ECC2000: Intermediate microeconomics

The course is broken up into three main sections – Consumer theory, producer theory, and analysis of market structure/competitive strategy.

Consumer theory is all about maximising utility given an individual’s preferences for various goods, the relative prices of the goods and a budget constraint. This involves indifference curves, budget constraints, marginal rate of substituting, normal goods, giffen goods and Engel curves. The general gist of a question on this topic would be you’re given a utility function, say U(x,y)=20x^(2/3)y^(1/3), the prices of good y and good x, and the consumers budget. You’re then asked to find the utility maximising combination of goods. Then follow up questions on price changes, income changes et cetera. You also get the classic social surplus and elasticities, price floors and the like.

Producer theory is almost exactly the same as consumer theory. You have labour and capital as factors of production, and each has a given cost. You have some production function telling you how much output can be produced from some combination of capital and Labour. You then need to find the cost minimising ratio of capital and labour to produce a given output. Instead of indifference curves you have isoquants, and instead of budget constraints you have isocost curves. Essentially the same principles apply as in consumer theory. You also revisit the cost curves from first year, but again with actual equations.

Market structures is when the course gets a lot more interesting though. You analyse profit maximising output under various models. You get perfect competition and monopoly like in ECC1000, but this time you have numbers, equations and differentiation. But the best part of the course for me was oligopolistic competition. Various equilibrium settings and output decision models, price discrimination, collusion, competition, and a bit of game theory. This part of the course follows on from producer theory.

I didn’t really like the unit at first to be honest. It was basically a rehash of ECC1000, with the lectures moving very slowly (a whole hour on what a demand curve is). While the basics are important in economics, it was just a bit slow and dry.

However after the first few weeks, and we started on cost curves and market structures, it started to grow on me a bit more. I found learning the actual content to be easier from youtube/textbook than the lectures. At this point Yin started to run though examples in the lectures which made them more worthwhile.

Tutes are pretty standard, just go over the 3-4 questions that were set that week. However due to the length of each question you rarely get though all of them.

The mid-sem covers consumer and producer theory. Mostly multiple choice with a short answer chucked on the end. You need to know a few definitions though.

The exam was pretty good I thought. 6 Questions, of which you answer 4. However each of them are pretty involved, which lots of re-arranging and substituting into equations. And then changing one variable, doing the whole process again and seeing what has changed. Doing all of the tute questions and the questions from the textbook will be enough for you to prepare. You don’t really need to know definitions as much as the mid-sem, so just know how to approach each type of question and you should be right. Also lots of algebra and partial differentiation. Nothing too crazy, but you should be comfortable with derivatives and solving linear equations.

Yinhua Mai.

The past exams on the database are from 15 years ago, and no longer particularly relevant. We were given a sample exam though.

3 out of 5

Yes

Pyndick, Robert S, and Daniel L Rubinfeld: Microeconomics. Seventh or Eighth Edition, Pearson.

I'd say worth it if you don’t have to buy it new from the bookstore. The questions at the end of the chapters are pretty useful for revision and are pretty similar to the exam style questions. Buy it second hand/eBay though - $200 from the bookstore is way too much. Solutions and the textbook can be found somewhere that shall remain nameless as well

One 2-hour lecture + one 1-hour tute = 3 hours

2014 Semester 1

HD