Università Roma Tre

1. Consumer theory: Preference and choice. Budget constraint and optimal consumption. Demand and comparative statics. The weak axion of revealed preferences. Utility maximization and expenditure minimization. Demand, indirect utility and expenditure. Welfare evaluation of economic changes. 2. Production theory: Production sets. Profit maximization and cost minimization. The geometry of costs. Efficient production. A digression of the linear activity model. 3. Choice under uncertainty: Risk and preferences. Expected utility theorem. Money lotteries and risk aversion. Comparison of payoff distributions in terms of returns and risk. Subjective probabilities. 4. Competitive equilibrium and its basic welfare properties: Markets and prices. Welfare theorems. Pareto optima and social welfare optima. First-order conditions for Pareto optimality. Applications. 5. Competitive equilibrium under uncertainty: Markets for contingent commodities. Arrow-Debreu equilibrium. Sequential trade. Asset markets and the no arbitrage theorem. Sequential trade and incomplete markets. Imperfect information. 6. Basic principles of financial economics: The fundamental theorem of asset pricing. Mean-variance analysis.

A. Mas-Colell, M.D. Whinston and J.R. Green, Microeconomic Theory, Oxford University Press, 1995 (Chapters 1, 2, 3, 5, 6, 16, 19, Mathematical Appendix).

Additional material will be provided during classes.