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Economics  4007:  Honours  Microeconomics  (2012)   Part  A:  Microeconomic  Theory     Justine  Burns  (Room  5.03;  Justine.Burns@uct.ac.

za)   Welcome  to  this  first  module  in  Honours  Micro  which  covers  core  Micro  theory.    In   this  part  of  the  course,  we  revisit  traditional  producer  and  consumer  theory  in  more   formal  detail.    While  most  students  find  theory  dry  and  boring,  I  encourage  you  to   hang   in   there   and   work   through   it   with   me.   There   really   is   no   other   way   to   get   through   theory   other   than   to   just   do   it   (and   keep   a   copy   of   Chiang   close   by!).   Hopefully,  some  of  the  additional  readings  on  the  course  outline  will  help  spark  your   interest,   and   allow   you   to   see   how   some   of   this   theoretical   framework   has   been   applied  in  understanding  important  empirical  questions.     Reading   The   prescribed   text   for   this   first   module   is   Hal   Varian’s   text   “Microeconomic   Analysis”   (3rd   edition).   This   is   a   standard   text   used   to   teach   graduate   Micro   the   world   over,   and   it’s   worth   the   investment,   especially   if   you   plan   to   carry   on   to   Masters.  To  get  the  most  out  of  lecture,  come  to  class  having  read  ahead.  I  will  also   put   the   lecture   slides   up   on   Vula   ahead   of   time.   Please   download   them   and   bring   them  with  you,  as  this  will  save  considerable  time.   In  addition,  there  are  a  few  additional  readings  (to  rescue  us  from  theory).  You  will   find  these  on  Vula  in  the  Resources  tab.  These  are  required  reading.   1. Arthur,  B.  (1990)    “Positive  feedbacks  in  the  Economy”,  Scientific  American,   262,  February,  pps  92-­‐99   2. Gebreselasie,  T.  (2008)  “Sectoral  elasticity  of  substitution  and  returns  to   scale  in  South  Africa”,  South  African  Journal  of  Economics,  Vol  76:S2,  August.   3. Frey,  B.S.  and  Stutzer,  A.  (2002)  “What  can  economists  learn  from  Happiness   Research?”,  Journal  of  Economic  Literature,  Vol  XL  (June),  pps  402-­‐435.   4. Harbaugh,  W.T.;  Krause,  K.  and  Berry,  T.R.  (2001)  “GARP  for  Kids:  On  the   Development  of  Rational  Choice  Behaviour”,  American  Economic  Review,     December,  pps  1539-­‐1545   5. Andreoni,  J.  and  Miller,  J.  (2002)  “Giving  according  to  GARP:  An  experimental   test  of  the  consistency  of  preferences  for  altruism”,  Econometrica,  Vol  70(20)   March,  pps  737-­‐753.    

  Tuts   There   is   a   tut   session   every   Tuesday   afternoon.   Tuts   are   voluntary,   but   highly   recommended.   We   will   work   through   selected   questions   each   week.   Again,   to   get   the  most  out  of  the  tuts,  please  attempt  the  questions  ahead  of  time.  Occasionally,  I   may  use  a  tut  slot  as  a  lecture  slot,  but  I  will  advise  you  of  this  ahead  of  time.       Evaluation   This  part  of  Honours  Micro  will  be  evaluated  as  follows:   Test  1:  25%    (date  tbc)   Test  2:  25%    (This  test  will  happen  on  20  March,  during  class  time)   Final  exam:  50%   Note  that  in  terms  of  your  overall  Micro  mark,  this  module  will  count  50%  of  your   final  mark.     Schedule   Below  is  a  proposed  work  schedule  that  I  will  revisit  as  the  course  progresses.      How   far  we  get  depends  on  how  much  progress  we  make  during  our  lecture  sessions  and   tuts.   We   will   certainly   cover   the   Varian   material   in   class.   Some   of   the   reading   material   may   be   covered   in   class   or   as   part   of   your   tutorial.   In   either   case,   the   material  is  examinable.       Date   14  Feb   21    Feb   28  Feb     6  March   13  March   20  March   27  March   Reading   Varian  Chs  1  &  2;  Arthur;  Gebreselasie   Varian  ch  3   Varian  4     Varian  Ch  5,  6    &12;     Varian  Ch  7,  Frey  &  Stutzer    In  Class  Test   Varian  Ch  8;  Harbaugh  et  al;  Andreoni  and  Miller.