Universitat Pompeu Fabra

Microeconomics I (20836)
Syllabus – Spring 2020

Prof. Fabrizio Germano

Email: Fabrizio.Germano@UPF.Edu
Theory classes: Monday, Tuesday 9-10:30 (G3,G4) and 11:00 -12:30 (G1,G2)
Office hours: Tuesday 12:30 -14:00 and by appointment
Office: 20.147
Note: Details and times of activities due to COVID-19 will be announced by email.
Some items on the syllabus (and hence PDA) may also change as updates come in.

Objective of the course:

The course covers the basic economic models of consumer theory, production theory,
and partial equilibrium. The student will learn how to formalize and therefore gain a
deeper understanding of economic phenomena. The main goal of this course is that
the students learn how to work with these basic economic models of consumption,
production and market equilibrium.

Bibliography:

Varian, H. R. Intermediate Microeconomics. 7th, 8th or 9th edition (or Intermediate

Microeconomics with Calculus, International Student Edition)

Varian, H. R. Microeconomía Intermedia. 7ma, 8va o 9na edición

Further readings to be discussed in the seminars will be announced during the course.

Course content:

Part One: Consumer Choice and Demand

1. Elements of the problem. Limits of consumer choice: the budget constraint.

Reasons for choice: preferences. Representation of preferences: Utility.

2. The choice. The formal problem of maximization of preferences and derivation

of the demand function. Duality theory. Indirect utility and expenditure function.

3. Revealed preference and Slutsky equation. Weak and strong axioms of

revealed preference. Price indices. The Slutsky equation: Income and
substitution effects. Income and substitution effects of Hicks.
 4. Consumer surplus and market demand. Consumer surplus: Discrete goods and
continuous goods. Market demand: Aggregation of individual demands. The
elasticity of demand and its relation with income.

Part Two: The Firm and the Supply Function.

5. Technology. Technological constraint. Different types of technology. Marginal

product and marginal rate of technical substitution. Returns to scale.

6. Benefit maximization and cost minimization. The formal problem of profit

maximization. The cost minimization problem. Cost functions: marginal cost and
average cost.

7. Supply curve. The supply function of a competitive firm. The relation of the
supply with marginal costs. The producer surplus. Supply curve of an industry.

Part Three: Supply and Demand.

8. The equilibrium.
Equilibrium in a competitive market. Comparative statics. Taxes and welfare.

Course evaluation:

Final exam: 70% (a grade of at least 5 out of 10 is required to pass the course)

Seminar participation: 15%

Tests: 15%

Resit exam and final grade: Those students who followed the continued evaluation,
took the final exam, and did not obtain a passing grade, will be eligible to take the resit
exam. The final grade will be computed as: 0.7*resit exam grade + 0.15*seminar grade
+ 0.15*tests (a minimum grade of 5 out of 10 in the resit exam is required to pass the
course).

Instructions for the seminars: The grades for the seminar participation will depend
on the active participation in the seminars. Students are expected to solve the problem
sets at home so they are able to discuss and present them in the seminar sessions.
They are also expected to read the assigned readings at home so they are able to
discuss them and answer questions in the seminar sessions. The relevant readings will
be announced in class.

Instructions for the tests: The tests will take place online during the time of the main
lectures and an invitation will be sent to your email account. Their exact dates will be
announced by email. Please make sure you check your emails regularly!

Note: Due to the current extraordinary situation with the COVID-19 quarantine, some
of the seminar sessions may be replaced by tests that may count up to 30% of the
grade. They will take place at the times of the main theory lectures and exact dates will
be announced by email. Please make sure you check your emails regularly!
Course schedule:
Week Topics covered in class Activity outside class

Week 1: Introduction, Budget Constraint Read the theory

March 30 to April 3 Consumer Preferences (Varian 1,2,3)

2 theory classes Solve problems

Week 2: Utility Read the theory

April 14 to 17 (Varian 4)

1 theory class Reading I

Test 1

Week 3: Consumer Choice Read the theory

April 20 to 24 (Varian,5, 6)

2 theory classes Solve problems

Test 2
Week 4: Demand Read the theory
April 27 to 30 (Varian 6)

2 theory classes Solve problems

Week 5: Demand Read the theory
May 4 to 8 (Varian 7,8)

2 theory classes Reading II

Test 3
Week 6: Revealed Preferences and Slutsky Read the theory
May 11 to 15 Equation (Varian 7, 8)

2 theory classes Solve problems

Week 7: Consumer Surplus Read the theory

May 18 to 22 Aggregate Demand (Varian 14, 15)

2 theory classes
Test 4 Solve problems

Week 8: Technology Read the theory

May 25 to 29 (Varian 18)

2 theory classes Solve problems

Week 9: Profit Maximization Read the theory

June 2 to 5 Cost Minimization (Varian 19, 20)

1 theory class Solve problems

Test 5

Week 10: Cost Curves and Firm Supply Read the theory
June 8 to 12 Industry Supply (Varian 21, 22, 23)

2 theory classes Reading III

Week 11: Partial Equilibrium Read the theory

June 15 to 16 Review (Varian 16)

1 theory class Solve problems

Test 6