2026
INTERMEDIATE MICROECONOMICS
SUMMARY
KOEN HANEGREEFS
VUB
,Table of Contents
Reading Guide ......................................................................................................................................... 1
Chapter 1 — Budget Constraint, Preferences & Utility (H2, H3, H4)............................................................. 2
Exercises — WPO 1 ............................................................................................................................ 13
Chapter 2 — Consumer Choice & Individual Demand (H5, H6) ................................................................. 17
Exercises — WPO 2 ............................................................................................................................ 25
Chapter 3 — Slutsky Equation & Market Demand (H8, H15)...................................................................... 29
Exercises — WPO 3 ............................................................................................................................ 37
Chapter 4 — Intertemporal Choice & Uncertainty (H10, H12) ................................................................... 41
Exercises — WPO 4 ............................................................................................................................ 56
Chapter 5 — Technology & Profit Maximisation (H19, H20) ....................................................................... 57
Exercises — WPO 5 ............................................................................................................................ 70
Chapter 6 — Cost Minimisation & Cost Curves (H21, H22) ....................................................................... 71
Exercises — WPO 6 ............................................................................................................................ 85
Chapter 7 — Firm Supply & Industry Supply (H23, H24) ............................................................................ 88
Exercises — WPO 7 .......................................................................................................................... 100
Chapter 8 — Market Equilibrium & Welfare (H16, H14) ........................................................................... 102
Chapter 9 — Monopoly & Monopoly Behaviour (H25, H26) ..................................................................... 118
Exercises — WPO 9 .......................................................................................................................... 132
Chapter 10 — Oligopoly & Game Theory (H28, H29, H30) ....................................................................... 137
Exercises — WPO 10 ........................................................................................................................ 154
Reading Guide
This document combines, for each of the ten lecture blocks of Intermediate Microeconomics at VUB
(Prof. Nikolas Vander Vennet):
1
,1. A high-quality summary of the lecture material, marked with importance levels:
– (Important) — central concepts, expected on the exam
– (Neutral) — useful supporting material
– (Less important) — context and intuition only
2. The WPO exercise questions for the matching textbook chapters.
All worked solutions are kept in a separate Solutions Manual so this study document can be used as
practice material without spoiling the answers.
Material follows Varian’s Intermediate Microeconomics with Calculus (9th/10th ed.).
Chapter 1 — Budget Constraint, Preferences & Utility (H2, H3,
H4)
Lecture HOC 1 — Budget Constraint, Preferences & Utility (Varian H2, H3, H4)
1.0 What Is Microeconomics? (Less important — context only)
Microeconomics studies the economic behavior of individual agents — consumers, firms, governments
— and how they interact in markets. It is the disciplined study of choice under constraints.
Key contrasts (Less important):
• Microeconomics vs. Macroeconomics. Macro looks at aggregates (GDP, unemployment, inflation);
micro looks at the agents whose behavior adds up to those aggregates. Modern macro is built on
“microeconomic foundations.”
• Theories vs. models. A theory explains observed phenomena with a set of assumptions; a model is a
formal, deliberately abstract description of one specific problem.
Three analytical tools used throughout the course (Important to internalise):
1. Constrained optimisation — choose the best option subject to a constraint (the foundation of every
consumer/firm problem).
2. Equilibrium analysis — a state of rest where, absent exogenous shocks, behavior persists.
3. Comparative statics — how does the equilibrium shift when an exogenous variable changes?
2
, The rationality assumption (Important). Agents are assumed to optimise their preferences with full
information. This is a useful baseline, not a literal description of human behavior. Departures (bounded
rationality — Herbert Simon; behavioural biases — Kahneman & Tversky) are studied as deviations from this
benchmark. Why this matters: even when reality deviates, the rational model gives you the yardstick to
measure the deviation.
1.1 The Budget Constraint (Important — H2)
The two-goods model
A consumer with income m chooses between two goods. The budget constraint is
𝑝! 𝑥! + 𝑝" 𝑥" ≤ 𝑚
The frontier of this set is the budget line:
𝑚 𝑝!
𝑝! 𝑥! + 𝑝" 𝑥" = 𝑚 ⇔ 𝑥" = − 𝑥
𝑝" 𝑝" !
Budget line and budget set
Why two goods? It is geometrically tractable yet still captures the essential trade-off. In practice we set
good 1 = “the good of interest” and good 2 = “money spent on everything else” — a composite good. When
𝑝" = 1, units of 𝑥" are literally euros.
3
INTERMEDIATE MICROECONOMICS
SUMMARY
KOEN HANEGREEFS
VUB
,Table of Contents
Reading Guide ......................................................................................................................................... 1
Chapter 1 — Budget Constraint, Preferences & Utility (H2, H3, H4)............................................................. 2
Exercises — WPO 1 ............................................................................................................................ 13
Chapter 2 — Consumer Choice & Individual Demand (H5, H6) ................................................................. 17
Exercises — WPO 2 ............................................................................................................................ 25
Chapter 3 — Slutsky Equation & Market Demand (H8, H15)...................................................................... 29
Exercises — WPO 3 ............................................................................................................................ 37
Chapter 4 — Intertemporal Choice & Uncertainty (H10, H12) ................................................................... 41
Exercises — WPO 4 ............................................................................................................................ 56
Chapter 5 — Technology & Profit Maximisation (H19, H20) ....................................................................... 57
Exercises — WPO 5 ............................................................................................................................ 70
Chapter 6 — Cost Minimisation & Cost Curves (H21, H22) ....................................................................... 71
Exercises — WPO 6 ............................................................................................................................ 85
Chapter 7 — Firm Supply & Industry Supply (H23, H24) ............................................................................ 88
Exercises — WPO 7 .......................................................................................................................... 100
Chapter 8 — Market Equilibrium & Welfare (H16, H14) ........................................................................... 102
Chapter 9 — Monopoly & Monopoly Behaviour (H25, H26) ..................................................................... 118
Exercises — WPO 9 .......................................................................................................................... 132
Chapter 10 — Oligopoly & Game Theory (H28, H29, H30) ....................................................................... 137
Exercises — WPO 10 ........................................................................................................................ 154
Reading Guide
This document combines, for each of the ten lecture blocks of Intermediate Microeconomics at VUB
(Prof. Nikolas Vander Vennet):
1
,1. A high-quality summary of the lecture material, marked with importance levels:
– (Important) — central concepts, expected on the exam
– (Neutral) — useful supporting material
– (Less important) — context and intuition only
2. The WPO exercise questions for the matching textbook chapters.
All worked solutions are kept in a separate Solutions Manual so this study document can be used as
practice material without spoiling the answers.
Material follows Varian’s Intermediate Microeconomics with Calculus (9th/10th ed.).
Chapter 1 — Budget Constraint, Preferences & Utility (H2, H3,
H4)
Lecture HOC 1 — Budget Constraint, Preferences & Utility (Varian H2, H3, H4)
1.0 What Is Microeconomics? (Less important — context only)
Microeconomics studies the economic behavior of individual agents — consumers, firms, governments
— and how they interact in markets. It is the disciplined study of choice under constraints.
Key contrasts (Less important):
• Microeconomics vs. Macroeconomics. Macro looks at aggregates (GDP, unemployment, inflation);
micro looks at the agents whose behavior adds up to those aggregates. Modern macro is built on
“microeconomic foundations.”
• Theories vs. models. A theory explains observed phenomena with a set of assumptions; a model is a
formal, deliberately abstract description of one specific problem.
Three analytical tools used throughout the course (Important to internalise):
1. Constrained optimisation — choose the best option subject to a constraint (the foundation of every
consumer/firm problem).
2. Equilibrium analysis — a state of rest where, absent exogenous shocks, behavior persists.
3. Comparative statics — how does the equilibrium shift when an exogenous variable changes?
2
, The rationality assumption (Important). Agents are assumed to optimise their preferences with full
information. This is a useful baseline, not a literal description of human behavior. Departures (bounded
rationality — Herbert Simon; behavioural biases — Kahneman & Tversky) are studied as deviations from this
benchmark. Why this matters: even when reality deviates, the rational model gives you the yardstick to
measure the deviation.
1.1 The Budget Constraint (Important — H2)
The two-goods model
A consumer with income m chooses between two goods. The budget constraint is
𝑝! 𝑥! + 𝑝" 𝑥" ≤ 𝑚
The frontier of this set is the budget line:
𝑚 𝑝!
𝑝! 𝑥! + 𝑝" 𝑥" = 𝑚 ⇔ 𝑥" = − 𝑥
𝑝" 𝑝" !
Budget line and budget set
Why two goods? It is geometrically tractable yet still captures the essential trade-off. In practice we set
good 1 = “the good of interest” and good 2 = “money spent on everything else” — a composite good. When
𝑝" = 1, units of 𝑥" are literally euros.
3
