ECO2045: Intermediate Microeconomics 1 (ECO2045)

Expenditure Minimisation and Duality: Whereas the consumer maximization problem is about solving the problem of maximizing utility subject to a budget constraint, expenditure minimization is about minimizing the cost of achieving a given utility level. You will see that utility maximization and expenditure minimization are just two ways of solving the same problem.

Optimal choice: Which of the affordable bundles will the consumer choose? How does a consumer choose in order to maximise utility subject to her budget constraint? The Lagrange method and Demand functions: The mathematical method used to solve for a consumer's optimal bundle. Demand functions are functions that relate the optimal choice - the quantities demanded - to the different values of price and income. Expenditure Minimisation and Duality: Whereas consumer maximisation problem is about ...

Consumer surplus, compensating variation and equivalent variation.

Budget constraint: What is it and what are its key elements? How can different factors change the position of the constraint and what are the implications of such changes? Preferences: The key assumptions (axioms) and their implications, the most common types of preferences, and features of indifference curves. Utility functions: Different types of utility functions, how different types of utility functions can represent different preferences, how to derive and interpret the marginal rate of s...