Carleton
University

ECON 4200, Microeconomic theory, Fall 2002

** **

**Instructor**: Keith
Acheson, **E-mail** keith_acheson@carleton.ca **Office**
A804 of Loeb Bldg

**Office
hours**: Wednesday 10am – 1pm; contact me by email to make appointments at
other times.

**Basis of class
assessment**

Tests and final exam:
There will be two in-class tests, each of one hour and twenty minutes, held on
Oct. 1, 2002 (worth 25%) and on Oct. 31, 2002 (worth 25%). The final exam will
be three hours and held in the formal exam period (worth 50%). The tests and
exam will mostly consist of problems.

Note: Students with disabilities requiring academic
accommodations in this course are encouraged to contact a coordinator at the
Paul Menton Centre for Students with Disabilities to complete the necessary *letters of accommodation*. After
registering with the PMC, make an appointment to meet and discuss your needs
with me at least two weeks prior to the each of the class tests. This is
necessary in order to ensure sufficient time to make the necessary
arrangements. Please note the following deadlines for submitting completed
forms to the Paul Menton Centre: November 1^{st} for fall and
fall/winter term courses, and March 7^{th} for winter term courses.

Note: Students must fulfill the course requirements
in order to achieve a passing grade. Failure to complete any of the course
assignments will result in a grade of F. In
order to write a deferred exam students must contact Registrarial Services of
Public Affairs and Management.
For general information on meeting course requirements, see
the 2002/2003 regulations on line.

* *

*Course
outline: *

The general topics with the readings from the text are listed below.
Adjustments in what we cover may occur as we proceed. Class lectures and
discussions will give guidance as to the relative importance of different
subjects. The classes will combine lectures and discussions of problems.

The text is Hal R. Varian, Microeconomic Analysis, 3^{rd}
edition, Norton, 1992.

*Topics
and readings:*

1. Production, technology, cost and supply

- production
functions and other depictions of the technology, elasticities of
substitution, homotheticity, economies of scale, profit functions, supply,
factor demands, elasticities, comparative statics, envelope theorem: Chs.
1,2,3.
- cost
functions, conditional factor demands, elasticities, substitution
measures, scale, duality: Chs. 4,5, 6.

2. Demand:

- utility
functions, indirect utility functions, expenditure function, money metric
utility function: Ch 7.
- price offer
curves, income expansion paths, ordinary demand functions, compensated
demand functions, endowment constrained demand functions, the Slutsky
equation, elasticities, comparative statics, envelope theorem, duality and
Roy's identity, comparative statics of the consumer: Chs 7, 8.
- labour
supply and the demand for leisure, inverse demand functions: Ch. 9.
- the
expenditure function, equivalent and compensating variations: Ch. 10.
- consumer's
surplus, integrability, consumers' surplus as an approximation: Chs. 10,
8.5.
- consumer
choice under uncertainty, demand for risky assets, interest rates under
uncertainty: Ch. 11.

3. Interactions between economic agents:

- price-taking
markets, equilibrium, welfare properties Ch. 13.
- Walrasian equilibrium, exchange, production, technical issues,
welfare properties: Parts of Chs. 17,18,21 to be designated by the
instructor.

4. Monopoly

- Simple
monopoly: output and price, quality, welfare Ch 14
- Price
discrimination: first, second and third degree, welfare Ch. 14

5. Externalities: definition, property rights and Coase, compensation
mechanisms: V: 24.