ECON 101 Lecture Notes - Lecture 1: Fundamental Theorems Of Welfare Economics, Pareto Efficiency, George E. P. Box
Document Summary
Microeconomic theory is any application of a microeconomic model to the study of some system or setting of interest. This class introduces very basic models which you should think of as a general framework for how to think about a problem. The most basic ones may seem especially unrealistic. But you should always think about the model as a baseline which can be augmented to better represent behavior. Writing down a model forces you to understand what assumptions you are making. Consumer theory: preferences, utility maximization, income and substitution effects, Producer theory: production functions, cost functions, pro t maximization; supply. There are a large number of rms (free entry and exit; non-increasing returns to scale and no network effects), each producing the same homogeneous product. It assumes that its actions have no effect on market price. There are a large number of rational demanders, each is a price taker.
