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Microeconomics 1 - Exercise Class for "Hold 3"

Link to Claus Thustrup Kleiner's course homepage

Notes:

# Please use this e-mail address! paul.sharp@econ.ku.dk
# You are always welcome to email questions or suggestions for improving the teaching.
# Don't forget to look at the exercises before Wednesday.
# You need this program! 
# "Harboe" = "Opgavesamling til Mikroøkonomi", Udarbejdet af Michael Harboe-Jørgensen. Available from Studiekontoret.
# Compulsory homework to be handed in to me in weeks 43, 46 and 49. There will be a test (lynprøven) in week 50. Three of these must be passed by me if you wish to participate in the exam in January.
# Holdlærer Nicolaj Verdelin har lavet en vejledende besvarelse til hjemmeopgave 1. Hent vejledende besvarelse
# Holdlærer Fane N. Groes har lavet en vejledende besvarelse til hjemmeopgave 3. Hent vejledende besvarelse
# Here is the result of the internal evaluation.
# NEW! Here is the result of the external evaluation.
# See important information about Lynprøven on Claus' homepage here.
# Sadly, I have found out that I won't be teaching you next semester, but good luck with your new teacher.

Classes 8-11 every Wednesday

Downloads

Required preparation

(in addition to following the lectures and reading the associated required reading to date)

What we did

37: September 8 Slides None! We looked at Varian Chapter 1.
38: September 15  

Try and solve Exercises 1.1 and 1.2 in Mich Tvede's "Opgaver i Mikro".

We went through the two exercises, and you solved Harboe 2.5 and 2.6 in class.
39: September 22  

In Chapter 2 we found out how we could describe the bundles of goods that a consumer was able to choose. Typically, there will, however, be an infinite amount of choices in the budget set.

In order to find out exactly which bundle the consumer chooses, we need to be able to describe his preferences. That is what you can read about in Chapter 3. This is also the subject of Exercise 1 here. Try and solve this before the next class.

Exercise 1 here asks you to relate the material in chapter 3 with the concept of a utility function (nyttefunktion). I will go through this with you, but it would be a good idea if you have thought this question through before Wednesday. If you have time you can look at Exercise 2 in the same exercise set. It is rather tricky, but have a go!

Finally, we will look at Exercise 1 here.

We went through all the exercises, plus 4.1 in Harboe. Let me know if you find the mathematics difficult - we can use more time on it if need be.

You had a chance to look at 4.2 in class.

40: September 29 Suggested answer for Hjemmeopgave 1, 2003, 3.10

Finish Harboe 4.2 and we will go through it in class.

We know how to draw budget lines and indifference curves, so we can now find out which bundle of goods the consumer will choose. It turns out that he will often (but not always) choose a bundle where the indifference curve is tangent to the budget line. Exercise 1 here looks at some graphical representations of consumer preferences. See if you can answer the questions about these before next time.

We will also go through Exercise 3 here, which relies rather more on calculus. This is a very important exercise to try and understand since it covers many of the key areas you will learn about here, so if you have time, have a look at it as well.

We went through the exercises. We didn't have time for 3.10 here. Check out the suggested answer under "downloads".

Some of you think these exercises are too easy and taking more time than they should, but most (I think) thought the tempo was about right. To those who think that it is going too slowly - you should just be happy about that! But be careful not to make the mistake of thinking that just because maybe you find the mathematics easy, you don't use enough time trying to understand the economic intuition. If both aspects are easy, then try for example to go through some of the old exam papers on Claus' homepage (not the old homework we look at in class). These have suggested answers you can check.

41: October 6   Send me an e-mail, so I can add you to my mailing list.

This week we will continue looking at exercises to do with the consumer's problem (budget lines preferences, etc.).

First, have a look at Exercise 1 here. These true/false questions require very precise answers, which sometimes can be very short and sometimes rather longer, depending on the question. Normally: if you think a statement is false, find a counter example. If you think it is true, then you need to prove that it is true in all circumstances. Well, it is best to illustrate this by looking at the answers, but have a go anyway!

Next, have a look at Exercise 2 here. This question might appear difficult, because we don't have x1 and x2 anymore, but C and L. You can, however, use the methods you have learned to answer this exercise. Try and think how the setup here relates to our familiar consumer's problem.

You will hopefully notice that some of the exercises start being rather more relevant to the real world, and give us interesting insights into for example political debates. Is it true, for example, that a decrease in income tax should increase employment?

We started by looking at the last question in the exercise we didn't have time for last week. Then we went through the two exercises.
42: October 13   AUTUMN BREAK: No teaching ;-)  
43: October 20  

Look at Exercise 2 here, which I handed out in class.

The next exercises are related to Varian Chapter 6, "Demand". We investigate how the demand for a good changes when prices or income change. This depends, of course, on the consumer's preferences.

Start by looking at Exercises 1 and 3 here.

We went through the exercises, but only got as far as 3.1 in the last one.
44: October 27 Rettevejledning til Hjemmeopgave 2, 2000, Opgave 1 You need to have completed Hjemmeopgave 1, which we will start by going through.

Then we will finish Exercise 3 here. Look at Exercise 1 here.

The exercises here are related to Varian Chapter 14, "Consumer's Surplus". In order to be able to solve these, you need to know integration. If you are unsure of this, then look especially at Exercise 1. Consumer surplus is a fairly technical concept and is related to the concept of a demand curve. In fact, the consumer surplus is the area under the demand curve for a good, but above the price level of that good, and as such measures how much more consumers are prepared to pay for a good in relation to its cost. The larger, the better for the consumer - in this respect it is also related to utility.

We went through the homework and we got as far as Exercise 2.3 in the Exercises for Chapter 14.

I am not very happy with how I went through Exercise 1 from Hjemmeopgave 2, 2000 - actually some of the things I said were wrong! Sorry. So I have posted a model answer under downloads. We can discuss it next time if need be.

45: November 3

If you haven't already, look at Exercises 2 and 3 here.

Then look at Exercise 1 here. A short true/false question.

Exercise 2 here provides an illustration of how we can use some of our micro-theory in practice.

We went through the exercises. We have arranged to meet on Friday (5/11) - see below.
45: November 5 (12-14)

N.B. Ekstra timer!!!

We are in Trin 62A (the usual place).

Rettevejledning til Hjemmeopgave 2, 2002, Opgave 2.12

The next few exercises will concentrate on the concept of income and substitution effects. Exercise 2 here is a short exercise looking at the idea of Giffen goods - a Giffen good is one where demand falls when price falls.

Look at Exercise 2 here. It looks at many important concepts, which you will have learnt about during the last few lectures.

We went through the exercises. We didn't have time for Exercise 2.12 - my answer is available under downloads.
46: November 10   First look at Exercise 2 here.

Exercise 3 here is about elasticity. The answers are available here, so we will go through it very quickly.

Exercise 4 here is about aggregate demand.

Exercise 2 here touches on elasticity and looks at the question of whether income tax cuts can get people to work more.

Despite a couple of hiccups we actually managed to get through all the exercises!
47: November 17   You need to have completed Hjemmeopgave 2, which we will start by going through.

We will then move on to our next topic - profit maximization. We have used a lot of time understanding consumer behaviour, now we will use some time on firms. Just as we assume that consumers try to maximize their utility, we assume that firms seek to maximize their profits.

The exercises I want you to look at are Exercise 1 here and Exercise 3 here.

If you have time, look at Exercise 1 here.

We managed to look at all the exercises again!

Mht. spørgsmål 1.1 i hjemmeopgave 2, har jeg fået følgende svar fra Claus:

Jeg har implicit taget for givet, at standard antagelserne er givet. Vi bevæger os da langs en indifferenskurve med negativ hældning, hvorved resultatet fremkommer.

48: November 24   Extra! I have had a request for another exercise like Exercise 3 from Hjemmeopgave 3, 2001, which we went through last time. We will therefore start by looking at Exercises 1 and 3 here.

We will then continue our look at the theory of the firm. Try and solve Exercises 1 and 2 here. Exercise 2 here looks at cost curves.

We went through all the exercises.
49: December 1

Why name junk e-mail after tinned meat?

The economics of spam

We will start by going through what you have learned about consumer theory, that is Chapters 1-6 + 14-15 + Claus' note.

In relation to this, I would like you to look at the following exercises:

Exercise 2 here;

Exercise 3 here;

Exercises 2 and 3 here;

and Exercise 1 here.

I don't expect we'll have time to go through all of them, but we can see how it goes!

We went through chapters 1-6 and 14. This took rather longer than I expected, so please let me know if you feel I am wasting your time, and you would rather look at some more exercises. But there seem to be quite a few of you who found it useful, and would like me to go through the theory of the firm in the same way. If you have strong feelings either way, let me know!

There are problems with the university spam filter at the moment, so if your mail doesn't get through first time round, try again later or use my private address paul.sharp@kabelnettet.dk.

50: December 8   Fill in the external evaluation form here.

We will start by completing our look at consumer theory by going through chapter 15.

Then we will go through Hjemmeopgave 3.

I would like you to look at Exercise 2 here, which is related to chapters 22 and 23 about supply.

See also the important note about lynprøven above!

We did what we had planned to do.

I also launched the "Christmas Competition". (Deadline Monday!)

I looked at 2.4 again when I got home, and it was OK as I had drawn it. If you differentiate e.g. MC once, you get something positive. If you differentiate it again, it is positive again. So MC is increasing everywhere. The same is true for AVC. To see this, try inserting beta=1. You then get that the second derivative is equal to zero. Lower values of beta make it positive.

51: December 15   We will go through lynprøven.

Then we will look at our final exercise, which is about chapter 16, "Equilibrium". Look at Exercise 2 here. Equilibrium is when demand equals supply - something we can find graphically by looking at the intercection of the demand and supply curves.

I will quickly go through the last chapters in Varian, and we will discuss the exam.

The winner of the "Christmas Competition" will be announced!

We looked at the exercises, then we discussed chapters 18 and 19. We talked about the exam and the winner of the competition was announced: Congratulations Louise!

Please send me a mail if you have any questions. I have enjoyed teaching you this semester (even at 8 in the morning) and I am looking forward to seeing you again next semester for macro.

MERRY CHRISTMAS AND HAPPY NEW YEAR!

 
    NEW! List of all the exercises we looked at. Please contact me if you find any mistakes/omissions.

Miscellaneous:

Exercises 1.1 and 1.2 here.

Harboe 2.5, 2.6, 4.1, 4.2

Exercises for Varian Chapter 14 here.

Hjemmeopgave 1:

Exercise 1 here

Exercises 1 and 2 here

Exercise 1 here

Exercises 1 and 2 here

Exercises 1, 2 and 3 here

Hjemmeopgave 2:

Exercise 2 here

Exercises 1 and 2 here

Exercises 1 and 3 here

Exercise 2 here

Exercise 1 here

Hjemmeopgave 3:

Exercises 1, 2 and 4 here

Exercise 1 and 3 here

Exercise 3 here

Exercises 1, 2 and 3 here

Hjemmeopgave 4:

Exercise 2 here

Lynprøve:

Exercise 2 here

Exercises 1 and 2 here

Eksamener:

Exercise 2 here