Intermediate Microeconomics : A Modern Approach,9780393978308

Intermediate Microeconomics : A Modern Approach

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Edition: 6th
ISBN13: 9780393978308
ISBN10: 0393978303
Format: Hardcover
Pub. Date: 2002-06-01
Publisher(s): W W Norton & Co Inc
List Price: $132.00

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Summary

Unrivaled in its unique combination of analytical rigor and accessibility, Intermediate Microeconomics: A Modern Approach has garnered one of the broadest adoption lists in the market. Now appearing in its Sixth Edition, Professor Varian?s hallmark text is better than ever, featuring new treatments of game theory and competitive strategy, and a variety of new illustrative examples. Modern, authoritative, and above all crafted by an outstanding teacher and scholar, Intermediate Microeconomics, Sixth Edition will expand your students? analytic powers and strengthen their understanding of microeconomics.

Table of Contents

Preface xix
The Market
Constructing a Model
1(2)
Optimization and Equilibrium
3(1)
The Demand Curve
3(2)
The Supply Curve
5(2)
Market Equilibrium
7(2)
Comparative Statics
9(2)
Other Ways to Allocate Apartments
11(3)
The Discriminating Monopolist
The Ordinary Monopolist
Rent Control
Which Way Is Best?
14(1)
Pareto Efficiency
15(1)
Comparing Ways to Allocate Apartments
16(1)
Equilibrium in the Long Run
17(1)
Summary
18(1)
Review Questions
19(1)
Budget Constraint
The Budget Constraint
20(1)
Two Goods Are Often Enough
21(1)
Properties of the Budget Set
22(2)
How the Budget Line Changes
24(2)
The Numeraire
26(1)
Taxes, Subsidies, and Rationing
26(5)
Example: The Food Stamp Program Budget Line Changes
31(1)
Summary
31(1)
Review Questions
32(2)
Preferences
Consumer Preferences
34(1)
Assumptions about Preferences
35(1)
Indifference Curves
36(1)
Examples of Preferences
37(7)
Perfect Substitutes
Perfect Complements
Bads
Neutrals
Satiation
Discrete Goods
Well-Behaved Preferences
44(4)
The Marginal Rate of Substitution
48(2)
Other Interpretations of the MRS
50(1)
Behavior of the MRS
51(1)
Summary
52(1)
Review Questions
52(5)
Utility
Cardinal Utility
57(1)
Constructing a Utility Function
58(1)
Some Examples of Utility Functions
59(6)
Example: Indifference Curves from Utility
Perfect Substitutes
Perfect Complements
Quasilinear Preferences
Cobb-Douglas Preferences
Marginal Utility
65(1)
Marginal Utility and MRS
66(1)
Utility for Commuting
67(2)
Summary
69(1)
Review Questions
70(1)
Appendix
70(3)
Example: Cobb-Douglas Preferences
Choice
Optimal Choice
73(5)
Consumer Demand
78(1)
Some Examples
78(5)
Perfect Substitutes
Perfect Complements
Neutrals and Bads
Discrete Goods
Concave Preferences
Cobb-Douglas Preferences
Estimating Utility Functions
83(2)
Implications of the MRS Condition
85(2)
Choosing Taxes
87(2)
Summary
89(1)
Review Questions
89(1)
Appendix
90(6)
Example: Cobb-Douglas Demand Functions
Demand
Normal and Inferior Goods
96(1)
Income Offer Curves and Engel Curves
97(2)
Some Examples
99(5)
Perfect Substitutes
Perfect Complements
Cobb-Douglas Preferences
Homothetic Preferences
Quasilinear Preferences
Ordinary Goods and Giffen Goods
104(2)
The Price Offer Curve and the Demand Curve
106(1)
Some Examples
107(4)
Perfect Substitutes
Perfect Complements
A Discrete Good
Substitutes and Complements
111(1)
The Inverse Demand Function
112(2)
Summary
114(1)
Review Questions
115(1)
Appendix
115(4)
Revealed Preference
The Idea of Revealed Preference
119(1)
From Revealed Preference to Preference
120(2)
Recovering Preferences
122(2)
The Weak Axiom of Revealed Preference
124(1)
Checking WARP
125(3)
The Strong Axiom of Revealed Preference
128(1)
How to Check SARP
129(1)
Index Numbers
130(2)
Price Indices
132(3)
Example: Indexing Social Security Payments
Summary
135(1)
Review Questions
135(2)
Slutsky Equation
The Substitution Effect
137(4)
Example: Calculating the Substitution Effect
The Income Effect
141(1)
Example: Calculating the Income Effect
Sign of the Substitution Effect
142(1)
The Total Change in Demand
143(1)
Rates of Change
144(3)
The Law of Demand
147(1)
Examples of Income and Substitution Effects
147(6)
Example: Rebating a Tax
Example: Voluntary Real Time Pricing
Another Substitution Effect
153(2)
Compensated Demand Curves
155(1)
Summary
156(1)
Review Questions
157(1)
Appendix
157(3)
Example: Rebating a Small Tax
Buying and Selling
Net and Gross Demands
160(1)
The Budget Constraint
161(2)
Changing the Endowment
163(1)
Price Changes
164(3)
Offer Curves and Demand Curves
167(1)
The Slutsky Equation Revisited
168(4)
Use of the Slutsky Equation
172(1)
Example: Calculating the Endowment Income Effect
Labor Supply
173(1)
The Budget Constraint Comparative Statics of Labor Supply
174(4)
Example: Overtime and the Supply of Labor
Summary
178(1)
Review Questions
179(1)
Appendix
179(3)
Intertemporal Choice
The Budget Constraint
182(3)
Preferences for Consumption
185(1)
Comparative Statics
186(1)
The Slutsky Equation and Intertemporal Choice
187(2)
Inflation
189(2)
Present Value: A Closer Look
191(2)
Analyzing Present Value for Several Periods
193(1)
Use of Present Value
194(3)
Example: Valuing a Stream of Payments
Example: The True Cost of a Credit Card
Bonds
197(2)
Example: Installment Loans
Taxes
199(1)
Example: Scholarships and Savings
Choice of the Interest Rate
200(1)
Summary
201(1)
Review Questions
201(1)
Asset Markets
Rates of Return
202(2)
Arbitrage and Present Value
204(1)
Adjustments for Differences among Assets
204(1)
Assets with Consumption Returns
205(1)
Taxation of Asset Returns
206(1)
Applications
207(4)
Depletable Resources
When to Cut a Forest
Example: Gasoline Prices during the Gulf War
Financial Institutions
211(1)
Summary
212(1)
Review Questions
213(1)
Appendix
213(2)
Uncertainty
Contingent Consumption
215(5)
Example: Catastrophe Bonds
Utility Functions and Probabilities
220(1)
Example: Some Examples of Utility Functions
Expected Utility
221(1)
Why Expected Utility Is Reasonable
222(2)
Risk Aversion
224(4)
Example: The Demand for Insurance
Diversification
228(1)
Risk Spreading
228(1)
Role of the Stock Market
229(1)
Summary
230(1)
Review Questions
230(1)
Appendix
231(3)
Example: The Effect of Taxation on Investment in Risky Assets
Risky Assets
Mean-Variance Utility
234(5)
Measuring Risk
239(2)
Equilibrium in a Market for Risky Assets
241(1)
How Returns Adjust
242(4)
Example: Ranking Mutual Funds
Summary
246(1)
Review Questions
246(2)
Consumer's Surplus
Demand for a Discrete Good
248(1)
Constructing Utility from Demand
249(1)
Other Interpretations of Consumer's Surplus
250(1)
From Consumer's Surplus to Consumers' Surplus
251(1)
Approximating a Continuous Demand
251(1)
Quasilinear Utility
251(1)
Interpreting the Change in Consumer's Surplus
252(2)
Example: The Change in Consumer's Surplus
Compensating and Equivalent Variation
254(4)
Example: Compensating and Equivalent Variations
Example: Compensating and Equivalent Variation for Quasilinear Preferences
Producer's Surplus
258(2)
Benefit, Cost Analysis
260(2)
Rationing Calculating Gains and Losses
262(1)
Summary
263(1)
Review Questions
263(1)
Appendix
264(2)
Example: A Few Demand Functions
Example: CV, EV, and Consumer's Surplus
Market Demand
From Individual to Market Demand
266(2)
The Inverse Demand Function
268(1)
Example: Adding Up ``Linear'' Demand Curves
Discrete Goods
269(1)
The Extensive and the Intensive Margin
269(1)
Elasticity
270(2)
Example: The Elasticity of a Linear Demand Curve
Elasticity and Demand
272(1)
Elasticity and Revenue
273(3)
Example: Strikes and Profits
Constant Elasticity Demands
276(1)
Elasticity and Marginal Revenue
277(2)
Example: Setting a Price Marginal Revenue Curves
279(1)
Income Elasticity
280(1)
Summary
281(1)
Review Questions
282(1)
Appendix
283(6)
Example: The Laffer Curve
Example: Another Expression for Elasticity
Equilibrium
Supply
289(1)
Market Equilibrium
289(1)
Two Special Cases
290(1)
Inverse Demand and Supply Curves
291(2)
Example: Equlibrium with Linear Curves
Comparative Statics
293(1)
Example: Shifting Both Curves
Taxes
294(4)
Example: Taxation with Linear Demand and Supply
Passing Along a Tax
298(2)
The Deadweight Loss of a Tax
300(6)
Example: The Market for Loans
Example: Food Subsidies
Pareto Efficiency
306(2)
Example: Waiting in Line
Summary
308(1)
Review Questions
309(2)
Auctions
Classification of Auctions
311(1)
Bidding Rules
Auction Design
312(3)
Other Auction Forms
315(1)
Problems with Auctions
316(1)
The Winner's Curse
317(1)
Summary
318(1)
Review Questions
318(1)
Technology
Inputs and Outputs
319(1)
Describing Technological Constraints
320(1)
Example of Technology
321(2)
Fixed Proportions
Perfect Substitutes
Cobb-Douglas
Properties of Technology
323(2)
The Marginal Product
325(1)
The Technical Rate of Substitution
325(1)
Diminishing Marginal Product
326(1)
Diminishing Technical Rate of Substitution
326(1)
The Long Run and the Short Run
327(1)
Returns to Scale
327(2)
Summary
329(1)
Review Questions
330(1)
Profit Maximization
Profits
331(2)
The Organization of Firms
333(1)
Profits and Stock Market Value
333(2)
Fixed and Variable Factors
335(1)
Short-Run Profit Maximization
335(2)
Comparative Statics
337(1)
Profit Maximization in the Long Run
338(1)
Inverse Factor Demand Curves
339(1)
Profit Maximization and Returns to Scale
340(1)
Revealed Profitability
341(4)
Example: How Do Farmers React to Price Supports?
Cost Minimization
345(1)
Summary
345(1)
Review Questions
346(1)
Appendix
347(2)
Cost Minimization
Cost Minimization
349(4)
Example: Minimizing Costs for Specific Technologies
Revealed Cost Minimization
353(1)
Returns to Scale and the Cost Function
354(2)
Long-Run and Short-Run Costs
356(2)
Fixed and Quasi-Fixed Costs
358(1)
Sunk Costs
358(1)
Summary
359(1)
Review Questions
359(1)
Appendix
360(3)
Cost Curves
Average Costs
363(2)
Marginal Costs
365(2)
Marginal Costs and Variable Costs
367(4)
Example: Specific Cost Curves
Example: Marginal Cost Curves for Two Plants
Long-Run Costs
371(2)
Discrete Levels of Plant Size
373(2)
Long-Run Marginal Costs
375(1)
Summary
376(1)
Review Questions
377(1)
Appendix
377(2)
Firm Supply
Market Environments
379(1)
Pure Competition
380(2)
The Supply Decision of a Competitive Firm
382(2)
An Exception
384(1)
Another Exception
385(2)
Example: Pricing Operating Systems
The Inverse Supply Function
387(1)
Profits and Producer's Surplus
387(4)
Example: The Supply Curve for a Specific Cost Function The
Long-Run Supply Curve of a Firm
391(2)
Long-Run Constant Average Costs
393(1)
Summary
394(1)
Review Questions
395(1)
Appendix
395(2)
Industry Supply
Short-Run Industry Supply
397(1)
Industry Equilibrium in the Short Run
398(1)
Industry Equilibrium in the Long Run
399(2)
The Long-Run Supply Curve
401(4)
Example: Taxation in the Long Run and in the Short Run
The Meaning of Zero Profits
405(1)
Fixed Factors and Economic Rent
406(2)
Example: Tax Licenses in New York City
Economic Rent
408(2)
Rental Rates and Prices
410(1)
Example: Liquor Licenses
The Politics of Rent
411(2)
Example: Farming the Government
Energy Policy
413(4)
Two-Tiered Oil Pricing
Price Controls
The Entitlement Program
Summary
417(1)
Review Questions
418(2)
Monopoly
Maximizing Profits
420(1)
Linear Demand Curve and Monopoly
421(2)
Markup Pricing
423(2)
Example: The Impact of Taxes on Monopolist
Inefficiency of Monopoly
425(2)
Deadweight Loss of Monopoly
427(3)
Example: The Optimal Life of a Patent
Natural Monopoly
430(2)
What Causes Monopolies?
432(3)
Example: Diamonds Are Forever
Example: Pooling in Auction Markets
Summary
435(1)
Review Questions
436(1)
Appendix
437(2)
Monopoly Behavior
Price Discrimination
439(1)
First-Degree Price Discrimination
439(2)
Second-Degree Price Discrimination
441(4)
Example: Price Discrimination in Airfares
Third-Degree Price Discrimination
445(4)
Example: Linear Demand Curves
Example: Calculating Optional Price Discrimination
Example: Price Discrimination in Academic Journals
Bundling
449(2)
Example: Software Suites
Two-Part Tariffs
451(2)
Monopolistic Competition
453(3)
A Location Model of Product Differentiation
456(2)
Product Differentiation
458(1)
More Vendors
458(1)
Summary
459(1)
Review Questions
460(1)
Factor Markets
Monopoly in the Output Market
461(3)
Monopsony
464(4)
Example: The Minimum Wage
Upstream and Downstream Monopolies
468(2)
Summary
470(1)
Review Questions
471(1)
Appendix
471(3)
Oligopoly
Choosing a Strategy
474(1)
Quantity Leadership
474(6)
The Followers Problem
The Leader's Problem
Price Leadership
480(2)
Comparing Price Leadership and Quantity Leadership
482(1)
Simultaneous Quantify Setting
482(2)
An Example of Cournot Equilibrium
484(2)
Adjustment to Equilibrium
486(1)
Many Firms in Cournot Equilibrium
486(1)
Simultaneous Price Setting
487(1)
Collusion
488(3)
Punishment Strategies
491(3)
Example: Price Matching and Competition
Example: Voluntary Export Restraints
Comparison of the Solutions
494(1)
Summary
495(1)
Review Questions
496(1)
Game Theory
The Payoff Matrix of a Game
497(2)
Nash Equilibrium
499(1)
Mixed Strategies
500(1)
The Prisoner's Dilemma
501(2)
Repeated Games
503(2)
Enforcing a Cartel
505(1)
Example: Tit for Tat in Airline Pricing
Sequential Games
506(3)
A Game of Entry Deterrence
509(1)
Summary
510(1)
Review Questions
511(1)
Game Applications
Best Response Curves
512(2)
Mixed Strategies
514(2)
Games of Coordination
516(4)
Battle of the Sexes
Prisoner's Dilemma
Assurance Games
Chicken
How to Coordinate
Games of Competition
520(5)
Games of Coexistence
525(2)
Games of Commitment
527(8)
The Frog and the Scorpion
The Kindly Kidnapper
When Strength Is Weakness
Savings and Social Security
Hold Up
Bargaining
535(3)
The Ultimatum Game
Summary
538(1)
Review Questions
539(2)
Exchange
The Edgeworth Box
541(2)
Trade
543(1)
Pareto Efficient Allocations
544(2)
Market Trade
546(2)
The Algebra of Equilibrium
548(2)
Walras' Law
550(3)
551
Example: An Algebraic Example of Equilibrium
The Existence of Equilibrium
553(1)
Equilibrium and Efficiency
554(1)
The Algebra of Efficiency
555(3)
Example: Monopoly in the Edgeworth Box
Efficiency and Equilibrium
558(2)
Implications of the First Welfare Theorem
560(2)
Implications of the Second Welfare Theorem
562(2)
Summary
564(1)
Review Questions
565(1)
Appendix
565(2)
Production
The Robinson Crusoe Economy
567(2)
Crusoe, Inc
569(1)
The Firm
570(1)
Robinson's Problem
571(1)
Putting Them Together
571(2)
Different Technologies
573(2)
Production and the First Welfare Theorem
575(1)
Production and the Second Welfare Theorem
576(1)
Production Possibilities
576(2)
Comparative Advantage
578(2)
Pareto Efficiency
580(2)
Castaways, Inc.
582(2)
Robinson and Friday as Consumers
584(1)
Decentralized Resource Allocation
585(1)
Summary
586(1)
Review Questions
586(1)
Appendix
587(3)
Welfare
Aggregation of Preferences
590(2)
Social Welfare Functions
592(2)
Welfare Maximization
594(2)
Individualistic Social Welfare Functions
596(1)
Fair Allocations
597(1)
Envy and Equity
598(2)
Summary
600(1)
Review Questions
600(1)
Appendix
601(2)
Externalities
Smokers and Nonsmokers
603(3)
Quasilinear Preferences and the Coase Theorem
606(2)
Production Externalities
608(5)
Example: Pollution Vouchers
Interpretation of the Conditions
613(3)
Market Signals
616(1)
The Tragedy of the Commons
616(4)
Example: Overfishing
Automobile Pollution
620(1)
Summary
621(1)
Review Questions
622(2)
Information Technology
Systems Competition
624(1)
Problem of Complements
624(4)
Relationships among Complementors
Lock-In
628(3)
A Model of Competition with Switching Costs
Network Externalities
631(1)
Markets with Network Externalities
631(2)
Market Dynamics
633(4)
Example: Network Externalities in Computer Software
Implications of Network Externalities
637(1)
Rights Management
637(2)
Ex ample: Video Rental
Sharing Intellectual property
639(2)
Summary
641(1)
Review Questions
642(2)
Public Goods
When to Provide a Public Good?
644(4)
Private Provision of the Public Good
648(1)
Free Riding
648(2)
Different Levels of the Public Good
650(2)
Quasilinear Preferences and Public Goods
652(2)
Example: Pollution Revisited
The Free Rider Problem
654(2)
Comparison to Private Goods
656(1)
Voting
657(3)
Example: Agenda Manipulation
Demand Revelation
660(4)
Example: An Example of the Clarke Tax
Problems with the Clarke Tax
664(1)
Summary
665(1)
Review Questions
665(1)
Appendix
666(2)
Asymmetric Information
The Market for Lemons
668(1)
Quality Choice
669(2)
Choosing the Quality
Adverse Selection
671(2)
Moral Hazard
673(1)
Moral Hazard and Adverse Selection
674(1)
Signaling
675(4)
Example: The Sheepskin Effect
Incentives
679(5)
Example: Voting Rights in the Corporation
Example: Chinese Economic Reforms
Asymmetric Information
684(3)
Example: Monitoring Costs
Example: The Grameen Bank
Summary
687(1)
Review Questions
688
Mathematical Appendix
Functions
1(1)
Graphs
2(1)
Properties of Functions
2(1)
Inverse Functions
3(1)
Equations and Identities
3(1)
Linear Functions
4(1)
Changes and Rates of Change
4(1)
Slopes and Intercepts
5(1)
Absolute Values and Logarithms
6(1)
Derivatives
6(1)
Second Derivatives
7(1)
The Product Rule and the Chain Rule
8(1)
Partial Derivatives
8(1)
Optimization
9(1)
Constrained Optimization
10(1)
Answers 11(30)
Index 31

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