THE UNIVERSITY OF HONG KONG

FACULTY OF BUSINESS AND ECONOMICS

School of Economics and Finance
ECON2101 – Microeconomic Theory

I. Course Information

Course coordinator: Frances (Zhiyun) Xu

Email: zfxu@hku.hk
Office: KK907
Phone: 2859-7037
Consultation times: 3pm –4:50pm Fri. or By Email Appointment
Tutor: Grace Yu [grace_yyt@hotmail.com], 2857 8310, KK1026
Pre-requisites: Introduction to Economics, Basic calculus

II. Course Description

Preference, utility and consumer choices; choices under uncertainty, introduction to game theory; market structures;
introduction to economics of information.

III. Course Objectives

To help the students to achieve all the learning outcomes below.

IV. Learning Outcomes

1. Have a solid understanding of important concepts such as utility, demand, surplus, moral hazard, adverse
selection, etc.
2. Acquire the ability of using basic game theory to analyze simple economics situations.
3. Prepare for more specialized and advanced microeconomics classes later, such as Games and Industrial
Organization.

V. Teaching and Learning Activities

TA sessions will start from the third week. Their time and location will be announced in the second week. The sessions
will go over the HW and some supplementary mathematical contents. Prepare questions to ask so you can get the most out
of the session.

Varian, 2005, “Intermediate Microeconomics: a Modern Approach”, 7ed/8ed, WW Norton & Company. (The book is
recommended, but not required. We will go beyond this book for certain topics.) The bookstore should have some copies,
and you can also get used ones from previous years.

This course assumes that you have a working knowledge of basic calculus. You need to know how to find the optimizer of
a smooth function, for example. You can study the Mathematical Appendix of Varian if you like or any calculus book.

VIa. Assessment Tasks

Learning outcomes Teaching and learning activities Assessment tasks
1. Have a solid understanding of important Lectures, TA sessions, HWs HWs, midterm, final
concepts such as utility, demand, surplus,
moral hazard, adverse selection, etc.
2. Acquire the ability of using basic game Lectures, TA sessions, HWs HWs, midterm, final
theory to analyze simple economics
situations.

3. Prepare for more specialized and Lectures, TA sessions, HWs HWs, midterm, final
advanced microeconomics classes later,
such as Games and Industrial Organization.

V1b. Assessment Tasks/Evaluation Plan:

This course will include the following types of Assessments:
 Homework Tasks: 35%
Midterm 30%
Final Exam 35%

There will be one HW each week, starting from Sep 13. (10 in total) It will be posted on the webCT on Monday, and it
will be due on the next Monday at 5pm in the course box on 9th Floor. Late submission will not be accepted. HW is to be
done in groups. You are to form groups of a target size of six and each group hands in one HW. You should provide the
TA with a list of six students in your group by the end of second lecture (Sep 6). I understand that the number might
change a bit during the add-drop period, so it is OK as long as your group size is within 5 to 7 students after the add-drop
period. You are encouraged to discuss HW with group members so that all of your group members progress together.
However, you should do every question at least once yourself before discussion, otherwise you will not be able to learn
and you will have difficulty at the exams. Midterm exam covers contents from Week 1 to Week 5, and Final exam is non-
cumulative.

The grade distribution will be:

Grade Standard Distribution

A+
A Excellent 0 - 25%
A-
B+
B Good 20- 50%
B-
C+
C Satisfactory 10 – 50%
C-
D+ Balance
D Pass Balance
F Fail Balance

VII. Course Outline

This schedule is tentative. Due to a conference presentation in US, I cannot be in Hong Kong on Sep 17. We will have
another professor substitute me on that day. My Apologies! The chapters below correspond to those in Varian.

Week 1: Preference (Ch.3)

Week 2: Utility (Ch.4)
Week 3: Individual Demand and Revealed Preference (Ch. 2, 5, 7, 8)
Week 4: Consumer Surplus and Market Demand (Ch. 14, 15)
Week 5: Production and Technology (Ch18, 19)
Week 6: Choice under Uncertainty (Ch. 12)
Reading Week
Week 7: Midterm Exam (in class on Oct 25); Welfare (Ch. 32, 33)
Week 8: Prisoner’s Dilemma and Coordination Game (Ch. 28)
Week 9: War of Attrition.
Week 10: Market Power (Ch. 24 & 27)
Week 11: Auction (Ch. 17)
Week 12: Adverse Selection (Ch. 37)
Week 13: Signaling and Moral Hazard (Ch. 37)

*If you have a schedule conflict with the Midterm, please email me about it well in advance.