In this class we will analyze the basic determinants of decision making on goods markets. Particularly, we will analyse, how private households decide to spend their available income if it is confronted with fixed goods prices and how manufacturers decide their level of production if both goods and factor prices are fixed. In addition, it is analyzed, how these decisions change, if the economic environment changes e.g. if there is a change in the available income or in the marked prices.
Chapter 1: Consumption Capacity
Chapter 2: Preferences
Chapter 3: Utility Function
Chapter 4: Examples for Preferences and Utility Function
Chapter 5: Utility Maximization
Chapter 6: Comparative Statics
Chapter 7: Substitution and Income Effect
Chapter 8: Theory of the Firm
We will work with simplified but precise mathematical models. Therefore a solid understanding of basic differential calculus is required. Other previous mathematical knowledge is not required.
The lecture slides are sufficiently detailed to guide you through the material that we are going to cover, therefore it is not necessary to buy a textbook. If some participants are interested in repeating the material or gaining additional insights the following textbooks are recommended:
- H.R. Varian: "Grundzüge der Mikroökonomik" (standard reference)
- R.S. Pindyck und D.L. Rubinfeld: "Mikroökonomie" (standard reference)
- T.J. Nechyba: "Microeconomics - An Intuitive Approach with Calculus" (new english textbook with many application examples)