Intermediate Microeconomics

In this microeconomics tutorial, instructor Ravi explores market mechanisms and resource allocation in a hypothetical scenario involving sellers with varying production costs and buyers with differing willingness to pay. Ravi poses an engaging question: what would happen if these parties were placed in a room to negotiate within a limited timeframe? He encourages critical thinking before revealing his predictions based on a demand-supply model, suggesting that high-cost producers may not sell, while low-cost sellers will likely match with high-valuation buyers at equilibrium prices between £18 and £22. Ravi supports this analysis by sharing real-world experiment results demonstrating the accuracy of such models despite market complexity. Finally, he introduces Pareto efficiency, emphasizing market mechanisms' focus on overall surplus maximization rather than equity concerns. Subscribe to @AxiomTutoring for more insightful economics lessons.

In this video, the tutor delves into consumer theory in microeconomics. They introduce the concept of demand determination beyond given willingness to pay, focusing on a two-good problem (X and Y). The tutorial explores budget constraints, with income spent equally on both goods. Key aspects include plotting the budget constraint, recognizing its slope as price ratios, and understanding trade-offs between X and Y. The consumer's problem is then discussed: maximizing utility given infinite points on the budget constraint. Indifference curves are introduced to represent utility level sets, with various shapes explored (linear, smooth, L-shaped, perfect complements). The video concludes by highlighting key topics for future videos. Subscribe to @AxiomTutoring for more.

Exploring Quasi-Linear Utility Functions: In this video, we revisit consumer theory to maximize utility under budget constraints with a focus on quasi-linear utility functions. Learn to identify their general shape and visualize them using marginal utilities. Discover how corner solutions can arise and practice solving these problems. A separate video will analyze quasi-linearity through indifference curves.

In this tutorial, the expert delves into perfect substitutes' intuition, building upon previous problem-solving methods. They explain marginal utilities of X and Y, representing extra utility gained per unit, and introduce indifference curves with CU/A + BY = constant utility. The slope of these curves represents the marginal rate of substitution, contrasting with the market's marginal rate of transformation. By comparing A/PX vs B/PY, one determines where to allocate resources for optimal utility per pound spent. Subscribe to @AxiomTutoring for more insightful economics lessons.

Exploring consumer theory, this video discusses 'perfect substitutes' in utility maximization under a budget constraint. Beginning with a simple example of goods x and y, the tutor demonstrates two methods to solve for optimal consumption: a non-graphical approach using corner solutions, and a graphical method employing indifference curves along a 45-degree line. The tutorial then generalizes these concepts, outlining how to determine optimal consumption given a general utility function. Subscribe to @AxiomTutoring for more comprehensive economic theory explanations.

The tutor discusses perfect compliments in economics, where utility is maximized by balancing two goods (x & y), using the 'min' function. They illustrate with left/right shoes and bike parts examples. The tutor then demonstrates graphing indifference curves for these goods, noting that the highest utility occurs along the 'king' line (y = x). They conclude with a practical example of maximizing utility under budget constraints.

The tutor presents an in-depth exploration of Cobb-Douglas preferences in consumer theory. Starting with a general utility function, x^αy^β, they discuss its transformations and interpretations, emphasizing ordinal properties and identical indifference curves. The tutor's favorite form is demonstrated through a most general Cobb-Douglas equation, with emphasis on mechanics, solutions, intuitions, corner vs interior solutions, tangency points, and budget constraints. They provide an example using α=0.5, β=0.5, px=2, py=4, m=12. Subscribe to @AxiomTutoring for more comprehensive economic explanations.

The tutor presents the Lagrangian method for deriving Copeland's theorem, explaining its transformation of constrained optimization into unconstrained with three variables. The process involves setting up first-order conditions and combining them to obtain the optimal condition: 'p_x / p_y = αy / βx'. The tutor emphasizes understanding the derivation over memorizing the formula alone. Subscribe to @AxiomTutoring for more.

The tutor introduces the Edgeworth Box, a graphical model illustrating resource allocation in an economy with two goods ('x' and 'y') and two participants ('Revy' and 'Ben'). They discuss how each point within the box represents a unique distribution of resources between individuals. The video emphasizes that every point allocates all available resources, reflecting a key principle in exchange economies. Subscribe to @AxiomTutoring for more insightful tutorials.

In this video, Ravi explores how to find equilibrium relative prices in an Edgeworth box scenario. He begins by reviewing key concepts from the previous lesson, emphasizing the importance of focusing on relative prices rather than absolute ones. Using a hypothetical economy with two individuals trading food (x) and shelter (y), Ravi demonstrates how to solve for equilibrium price using Walras' Law and market clearing conditions. He shows that by setting one price as the numerator, simplifying demands into functions of the relative price, and solving for market clearance, the equilibrium price can be found. Ravi also offers a check by reversing the price assumption, confirming the expected inverse relationship. Subscribe to @AxiomTutoring for more insightful economics tutorials.

In this microeconomics tutorial, an experienced tutor explains Pareto optimality using the Edgeworth Box. They discuss how to determine Pareto optimal allocations between two individuals (Ravi and Ben), focusing on preferences and indifference curves. The tutor demonstrates that not all points within the box are Pareto optimal, emphasizing the importance of understanding these concepts for assessing efficiency in exchange economies.

In this tutorial, the instructor delves into the concept of equilibrium in economics, building upon previous lessons on consumer theory and utility maximization. The video explores the definition of equilibrium as a pair of prices that clear markets, satisfy initial endowments, and maximize utility for all agents. Using an example with two goods (X and Y), the instructor demonstrates how to determine if given prices result in an equilibrium by calculating optimal consumption and verifying market clearing. They conclude by previewing the next video, where they will find the actual equilibrium price.