation

8. Measuring of changes in consumer's benefit resulting from price changes,

9. Revealed preferences. Price indices and changes in consumer's standard of living.

10. Consumer buying and selling goods.

11. Consumer's supply of labor.

12. Intertemporal choice and interest rate. Capital market, investment and consumers production opportunity.

13. Consumer choice under uncertainty, expected utility and certainty equivalent.

14. Optimal insurance and bets, moral hazard and adverse selection.

Syllabus of tutorials:

1. Introduction in optimization. Statement of a problem,

2. Sets, functions, solution characteristic, the method of Lagrange, complementary slackness conditions.

3. Different types of preferences, utility functions for particular preference orderings.

4. Exercising: consumer choice, demand.

5. Derivation of income and price elasticities of demands. Substitution and income effect calculation.

6. Derivation of Hicksian demands and expenditure functions. Shephard's lemma applications.

7. Derivation of indirect utility function, Roy's identity applications, Examples of Slutski equation applications.

8. Measuring of compensating and equivalent variations with use of expenditure functions.

9. Exercises: revealed preferences and price indices.

10. Net demands and initial endowment effect.

11. Exercises: labor supply.

12. Exercises: PV, FV, intertemporal choice, real interest rate, investment evaluation.

13. Exercises: Choice under uncertainty.

14. Exercises: Optimal insurance.

Study Objective:

Making students acquainted with structure of microeconomic analysis, its subjects and methods. Introducing them into the principles of optimization in consumer theory. Teaching them to apply basic instruments of microeconomic analysis. Making students familiar with different models of consumer behavior and with their particular attributes. Teaching students to apply procedures derived from these models for economic problems solving

Study materials:

Key references :

2. Gravelle, H. - Rees, R.: Microeconomics, Prentice Hall, third edition, 2004

Recommended references :

1. Varian H.R. Intermediate Microeconomics, A Modern Approach, Norton, sixth edition, 2002

2. Frank, Robert H.: Microeconomics and Behavior, McGraw Hill, eighth edition, 2009

Note:
Further information:
No time-table has been prepared for this course
The course is a part of the following study plans:
Data valid to 2022-10-07
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