The lecture notes shown below are from the one of the Discussion sections for the course. The subtopics for each lecture are related to the chapters in the textbook. These lecture notes were prepared by Xingze Wang, YingHsuan Lin, and Frederick Jao specifically for MIT OpenCourseWare.

SES # | TOPICS | SUBTOPICS |
---|---|---|

D1 | Overview: themes, types of markets, economic measurement, economic analysis (PDF) | Optimization and allocation (chapter 1) |

Definition and various types of markets (chapter 2) | ||

Economic measurement (chapter 2) | ||

Economic analysis (chapter 2) | ||

D2 | The basics of supply and demand (PDF) | Demand and supply curves (chapter 2) |

Equilibrium in the market (chapter 2) | ||

Government interventions (chapter 2) | ||

D3 | Elasticities of demand (PDF) | Price elasticity of demand (chapter 2) |

Income elasticity of demand (chapter 2) | ||

Cross price elasticity of demand (chapter 2) | ||

Comparison of elasticity over short run and long run (chapter 2) | ||

D4 | Price elasticity of supply; consumer preferences (PDF) | Elasticity - price elasticity of supply (chapter 2) |

Consumer behavior - consumer preference (chapter 3) | ||

D5 | Deriving MRS from utility function, budget constraints, and interior solution of optimization (PDF) | Utility functions, deriving marginal rate of substitution (MRS) (chapter 3) |

Budget constraints (chapter 3) | ||

Optimization: interior solutions (chapter 3) | ||

D6 | Optimization, revealed preference, and deriving individual demand (PDF) | Optimization: corner solutions (chapter 3) |

Revealed preferences (chapter 3) | ||

Deriving individual demand, Engle curves (chapter 4) | ||

D7 | Substitution and income effects, individual and market demand, consumer surplus (PDF) | Substitution effect, income effect, Giffen goods (chapter 4) |

From individual demand to market demand (chapter 4) | ||

Consumer surplus (chapter 4) | ||

D8 | Irish potato famine, network externalities, and uncertainty (PDF) | Irish potato famine (chapter 4) |

Network externalities (chapter 4) | ||

Uncertainty (chapter 5) | ||

D9 | Preference toward risk, risk premium, indifference curves, and reducing risk (PDF) | Preference toward risk (chapter 5) |

Risk premium (chapter 5) | ||

Indifference curves between expected value and standard deviation (chapter 5) | ||

Reducing risk: diversification (chapter 5) | ||

D10 | Insurance and production function (PDF) | Reducing risk: insurance (chapter 5) |

Outline of producer theory (chapter 6) | ||

Production functions: short run and long run (chapter 6) | ||

D11 | Production functions (PDF) | Short run production functions (chapter 6) |

Long run production functions (chapter 6) | ||

Returns to scale (chapter 6) | ||

D12 | Production functions and cost of production (PDF) | Returns to scale (chapter 6) |

Production function derivation (chapter 6) | ||

Cost of production (chapter 7) | ||

D13 | Cost functions (PDF) | Short run cost functions (chapter 7) |

Long run cost functions (chapter 7) | ||

D14 | The cost of production and profit maximization (PDF) | Relation between long run cost and short run cost (chapter 7) |

Economies of scale (chapter 7) | ||

Economies of scope, learning (chapter 7) | ||

D15 | Short run and long run supply (PDF) | Profit maximization (chapter 8) |

Short run supply (chapter 8) | ||

Producer surplus (chapter 8) | ||

Long run competitive equilibrium (chapter 8) | ||

D16 | Long run supply and the analysis of competitive markets (PDF) | Long run equilibrium (chapter 8) |

Long run market supply (chapter 8) | ||

Gains and losses from government policies (chapter 9) | ||

D17 | Supply restrictions, tax, and subsidy (PDF) | Agricultural price support (chapter 9) |

Supply restrictions (chapter 9) | ||

Tax and subsidy (chapter 9) | ||

D18 | Tax, subsidy, and general equilibrium (PDF) | Tax (chapter 9) |

Subsidy (chapter 9) | ||

General equilibrium (chapter 16) | ||

Exchange economy (chapter 16) | ||

D19 | Efficiency in exchange, equity and efficiency, and efficiency in production (PDF) | Exchange economy (chapter 16) |

Contract curves (chapter 16) | ||

General equilibrium in a competitive market (chapter 16) | ||

Utility possibilities frontier (chapter 16) | ||

Production in Edgeworth box (chapter 16) | ||

D20 | Production possibilities frontier and output market efficiency (PDF) | Production possibilities frontier (chapter 16) |

Output market efficiency (chapter 16) | ||

D21 | Why markets fail (PDF) | Why markets fail (chapter 16) |

D22 | Monopoly (PDF) | Monopoly (chapter 10) |

Shift in demand and effect of tax (chapter 10) | ||

D23 | Monopoly and monopsony (PDF) | Multiplant firm (chapter 10) |

Social cost (chapter 10) | ||

Price regulation (chapter 10) | ||

Monopsony (chapter 10) | ||

D24 | Monopoly and monopsony (cont.) (PDF) | Monopsony (chapter 10) |

Monopoly power (chapter 10) | ||

Price discrimination (chapter 11) | ||

D25 | Pricing with market power (PDF) | Third degree price discrimination (chapter 11) |

Peak-load pricing (chapter 11) | ||

Two-part tariffs (chapter 11) | ||

D26 | Pricing and monopolistic competition (PDF) | Two-part tariffs (chapter 11) |

Bundling (chapter 11) | ||

Monopolistic competition (chapter 12) | ||

D27 | Game theory and oligopoly (PDF) | Game theory (chapters 12 and 13) |

Oligopoly (chapters 12 and 13) | ||

D28 | Oligopoly (PDF) | Cournot games (chapters 12 and 13) |

Stackelberg games (chapters 12 and 13) | ||

Bertrand games (chapters 12 and 13) | ||

Prisoner's Dilemma (chapters 12 and 13) | ||

D29 | Strategic games (PDF) | Collusion - Prisoner's Dilemma (chapters 12 and 13) |

Repeated games (chapters 12 and 13) | ||

Threat, credibility, commitment (chapters 12 and 13) | ||

Dominant firm model, cartel (chapters 12 and 13) | ||

D30 | Dominant firm model and factor market (PDF) | Dominant firm model (chapters 12 and 13) |

Factor markets (chapter 14) | ||

D31 | Factor market (PDF) | Supply of labor (chapter 14) |

Maximum/minimum strategy (chapter 14) | ||

Demand of labor (chapter 14) | ||

D32 | Investment, savings, time, and capital markets (PDF) | Present discount value (chapter 15) |

Bonds (chapter 15) | ||

Effective yields (chapter 15) | ||

Interest rate determination (chapter 15) | ||

D33 | Asymmetric information (PDF) | Adverse selection (chapter 17) |

Moral hazard (chapter 17) | ||

Unemployment (chapter 17) | ||

D34 | Externalities, market failure and government (PDF) | Efficient wage theory (chapter 17) |

Externalities (chapter 18) | ||

Property rights (chapter 18) | ||

Common property resources (chapter 18) | ||

D35 | Public goods (PDF) | Public goods (chapter 18) |