Introduction

This large set of practice problems and solution was originally made while I was a PGTA for students of the SESS0007: Introduction to Microeconomics course at SSEES, UCL. The problems therefore match the structure and content of the course as it was in the 2023-24 academic year. Please keep this in mind when using this resource. Note too that each problem set comes with a preliminary section describing some of the techniques needed for the topic.

Part 1: Basic Mathematics for Economists

This section contains notes for the following topics in mathematics: equations & algebra, functions & inverses, limits, logarithms and exponentials, differentiation and partial differentiation. This is not exhaustive of the material needed for undergraduate economics but provides a decent foundation for the problem sets provided here.

Problems and Solutions

Part 2: Supply and Demand

This section contains problem sets for obtaining inverse supply and demand curves, finding simple equilibria and evaluating the impact of specific taxes.

Problems and Solutions

Part 3: Consumer Theory

This section concerns the basics of consumer theory: using utility functions, finding the marginal rate of substitution and transformation, and solving simple utility maximisation problems subject to a budget constraint. The final challenge question introduces the indirect utility function and Roy’s Identity.

Problems and Solutions

Part 4: Producer Theory

This section introduces the notion of a production functions and its properties. Students are asked to calculate marginal products and rates of technical substitution, determine the return to scale exhibited by a given production function and show an understanding of the nature of technological change.

Problems and Solutions

Part 4: Costs

This section concerns the nature of costs: understanding the difference between the total, average and marginal cost functions, solving basic cost minimisation problems, deriving the long-run cost function for a firm and finding expansion paths.

Problems and Solutions

Part 5: Competitive Firms and Markets

This section contains questions about profit maximisation for perfectly competitive firms. It introduces the idea that such firms profit maximise at the output level where the market price equals their marginal cost of production. Question concern: evaluating whether a firm will shutdown or continue operating in the short-run, deriving firm and market-level supply curves and working with the residual demand curve.

Problems and Solutions

Part 6: Imperfect Competition

This sections covers questions about monopolies and oligopolies, situations where firms have significant market power. This involves working with marginal revenue curves, solving profit maximisation problems where output decisions affect the market price and finding Cournot-Nash Equilibria for duopolies.

Problems and Solutions

Part 7: Game Theory

This section includes a simple introduction to game theory covering static and dynamic 2-player games, introducing the concepts of dominant strategies, best response functions and Nash equilibrium to students.

Problems and Solutions

Part 8: Factor Markets

This section is all about analysing factor markets with attention primarily on the labour market. Students are introduced to monopsonies and are asked to evaluate how they impact firm decision-making and the eventual market equilibrium.

Problems and Solutions

Part 9: Externalities and General Equilibrium

This section combines the work on consumer and producer theory and concerns the following: identifying and calculating consumer and producer surplus and deadweight losses from various policies, understanding Pareto welfare and analysing basic Robinson Crusoe economies.

Problems and Solutions

Part 10: Additional Notes

Here I present some additional notes/derivations that may of interest to economics undergraduate students.