Microeconomic Theory Basic Principles and Extensions

by Nicholson, Walter

• ISBN13: 9780324270860
• ISBN10: 0324270860
• Edition: 9th
• Format: Hardcover
• Copyright: 2004-04-23
• Publisher: South-Western College Pub

Summary

Nicholson's Microeconomic Theory: Basic Principles and Extensions, 9th edition is a tried-and-true, well-known and respected market-leading text. Applauded for providing the most clear and accurate presentation of advanced microeconomic concepts, it offers an ideal level of mathematical rigor for upper level undergraduate students and beginning graduate students. It gives students the opportunity to work directly with theoretical tools, real-world applications, and cutting edge developments in the study of microeconomics. This book is solid, rigorous, comprehensive, and is sensibly challenging for students, best serving students with a mathematics background.

Author Biography

Walter Nicholson is the Ward H. Patton Professor of Economics at Amherst College

Table of Contents

Part 1 INTRODUCTION	1	(66)
Economic Models	3	(17)
Theoretical Models	3	(1)
Verification of Economic Models	4	(1)
General Features of Economic Models	5	(3)
Development of the Economic Theory of Value	8	(8)
Modern Developments	16	(4)
Summary	17	(3)
The Mathematics of Optimization	20	(47)
Maximization of a Function of One Variable	20	(4)
Functions of Several Variables	24	(3)
Elasticity---a General Definition	27	(3)
Maximization of Functions of Several Variables	30	(2)
Implicit Functions	32	(1)
The Envelope Theorem	33	(5)
Constrained Maximization	38	(6)
Envelope Theorem in Constrained Maximization Problems	44	(1)
Inequality Constraints	45	(2)
Second-Order Conditions	47	(6)
Homogeneous Functions	53	(14)
Summary	57	(1)
Problems	58	(4)
Extensions Second-Order Conditions and Matrix Algebra	62	(5)
Part 2 CHOICE AND DEMAND	67	(114)
Preferences and Utility	69	(25)
Axioms of Rational Choice	69	(1)
Utility	70	(2)
Trades and Substitution	72	(8)
A Mathematical Derivation	80	(2)
Utility Functions for Specific Preferences	82	(2)
Perfect Substitutes	84	(3)
The Many-Good Case	87	(7)
Summary	88	(1)
Problems	89	(3)
Extensions Special Preferences	92	(2)
Utility Maximization and Choice	94	(27)
An Initial Survey	95	(1)
The Two-Good Case: A Graphical Analysis	95	(4)
The n-Good Case	99	(7)
Indirect Utility Function	106	(1)
The Lump Sum Principle	106	(3)
Expenditure Minimization	109	(2)
Properties of Expenditure Functions	111	(10)
Summary	113	(1)
Problems	114	(4)
Extensions Budget Shares	118	(3)
Income and Substitution Effects	121	(40)
Demand Functions	121	(2)
Changes in Income	123	(1)
Changes in a Good's Price	124	(4)
The Individual's Demand Curve	128	(3)
Compensated Demand Curves	131	(4)
A Mathematical Development of Response to Price Changes	135	(4)
Demand Elasticities	139	(6)
Consumer Surplus	145	(5)
Revealed Preference and the Substitution Effect	150	(11)
Summary	152	(1)
Problems	153	(5)
Extensions Demand Concepts and the Evaluation of Price Indices	158	(3)
Demand Relationships Among Goods	161	(20)
The Two-Good Case	161	(3)
Substitutes and Complements	164	(2)
Net Substitutes and Complements	166	(1)
Substitutability with Many Goods	167	(1)
Composite Commodities	167	(3)
Home Production, Attributes of Goods and Implicit Prices	170	(11)
Summary	174	(1)
Problems	174	(4)
Extensions Simplifying Demand and Two-Stage Budgeting	178	(3)
Part 3 PRODUCTION AND SUPPLY	181	(96)
Production Functions	183	(29)
Marginal Productivity	183	(3)
Isoquant Maps and the Rate of Technical Substitution	186	(4)
Returns to Scale	190	(3)
The Elasticity of Substitution	193	(2)
Four Simple Production Functions	195	(5)
Technical Progress	200	(12)
Summary	203	(1)
Problems	204	(5)
Extensions Many-Input Production Functions	209	(3)
Cost Functions	212	(36)
Definitions of Costs	212	(2)
Cost-Minimizing Input Choices	214	(6)
Cost Functions	220	(4)
Cost Functions and Shifts in Cost Curves	224	(10)
Short-Run, Long-Run Distinction	234	(14)
Summary	240	(1)
Problems	241	(4)
Extensions The Translog Cost Function	245	(3)
Profit Maximization	248	(29)
The Nature and Behavior of Firms	248	(1)
Profit Maximization	249	(2)
Marginal Revenue	251	(5)
Short-Run Supply by a Price-Taking Firm	256	(3)
Profit Functions	259	(6)
Profit Maximization and Input Demand	265	(12)
Summary	271	(1)
Problems	271	(4)
Extensions Applications of the Profit Function	275	(2)
Part 4 COMPETITIVE MARKETS	277	(106)
The Partial Equilibrium Competitive Model	279	(38)
Market Demand	279	(4)
Timing of the Supply Response	283	(1)
Pricing in the Very Short Run	283	(2)
Short-Run Price Determination	285	(4)
Shifts in Supply and Demand Curves: A Graphical Analysis	289	(4)
Mathematical Model of Market Equilibrium	293	(2)
Long-Run Analysis	295	(1)
Long-Run Equilibrium: Constant-Cost Case	296	(3)
Shape of the Long-Run Supply Curve	299	(3)
Long-Run Elasticity of Supply	302	(1)
Comparative Statics Analysis of Long-Run Equilibrium	303	(3)
Producer Surplus in the Long Run	306	(11)
Summary	309	(1)
Problems	309	(5)
Extensions Demand Aggregation and Estimation	314	(3)
Applied Competitive Analysis	317	(18)
Economic Efficiency and Welfare Analysis	317	(3)
Price Controls and Shortages	320	(2)
Tax Incidence Analysis	322	(4)
Trade Restrictions	326	(9)
Summary	330	(1)
Problems	330	(5)
General Equilibrium and Welfare	335	(48)
Perfectly Competitive Price System	335	(1)
A Simple Graphical Model of General Equilibrium	336	(9)
Comparative Statics Analysis	345	(2)
General Equilibrium Modeling and Factor Prices	347	(2)
Existence of General Equilibrium Prices	349	(8)
The Efficiency of Perfect Competition	357	(1)
Smith's Invisible Hand Hypothesis	357	(1)
Pareto Efficiency	357	(1)
Efficiency in Production	358	(4)
Efficiency in Product Mix	362
Competitive Prices and Efficiency---The First Theorem of Welfare Economics	354	(12)
Departing from the Competitive Assumptions	366	(2)
Distribution	368	(15)
Summary	374	(1)
Problems	374	(6)
Extensions Computable General Equilibrium Models	380	(3)
Part 5 MODELS OF IMPERFECT COMPETITION	383	(92)
Models of Monopoly	385	(30)
Barriers to Entry	385	(2)
Profit Maximization and Output Choice	387	(4)
Monopoly and Resource Allocation	391	(3)
Monopoly, Product Quality, and Durability	394	(3)
Price Discrimination	397	(5)
Second-Degree Price Discrimination Through Price Schedules	402	(2)
Regulation of Monopoly	404	(3)
Dynamic Views of Monopoly	407	(8)
Summary	408	(1)
Problems	408	(5)
Extensions Optimal Tariff Schedules	413	(2)
Traditional Models of Imperfect Competition	415	(25)
Pricing Under Homogeneous Oligopoly	415	(9)
Product Differentiation	424	(5)
Entry	429	(11)
Summary	435	(1)
Problems	435	(5)
Game Theory Models of Pricing	440	(35)
Basic Concepts	440	(1)
Nash Equilibrium in Games	441	(1)
An Illustrative Game	442	(2)
Existence of Nash Equilibria	444	(2)
The Prisoner's Dilemma	446	(3)
A Two-Period Game	449	(2)
Repeated Games	451	(3)
Pricing in Static Games	454	(3)
Entry, Exit, and Strategy	457	(4)
Entry and Incomplete Information	461	(2)
Games of Incomplete Information	463	(12)
Summary	467	(1)
Problems	468	(4)
Extensions Strategic Substitutes and Complements	472	(3)
Part 6 PRICING IN INPUT MARKETS	475	(56)
Labor Markets	477	(23)
Allocation of Time	477	(3)
A Mathematical Analysis of Labor Supply	480	(5)
Market Supply Curve for Labor	485	(1)
Labor Market Equilibrium	485	(6)
Labor Unions	491	(9)
Summary	495	(1)
Problems	495	(5)
Capital Markets	500	(31)
Capital and the Rate of Return	500	(2)
Determination of the Rate of Return	502	(6)
The Firm's Demand for Capital	508	(2)
Present Discounted Value Approach to Investment Decisions	510	(4)
Optimal Resource Allocation Over Time	514	(17)
Summary	519	(1)
Problems	520	(5)
Appendix: The Mathematics of Compound Interest	525	(6)
Part 7 UNCERTAINTY, INFORMATION, AND EXTERNALITIES	531	(101)
Uncertainty and Risk Aversion	533	(28)
Probability and Expected Value	533	(2)
Fair Games and the Expected Utility Hypothesis	535	(1)
The von Neumann--Morgenstern Theorem	536	(2)
Risk Aversion	538	(3)
Measuring Risk Aversion	541	(4)
The State-Preference Approach to Choice Under Uncertainty	545	(16)
Summary	551	(1)
Problems	552	(4)
Extensions Portfolio Theory and the Pricing of Risk	556	(5)
The Economics of Information	561	(25)
Properties of Information	561	(1)
The Value of Information	562	(3)
Information and Insurance	565	(1)
Moral Hazard	565	(3)
Adverse Selection	568	(5)
The Principal-Agent Relationship	573	(3)
The Owner-Manager Relationship: A Mathematical Analysis	576	(10)
Summary	580	(1)
Problems	580	(4)
Extensions The Economics of Search	584	(2)
Externalities and Public Goods	586	(24)
Defining Externalities	586	(2)
Externalities and Allocative Inefficiency	588	(4)
Solutions to the Externality Problem	592	(3)
Attributes of Public Goods	595	(2)
Public Goods and Resource Allocation	597	(4)
Lindahl Pricing of Public Goods	601	(9)
Summary	603	(1)
Problems	603	(5)
Extensions Pollution Abatement	608	(2)
Political Economics	610	(22)
Social Welfare Criteria	610	(3)
Social Welfare Functions	613	(2)
The Arrow Impossibility Theorem	615	(2)
Direct Voting and Resource Allocation	617	(2)
A Simple Political Model	619	(3)
Representative Government	622	(2)
Rent-Seeking Behavior	624	(8)
Summary	625	(1)
Problems	626	(4)
Extensions Voting Schemes	630	(2)
Brief Answers to Queries	632	(8)
Solutions to Odd-Numbered Problems	640	(9)
Glossary of Frequently Used Terms	649	(6)
Index	655