Classroom: KAPLAN A65 TUTH 9:30TA sections: Friday 9:00 and 10:00Bunche 2168This Masters level course is designed togive students a strong understanding of micro-economic concepts and modelswithout delving too deeply into high-tech formalizations of economic theory.Some students will have avery strong mathematical background. Everyone will have a good grasp ofcalculus. But whichever group you think you may be in, I urge you to spendtime developing your ability to use the kind of mathematics that economistsmost commonly use.To help you reviewyour understanding of mathematics, Ihave provided nine moduleson the use of calculus in economics. (Click on Preparing above.) Pleasereview them carefully. Do not feel you need to get too much intotechnical details on the first reading.
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What I really want you to do iswork through the exercises provided with each module. Answers are alsoprovided but please do not look at an answer before really trying hardto answer the question yourself. Doing that will turn active learninginto passive learning and the former is much more powerful.Suppose you look up ananswer and realize that your answer is different. If you are notconvinced that I am correct please email me immediately and we willfigure out the truth together!I can becontacted at riley at econ dot ucladot edu.Since this is my first year teaching the course, any communication wihincoming students will be very helpful and much appreciated.Studying graduate level economics involvesunderstanding how and why models work and how to extract economic insightsfrom them.
Problem solving using calculus is necessary tounderstanding maximizing behavior. The only way to develop this skill is topractice and practice.
Thus homework exercises will play a very important role inthis course.In the course you will also use Excel to solveproblems that are too complex to anaytically. The note 'Thinking on the margin' is anintroduction to solving numerically. It explains how to load and makeuse of Excel's optimization package called 'solver'. I encourageyou to see how this works using your own laptop.Some of you may be thinkingof this course as a stepping stone in possibly applying to doctoralprograms in economics. If so, you may wish to look at my textbook'Essential Microeconomics' Cambridge University Press.
Essential Microeconomics is a beautifully lucid book that will quickly and easily take students to the heart of the subject.’ Eric S. Maskin - Institute for Advanced Study, Princeton, and Nobel Laureate in Economics ‘Riley’s appealing new graduate text develops both the intuitive meaning and the mathematical technique of microeconomic theory. Buy Microeconomic Foundations I: Choice and Competitive Markets by David M. Half the problems, and a limited-access instructor's manual, which provides solutions to the rest of the. Essential Microeconomics John G.
Howeverthis is a more advanced text than will be required for this course.
ESSENTIALMicroeconomicsThis web-siteis designed to complement the text. Thegoal of the book is to help students study the core material of a first yeargraduate course in microeconomics. While there are other good textbooksavailable, their goal is typically to provide encyclopedic coverage. The goal ofthis textbook is to help students become comfortable with actually theorizingthemselves. Of course only a small fraction of students will spend their careersas formal modelers. However to do good applied theory, it is a tremendousadvantage if you can take a model, adapt it to your needs and take the appliedmodel to the data.In their effort to come to grips with the mathematics of economics, graduatestudents sometimes focus single mindedly on the mathematics and forget thatthe ultimate purpose of theory is to provide testable insights and developbetter understanding (“economic intuition”).
To help redress thisimbalance, this text is somewhat less formal and places more emphasis on thedevelopment of insights.Most students find that even if they once knew the calculus and linearalgebra used in graduate courses, getting back up to speed is important. Youmay wish to test out your skills in a short Calculus and Algebra OnlineReview Course. The link is in the top menu. Six modules are provided,each designed to help you prepare for the course on your own. In eachmodule you are asked to solve problems. If you are struggling, there arehints to keep you from bogging down.The second stage ofyour preparation is familiarizing yourself with the mathematical skills mostused in economics.
These mathematical foundations for economic analysis canbe found in AppendixA, B and C of the text. Slidesfor the material covered in these Appendixes can be found by clicking on theMathematical Foundations link in the top menu. Ifyou scroll down the left menu you will find answers to even numberedquestions in the text and further homework exercises and additional topicsnot covered in the text. Theweb-site also offers a range of material complementing the text.As a preliminary to examining economic issues, the first chapter goes insome depth into particular topics that are not usually found in coursestaught in a mathematics department. At the very heart of economic analysisare two fundamental ideas. The first is that economic agents makeconsistent choices that lead to “maximizing” behavior. This need notbe selfish behavior.
For example economists study families where parents’choices for their children play a central role. The maximizing byparents then includes the trade-off between personal and family consumptionand investments. The second idea is that if agents’ plans are mutuallyinconsistent, market pressures provide an incentive for agents to adaptuntil an overall balance is reached. Much of economic theory then studiesthe property of the resulting balance point or equilibrium. Chapters 2 and 4focus primarily on the choices of single agents (consumers and firms).Chapters 3 and 5 focuses on equilibrium outcomes. The later chapters lookboth at optimization and equilibrium and show how the forces of optimizationand equilibrium interact. Much of modern theorizing has focused on strategicissues.
Price theory, and in particular, general equilibrium has been viewedas a largely finished product. But this does not make understanding pricetheory any less vital. To use a medical metaphor, if we reach a point wherethe heart is so well understood that research funding switches to cancer, itwill not make understanding the heart any less important in medical school.One final comment is in order. Aconsiderable effort has gone into preparing exercises and detailed answersto those questions.
This is because the only way to learn economic theorywell is through practice. There are two types of questions. Some aredesigned to help you develop your understanding of core principles. Some aredesigned to help you see how these core principles can be generalized orapplied to particular topics. For both types of question readers arestrongly discouraged from reading a question and then flipping to itsanswer. It is only by doing that there will be learning. When you do look atthe answer, if you find it confusing, let me know and I will put a revisedanswer on this web-site.
This web-siteis designed to complement the text. Thegoal of the book is to help students study the core material of a first yeargraduate course in microeconomics. While there are other good textbooksavailable, their goal is typically to provide encyclopedic coverage. The goal ofthis textbook is to help students become comfortable with actually theorizingthemselves. Of course only a small fraction of students will spend their careersas formal modelers. However to do good applied theory, it is a tremendousadvantage if you can take a model, adapt it to your needs and take the appliedmodel to the data.In their effort to come to grips with themathematics of economics, graduate students sometimes focus single mindedly onthe mathematics and forget that the ultimate purpose of theory is to providetestable insights and develop better understanding (“economic intuition”). Tohelp redress this imbalance, this text is somewhat less formal and places moreemphasis on the development of insights.Most students find that even if they once knewthe calculus and linear algebra used in graduate courses, getting back up tospeed is important.
Youmay wish to test out your skills in a short Calculus and Algebra Online ReviewCourse. The link is in the top menu. Six modules are provided, eachdesigned to help you prepare for the course on your own.
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In each moduleyou are asked to solve problems. If you are struggling, there are hints to keepyou from bogging down.The second stage of your preparation is familiarizing yourselfwith the mathematical skills most used in economics. These mathematicalfoundations for economic analysis can be found in AppendixA, B and C of the text. Slidesfor the material covered in these Appendixes can be found by clicking on theMathematical Foundations link in the top menu. Ifyou scroll down the left menu you will find answers to even numbered questionsin the text and further homework exercises and additional topics not covered inthe text. Theweb-site also offers a range of material complementing the text.As a preliminary to examining economic issues,the first chapter goes in some depth into particular topics that are not usuallyfound in courses taught in a mathematics department.
At the very heart ofeconomic analysis are two fundamental ideas. The first is that economicagents make consistent choices that lead to “maximizing” behavior. Thisneed not be selfish behavior. For example economists study families whereparents’ choices for their children play a central role. The maximizing byparents then includes the trade-off between personal and family consumption andinvestments. The second idea is that if agents’ plans are mutually inconsistent,market pressures provide an incentive for agents to adapt until an overallbalance is reached.
Much of economic theory then studies the property of theresulting balance point or equilibrium. Chapters 2 and 4 focus primarily on thechoices of single agents (consumers and firms). Chapters 3 and 5 focuses onequilibrium outcomes. The later chapters look both at optimization andequilibrium and show how the forces of optimization and equilibrium interact.Much of modern theorizing has focused on strategic issues.
Price theory, and inparticular, general equilibrium has been viewed as a largely finished product.But this does not make understanding price theory any less vital. To use amedical metaphor, if we reach a point where the heart is so well understood thatresearch funding switches to cancer, it will not make understanding the heartany less important in medical school. One final comment is in order. A considerable effort has gone into preparingexercises and detailed answers to those questions. This is because the only wayto learn economic theory well is through practice.
There are two types ofquestions. Some are designed to help you develop your understanding of coreprinciples. Some are designed to help you see how these core principles can begeneralized or applied to particular topics. For both types of questionreaders are strongly discouraged from reading a question and then flipping toits answer. It is only by doing that there will be learning. When you do look atthe answer, if you find it confusing, let me know and I will put a revisedanswer on this web-site. John RileyIn their effort to come to grips with themathematics of economics, graduate students sometimes focus single mindedly onthe mathematics and forget that the ultimate purpose of theory is to providetestable insights and develop better understanding (“economic intuition”).
Tohelp redress this imbalance, this text is somewhat less formal and places moreemphasis on the development of insights.Most students find that even if they once knewthe calculus and linear algebra used in graduate courses, getting back up tospeed is important. Youmay wish to test out your skills in a short Calculus and Algebra Online ReviewCourse. The link is in the top menu.
Six modules are provided, eachdesigned to help you prepare for the course on your own. In each moduleyou are asked to solve problems.
If you are struggling, there are hints to keepyou from bogging down.The second stage of your preparation is familiarizing yourselfwith the mathematical skills most used in economics. These mathematicalfoundations for economic analysis can be found in AppendixA, B and C of the text.
Slidesfor the material covered in these Appendixes can be found by clicking on theMathematical Foundations link in the top menu.If you scroll down theleft menu you will find answers to even numbered questions in the text andfurther homework exercises and additional topics not covered in the text. Theweb-site also offers a range of material complementing the text.As a preliminary to examining economic issues,the first chapter goes in some depth into particular topics that are not usuallyfound in courses taught in a mathematics department.At the very heart of economic analysis are twofundamental ideas. The first is that economic agents make consistentchoices that lead to “maximizing” behavior. This need not be selfishbehavior. For example economists study families where parents’ choices for theirchildren play a central role.
The maximizing by parents then includes thetrade-off between personal and family consumption and investments. The secondidea is that if agents’ plans are mutually inconsistent, market pressuresprovide an incentive for agents to adapt until an overall balance is reached.Much of economic theory then studies the property of the resulting balance pointor equilibrium. Chapters 2 and 4 focus primarily on the choices of single agents(consumers and firms). Chapters 3 and 5 focuses on equilibrium outcomes. Thelater chapters look both at optimization and equilibrium and show how the forcesof optimization and equilibrium interact.Much of modern theorizing has focused onstrategic issues. Price theory, and in particular, general equilibrium has beenviewed as a largely finished product. But this does not make understanding pricetheory any less vital.
To use a medical metaphor, if we reach a point where theheart is so well understood that research funding switches to cancer, it willnot make understanding the heart any less important in medical school.One final comment is in order. A considerableeffort has gone into preparing exercises and detailed answers to thosequestions. This is because the only way to learn economic theory well is throughpractice. There are two types of questions. Some are designed to help youdevelop your understanding of core principles.
Some are designed to help you seehow these core principles can be generalized or applied to particular topics.For both types of question readers are strongly discouraged from reading aquestion and then flipping to its answer. It is only by doing that there will belearning. When you do look at the answer, if you find it confusing, let me knowand I will put a revised answer on this web-site.John Riley.
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