California Institute of Technology

Ec 121a: Theory of Value

Ec 121 is a required course for the economics option. In this course you will learn to understand and manipulate economists' theoretical models of resource allocation and the workings of supply and demand in an idealized economy. The course is highly theoretical and somewhat mathematical. The course evaluations have suggested that the level of mathematics was that of the “analytical track.” I presume you know what that means, as I don't.

• Preliminary Syllabus for 121a. This will change over the course of the term. This version was last modified 10/ 2/07.
• Einstein's speech delivered to the students at Caltech in 1931, in which he opines that economic problems are the greatest facing mankind.

Office hours

I am usually available MWF between 9:00 am and 12:00 m (that's noon) and 1:30 pm to 4:00 pm.

Exams

• Midquarter, due Tuesday, November 6, at start of class.
• Final, due Thursday, December 13 at noon. You may turn it in to me, under my office door, my mailbox, or to my secretary.

Homework

Assignments are due in class at the beginning of the lecture.

If you need an extension, I will be happy to give you one if you get a note from the Dean or the Health Center recommending it.

Notes for Lectures

Dates indicate latest revision

Sample answers

Supplemental Notes

Some of these notes are unfinished. While I have been careful in the preparation of these notes, I am not good at proofreading my own writing, so there may be some errors. If you find any, please let me know.

• Desultory notes on aspects of maximization, including convex analysis (1.4 mb). Updated October 14, 2005
• Notes on linear algebra. Updated April 16, 2002

• Week 1
  • Maximization of a function of one variable. Updated October 4, 2007
  • Increasing differences and comparative statics. Updated October 12, 2001
  • Homogeneous functions. Updated September 28, 2004
  • Envelope theorem. Updated December 19, 2006
• Week 2
  • Notes on support functions, or profit and cost functions. Updated February 21, 2006
  • More than you want to know about quadratic forms. Updated October 20, 2001
  • Maximization of a function of several variables. Updated October 14, 2004
  • Comparative statics. Updated September 28, 2001
  • Traditional approach to cost minimization. Updated October 13, 2005
• Week 3
  • Production possibility frontier and marginal costs. Updated November 4, 2003
  • Saddlepoints and constrained maximization. Updated October 16, 2005
  • Linear programming and saddlepoints. Updated November 3, 2004
  • Simplex Algorithm. Updated October 31, 2007
• Week 4
  • Moral Hazard in Teams. Updated December 2, 2004
• Week 5
  • Preference relations. Updated February 21, 2006
  • Neoclassical demand theory. Updated October 14, 2003
  • Duality and demand theory. Updated November 9, 2004
  • The weak axiom of revealed preference. Updated November 29, 2001
  • Rational choice. Updated September 29, 2003
  • The Integrability Problem. Updated August 10, 2005
• Week 6
  • The Arrow–Debreu Model. Updated April 17, 2003
  • First Welfare Theorem. Updated January 13, 2004
  • Second Welfare Theorem. Updated February 27, 2002
  • Second Welfare Theorem via Saddlepoints. Updated November 5, 2004