Money as a medium of exchange and how it can influence economic activity. Incomplete markets as a way of linking traditional microeconomic theory to macroeconomics. First and Second Welfare Theorems. The gradient conditions for Pareto optimality. Representative agent analysis, one of the fundamental techniques of modern macroeconomics.
Additive separability permits interchange of summations.
Each agent's equilibrium consumption is an increasing function of aggregate output . One public and one private good economy. Provision of indivisible public good, willingness to pay,Pareto efficient provision of public good. Provision by subscription and by majority voting. Provision of perfectly divisible public good.