Early Danish Trading Post (Ribe)
Early Danish Trading Post

ECON 701
West Virginia University
Fall 2023
Reynolds Hall 5201
4:00- 5:40  T-TH
Underground Shopping Mall in Beijing
Beijing Shopping Mall (UG)

Instructor: Professor Roger D. Congleton .
Office: 4131 Reynolds Hall
E-Mail roger.congleto@mail.wvu.edu          (the best way to contact Prof Congleton)
Office Hours: 2:30 - 3:30 Wednesdays-Thursdays, and other afternoons by appointment

OptionalTexts:. Nicholson, W. Microeconomic Theory, Twelfth Edition. (2016)

Knight, F. H. Risk Uncertainty and Profit. (1985/1921) Midway Reprint edition, University of Chicago Press. .

Mas-Colell, A., Green, J. R., and Whinston, M. D. (1995) Microeconomic Theory. Oxford: Oxford University Press
. Congleton, R. D. (2022) Solving Social Dilemmas: Ethics, Politics, and Prosperity. Oxford University Press
Extended Reading List
.Course Focus: Advanced Microeconomics I is divided into three parts. The first part of the course focuses on the core models and results of economics. It reviews the theory of consumer behavior (demand), theory of firm output decisions (supply). the theory of firm production decisions and their connection to a firm's cost functions, and models of equilibrium prices. 

The second part explores extensions of the neoclassical model to choice settings where time and uncertainty are important features. It models inter-temporal choices and choices uin settings were outcomes or circumstances are probabilistic rather than certain. It also develops models of innovation and entrepreneurship. Innovation and entrepreneurship are both examples of decisionmaking under uncertainty and a source of uncertainty.

The third part explores implications of what might be regarded as market imperfections, but which are actually simply violations of some of the usual assumptions about the setting in which trade takes place. Implications of  theft, fraud, regulation, politics, and ethical dispositions are developed analytically. All these neglected factors can have significant effects on the manner in which markets operate and the extent of the networks of exchange, production, and innovation that typify contemporary markets. Part three concludes with an overview of welfare economics and its applications to markets, externalities, and system design.
The goal of the course is to provide graduate student with a thorough understanding of the core neoclassical models, their extensions, and foundational assumptions. It also attempts to give them an appreciation of itheir explanatory power by exploring subset of post-war extensions of the core models and analyzing linkages between economic, political and social systems.. The course is lecture and web-text based.
Link to
Math Econ Course

. Tentative Course Outline (pdf)
Dates Topic
. I. The Core Models of Neoclassical Economics .
17-Aug-23 1. Introduction to Course and Economic Models
N: 1, 2, 3
MWG: 1, 2 Kn 3
. Methodological Individualism: Rational Choice as a modeling device. Scarcity and optimization. What does rational choice mean? Choosing patterns of consumption.
Appendix for
First Lecture
17-Aug-23 2.Consumer Demand
N: 11, 12 
MWG: 5
. The Geometry and Mathematics of Decisions to Purchase Goods and Services, Cobb-Douglas Models, More Abstract Models of Consumer Choice                 [HW 1]
29-Aug-09 3. Supply
N: 5, 6, 7, 13 
MWG: 3, 5  Kn: 6
. The Mathematics of Decisions to Produce Goods for Sale in the Short Run and Long Run by Price-Taking Firms, The Implications of Diminishing Returns. Monopolists and Price- Making Firms. .                                                                                         [HW 2]

5-Sept-23 4. Production
N: 21, 22, 23;
MWG: 3, 5 Kn: 4
. Decisions about how goods are Produced, and what they cost?. Input Prices, Technology, and Production Costs for Price Taking firms. Demands for Inputs.                   [HW 3]
.Appendix for Lectures 2-4
12-Sept-23 5. Equilibrium Prices
N:13, K:7
. Market Clearing Prices in the Short Run. Marshallian and Ricardian Theories of Long Run Supply, Geometry and Calculus-Based Models of Market Prices, .                   [HW 4]
Review for Midterm Exam    (Prerecorded overview of Part I)
Study Guide
Selected Answers
19-21 - Sept-23 MIDTERM EXAMINATION (take home)

28-Sept-23 Midterm Exams Returned and Reviewed 
Suggested Paper Ideas

II. Extensions of Neoclassical Price Theory
6. Intertemporal Choice

Plans that take more than 1 "period" to excecute require taking into account both changes  that may occur through time and interest rates. Chapter 6 develops models of consumer choice where consumption takes place in long enough periods that interest rates and changes in income need to be taken into account. The chapter also introduces present and future value calculations in money terms.

28-Sept-23 7. Economic Implications of Risk
N: 9, 10, 19
MWG: 13, 14

Risk Aversion and Choice under Uncertainly. Markets for Insurance. Other Risk shifting Strategies. Strategies for Moderating Risks: Monitoring, Quality Control, and the Routines of Management, Risk Moderation and the Extent of Markets                                               
                                                                               [HW 5]

Exams Returned and Reviewed / Economic Consequences of Risk Continued

5-Oct-23 Fall Break NO CLASS

12-Oct-23 8. Uncertainty and Entrepreneurship
N:9, 10; 
MWG: 14 Kn: 9, 10

Uninsurable Risks and the Usefulness of Reserves. Entrepreurship as decisionmaking under uncertainty. Knight, Schumpeter, and Kirzner on Entrepreneurship. Entrepreneurs as Formeteurs, Investing in Innovation, Innovation as a source of economic profits, Innovation as a source of uncertainty.                                                   [ HW 6]

Likely Future Chapters not covered this semester:

(9) Information, Expectations, and Intertemporal Choice
(10) Goods" as Collections of Valued Attributes--Hedonics
(11) Multi-product Firms
(12) Firms as Organizations"

Stigler (1961)
Farrell and Rabin (1996)
Lancaster (1966)
Becker (1965)
Brown et al (1979)
Riley (1975)
Baysinger and Butler (1985)

III. Underpinnings of Markets: Further Extensions
13. Law and Economics
N: 26 
MWG: 11, 12

The Economics of Crime the Extent of Markets, Fraud and the extent of Markets, the Quality of Law Enforcement, Realizable Gains to Trade, and the Extent of Markets             

24-Oct-23 14. Politics and Economics--Political Economy
N: 26, 27
MWG: 21, 22
. Electoral Competition and Electoral Determined Public Policy, Market Adjustments to Public Policies, Investments in Rent Seeking and the Extent of Markets.          [HW 7]  .
31-Oct-09 15. Ethics, Norms, and the Efficiency of Markets
N: 24
Kn: 5, 11 / C: 6,8

Culture and the Efficiency of Markets. Economizing on Etihcal Agents. Culture and the Extent and Growth Rates of Markets. Extended Rational Choice Models.
7-Nov-23 16. Welfare Economics

Deciding what is best, Utillitarian Notions of Economic Efficiency, Cost Benefit Analysis, the Pareto Criteria, Contractarianism. The normative properties of exchange (w and w/o externalities). [HW 8]
N: 9 
MWG: 10, 15, 16
14-16-Nov-23 17. Overview of the Course / Paper Work Shop
 END-TERM Take Home Exam / Due Monday Nov 27 at 2:00 PM

18-26 - Nov-23 Fall Break

No Class on Tuesday, Exams returned and Reviewed on Thursday

5-7-Dec-23 Extended Office Hours 1-4:00, T and Th for Meetings and Advice on Final Papers
Ideas for Papers
13-Dec-23 8-10 page paper due on an applied micro topic
. Grades:                                                                Midterm Exam 35.00%
. 8-10 page Paper 25.00%
. Endterm Exam 35.00%

. Marginal extra credit for class participation (up to 5% bonus)