# Microeconomics Q-Exam Syllabus

The qualifying exam in microeconomic theory is offered twice each year, in the spring and again in late summer. The 'Q' exam is not a final exam for the microeconomic theory sequence; nor is it the explicit goal of the courses to teach the exam. The exam covers the topics on the following outline.

While students might expect that much of this material will be covered in Economics 6090 and 6100, not all of it will be, and the instructors may choose to devote time to topics not on the Q syllabus. Students are advised to clarify early on with their instructors what on this list will and will not be covered, so they can plan their studying accordingly.

### 1. Consumer Theory

- Preferences and representation with utility functions
- Budget sets
- Revealed preference
- Choice based on preferences and on utility
- Demand functions–derivation (maximization) and properties of demand
- Comparative statics
- Duality–indirect utility, expenditure functions and Hicksian demand
- Integrability
- Consumer surplus
- Aggregation and properties of aggregate demand

### 2. Theory of the Firm

- Objective of the firm
- Technology
- Cost functions
- Profit maximization
- Input demand and output supply–derivation and properties
- Duality–profit functions and cost functions
- Aggregation

### 3. Decision Making under Uncertainty

- Objective uncertainty–probabilities as objects of choice
- Objective expected utility representation
- Risk aversion and measures of risk aversion
- Insurance and gambling
- Subjective uncertainty—Anscombe and Aumann structure
- Subjective expected utility representation

### 4. General Equilibrium — Analysis

- The existence problem
- Welfare analysis — Pareto optimality
- Comparative statics
- Equilibrium of plans, prices and price expectations (Radner equilibrium)

### 5. General Equilibrium — Examples

- Single agent economies
- Bilateral pure exchange
- The 2
*×*2 production model - Linear economies
- State-preference equilibrium models of uncertainty
- Intertemporal equilibrium
- Overlapping generations models

### 6. Externalities and Market Failure

- Public goods
- Information
- Non-convexities
- Market power

### 7. Non-cooperative Games

- The normal form
- Domination and iterative dominance
- Nash equilibrium
- Games of incomplete information and Bayesian-Nash equilibria
- Repeated games and the Folk Theorem
- Dynamic games of complete information and Subgame Perfect Nash Equilibria

[revised: February 2013]

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