# Intermediate Microeconomics II

# Recommended Course Outline

I use this course outline for my second-year undergraduate-level intermediate microeconomic theory classes. It includes an ordered list of topics and lecture videos. It's essential to watch the videos in the proper order because each concept builds on the ones introduced in previous videos. This will help ensure effective learning.

# Course Description and Objective

This is the second course in the sequel of intermediate microeconomics courses for second-year ECON students. This course analyzes resource allocation in imperfectly competitive markets and factor pricing in alternative market structures. The course also introduces students to concepts and applications of game theory and considers basic concepts of general equilibrium and externalities. At the end of the course, students are expected to

gain a comprehensive understanding of microeconomic models and how predictions change when assumptions are altered,

learn how to apply the basic tools of game theory in various settings,

develop the ability to identify and solve constrained optimization problems,

demonstrate proficiency in using calculus-based techniques to evaluate microeconomic problems.

develop the ability to explain the fundamental economic intuition associated with the standard models in non-technical terms.

# Suggested Textbooks

Hal R. Varian, Intermediate Microeconomics with Calculus, W.W. Norton & Company

Theodore C. Bergstrom and Hal R. Varian, Workouts in Intermediate Microeconomics, W.W. Norton & Company.

# Course Outline

CHAPTER 1: MONOPOLY (Chapter 25 of Varian)

CHAPTER 2: MONOPOLY BEHAVIOR (Chapter 26 of Varian)

CHAPTER 3: FACTOR MARKETS (Chapter 27 of Varian)

Perfectly Competitive Input and Output Markets (The Benchmark Case).

Perfectly Competitive Input Market and Monopoly Output Market.

Example: Monopsony in Input Market and Competitive in Output Market.

Example: Monopoly in Output Market and Competitive in Input Market.

CHAPTER 4: OLIGOPOLY (Chapter 28 of Varian)

Cournot Duopoly, Calculating Reaction Functions and Quantities.

Cournot- Nash Solution. Why Intersection of Reaction Functions Matters.

Collusion in Cournot Model, Monopoly Profit, and Incentive to Deviate.

CHAPTER 5: GAME THEORY & APPLICATIONS (Chapters 29 and 30 of Varian)

Solving for Mixed Nash Equilibrium; Calculating Expected Payoffs.

Calculating Best Response Functions and Mixed Strategy Nash Equilibrium.

Centipede Game and Role of Commitment. An example of Sequential Games.

CHAPTER 6: EXCHANGE (Chapter 32 of Varian)

Trade in Pure Exchange Economy and Calculating Trade Outcomes.

Walrasian Equilibrium - Calculating General Equilibrium Prices.

First and Second Theorem of Welfare Economics and How to Verify.

CHAPTER 7: PRODUCTION (Chapter 33 of Varian)

General Equilibrium with Production - Production Possibility Frontier.

Solving General Equilibrium Price Ratio - The Case with PPF.

General Equilibrium with Production—Labor as the Only Input.

General Equilibrium with Production - Two Consumers and Labor as Input.

General Equilibrium with Production - Two Consumers and Endowments.

CHAPTER 8: WELFARE (Chapter 34 of Varian)

Finding all Fair Allocations in an Exchange Economy - Numerical Example.

Borda Count Voting Rule and Independence of Irrelevant Alternatives.

Arrow's Impossibility Theorem - Democracy Fails to Aggregate Preferences.

Social Welfare Functions - Aggregating Cardinal Preferences.

Utilitarian, Rawlsian, and Weighted-Sum-of-Utilities Welfare Functions.

CHAPTER 9: EXTERNALITIES (Chapter 35 of Varian)

CHAPTER 10: PUBLIC GOODS (Chapter 37 of Varian)

How to Determine Efficiency or Inefficiency of Public Goods.

Nash Equilibria of the Public Good Provision Game - An Example

CHAPTER 11: ASYMMETRIC INFORMATION (Chapter 38 of Varian)

Used Cars or the Lemons Problem With Two Types - Key Concepts.

Solving the Used Cars or the Lemons Problem with Three Types.

Introduction to Spence's Job Market Signaling Model - Key Concepts.

Solving for the Separating Equilibrium of the Spence's Job Market Signaling Model.

Solving for the Pooling Equilibria of the Spence's Job Market Signaling Model.

Equilibria of the Spence's Job Market Signaling Model With Low Cost of Education.