Contents Dominant strategy Nash equilibrium Prisoner’s dilemma and repeated games Multiple equilibria and sequential games Pure and mixed strategies

Now Add Production ... Add input markets, output markets, describe firms’ technologies, the distributions of firms’ outputs and profits … That’s not easy!

Structure Definition When to provide a public good – Efficient provision – Private provision: free-riding Variable quantities of public good – Efficient amount – Free-riding problem How to provide public goods? Demand revelation

Revealed Preference Analysis Suppose we observe the demands (consumption choices) that a consumer makes for different budgets. This reveals information about the consumer’s preferences. We can use this information to

Contents Describe preferences Indifference curves Well-behaved preferences Marginal rate of substitution

内蒙古师范大学：经济管理学院经济学（汉）专业课程教学大纲汇编

内蒙古师范大学：经济管理学院经济学（蒙）专业课程教学大纲汇编

Contents Describe budget constraint –Algebra –Graph Describe changes in budget constraint Government programs and budget constraints Non-linear budget lines

Effects of a Price Change What happens when a commodity’s price decreases? –Substitution effect (替代效应）: the commodity is relatively cheaper, so consumers substitute it for now relatively more expensive other commodities

Structure When to sell an asset? –Rate-of-return Arbitrage Taxation of asset returns Applications Financial intermediaries