Advanced Microeconomic Theory
An Intuitive Approach with Examples
by Muñoz-Garcia
ISBN: 9780262364164 | Copyright 2017
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| Contents (pg. v) | |
| Preface (pg. xi) | |
| Organization of the Book (pg. xii) | |
| How to Use This Textbook (pg. xii) | |
| Examples of Course Guidelines (pg. xiii) | |
| Ancillary Materials (pg. xiv) | |
| Acknowledgments (pg. xiv) | |
| 1 Preferences and Utility (pg. 1) | |
| 1.1 Preference and Choice: The Preference-Based Approach (pg. 2) | |
| 1.2 Utility Function (pg. 10) | |
| 1.3 Desirability (pg. 11) | |
| 1.4 Indifference Sets, Upper Contour Sets, and Lower Contour Sets (pg. 16) | |
| 1.5 Convexity of Preferences (pg. 17) | |
| 1.6 Interpretation of Convexity (pg. 20) | |
| 1.7 Quasi-Concavity (pg. 23) | |
| 1.8 Common Utility Functions in Economics (pg. 33) | |
| 1.9 Properties of Preference Relations (pg. 39) | |
| 1.10 Continuous Preferences (pg. 48) | |
| 1.11 Existence of a Utility Function (pg. 50) | |
| 1.12 Behavioral Economics—Two Utility Functions (pg. 51) | |
| 1.13 Choice-Based Approach (pg. 59) | |
| 1.14 Consistency on Choices: The Weak Axiom of Revealed Preference (WARP) (pg. 60) | |
| 1.15 Consumption Sets (pg. 63) | |
| Appendix: Rational Preference Relations Satisfy the WARP (pg. 68) | |
| Exercises (pg. 69) | |
| References (pg. 74) | |
| 2 Demand Theory (pg. 77) | |
| 2.1 The Utility Maximization Problem (pg. 78) | |
| 2.2 Walrasian Demand—Comparative Statics (pg. 89) | |
| 2.3 Indirect Utility Function (pg. 94) | |
| 2.4 WARP and Demand (pg. 99) | |
| 2.5 Slutsky Matrix (pg. 109) | |
| 2.6 Expenditure Minimization Problem (pg. 117) | |
| 2.7 Relationships between the Expenditure Function and Hicksian Demand (pg. 128) | |
| 2.8 Relationship between the Walrasian and Hicksian Demand (pg. 129) | |
| 2.9 Relationship between the Walrasian Demand and the Indirect Utility Function (pg. 133) | |
| 2.10 Summary of Relationships (pg. 134) | |
| Appendix A: Duality in Consumption (pg. 139) | |
| Appendix B: Relationship between the Expenditure Function and Hicksian Demand (pg. 146) | |
| Appendix C: Generalized Axiom of Revealed Preference (pg. 148) | |
| Exercises (pg. 153) | |
| References (pg. 161) | |
| 3 Demand Theory—Applications (pg. 163) | |
| 3.1 Measuring the Welfare Effects of a Price Change (pg. 164) | |
| 3.2 Measuring the Welfare Change Associated with the Introduction of a Tax (pg. 172) | |
| 3.3 What If We Use the Walrasian Demand to Measure Welfare Changes? (pg. 173) | |
| 3.4 When Can We Use the Walrasian Demand as a Measure of Welfare Change? (pg. 179) | |
| 3.5 Application of Income and Substitution Effects—I (pg. 182) | |
| 3.6 Application of Income and Substitution Effects—II: The Consumer as a Labor Supplier (pg. 184) | |
| 3.7 Application of Income and Substitution Effects—III: Income and Substitution Effects among Different Goods (pg. 194) | |
| 3.8 Aggregate Demand (pg. 202) | |
| Appendix: Applying Euler’s Theorem to the Hicksian Demand (pg. 208) | |
| Exercises (pg. 210) | |
| References (pg. 220) | |
| 4 Production Theory (pg. 221) | |
| 4.1 Production Sets (pg. 222) | |
| 4.2 Properties of Production Sets (pg. 229) | |
| 4.3 Elasticity of Substitution (pg. 244) | |
| 4.4 Profit Maximization (pg. 249) | |
| 4.5 Cost Minimization (pg. 264) | |
| 4.6 Cost Function (pg. 274) | |
| 4.7 Conditional Factor Demand Correspondence, z(w, q) (pg. 275) | |
| 4.8 Production Function, f(z) (pg. 282) | |
| 4.9 Alternative Representation of the PMP (pg. 283) | |
| 4.10 Average and Marginal Costs with a Single Output (pg. 289) | |
| 4.11 Aggregation in Production (pg. 294) | |
| 4.12 Efficient Production (pg. 297) | |
| Appendix A: Graphical Representation of Cost Functions (pg. 304) | |
| Appendix B: Output and Cost Elasticity (pg. 311) | |
| Exercises (pg. 316) | |
| References (pg. 321) | |
| 5 Choice under Uncertainty (pg. 323) | |
| 5.1 Simple and Compound Lotteries (pg. 324) | |
| 5.2 Preferences over Lotteries (pg. 329) | |
| 5.3 Violations of the IA (pg. 341) | |
| 5.4 Behavioral Theories That Modify Expected Utility Theory (pg. 345) | |
| 5.5 Money Lotteries (pg. 348) | |
| 5.6 Measuring Risk Preferences (pg. 353) | |
| 5.7 Arrow–Pratt Coefficients of Absolute and Relative Risk Aversion (pg. 360) | |
| 5.8 Prudence (pg. 366) | |
| 5.9 Prospect Theory and Reference-Dependent Utility (pg. 368) | |
| 5.10 Comparison of Payoff Distributions (pg. 372) | |
| 5.11 Subjective Probability Theory (pg. 381) | |
| 5.12 Alternatives to SEU: Ambiguity Aversion (MEU), Capacities (CEU), and Smooth Ambiguity Aversion (SAA) (pg. 384) | |
| Appendix A: State-Dependent Utility (pg. 391) | |
| Appendix B: “Extended” Expected Utility Representation (pg. 393) | |
| Exercises (pg. 398) | |
| References (pg. 408) | |
| 6 Partial and General Equilibrium (pg. 411) | |
| 6.1 Partial Equilibrium Analysis (pg. 412) | |
| 6.2 Comparative Statics (pg. 419) | |
| 6.3 Welfare Analysis (pg. 424) | |
| 6.4 General Equilibrium (pg. 428) | |
| 6.5 Comparative Statics (pg. 460) | |
| 6.6 Introducing Taxes (pg. 466) | |
| Appendix A: Large Economies and the Core (pg. 468) | |
| Appendix B: Marshall–Hicks Four Laws of Derived Demand (pg. 477) | |
| Exercises (pg. 479) | |
| References (pg. 487) | |
| 7 Monopoly (pg. 489) | |
| 7.1 Barriers to Entry (pg. 490) | |
| 7.2 Profit-Maximizing Output under Monopoly (pg. 491) | |
| 7.3 Welfare Loss of Monopoly (pg. 499) | |
| 7.4 Comparative Statics (pg. 504) | |
| 7.5 Multiplant Monopolist (pg. 506) | |
| 7.6 Price Discrimination (pg. 509) | |
| 7.7 Advertising in Monopoly (pg. 529) | |
| 7.8 Regulation of Natural Monopolies (pg. 531) | |
| 7.9 Monopsony (pg. 536) | |
| Exercises (pg. 539) | |
| References (pg. 546) | |
| 8 Game Theory and Imperfect Competition (pg. 547) | |
| 8.1 Game Theory Tools (pg. 548) | |
| 8.2 Bertrand Model of Price Competition with Homogeneous Products (pg. 580) | |
| 8.3 Cournot Model of Quantity Competition (pg. 584) | |
| 8.4 Product Differentiation (pg. 594) | |
| 8.5 Dynamic Competition (pg. 598) | |
| 8.6 Reconciling Cournot and Bertrand: Introducing Capacity Constraints (pg. 606) | |
| 8.7 Endogenous Entry (pg. 610) | |
| 8.8 Repeated Interaction (pg. 614) | |
| Appendix A: Cournot Model with Asymmetric Costs (pg. 625) | |
| Appendix B: Cournot Competition with J ≥ 2 Firms (pg. 627) | |
| Exercises (pg. 629) | |
| References (pg. 638) | |
| 9 Externalities and Public Goods (pg. 641) | |
| 9.1 Externalities (pg. 643) | |
| 9.2 Common Pool Resources (pg. 649) | |
| 9.3 Solutions to the Externality Problem (pg. 657) | |
| 9.4 Regulating a Polluting Monopolist (pg. 669) | |
| 9.5 Regulating a Polluting Oligopoly (pg. 671) | |
| 9.6 Fee Comparison (pg. 676) | |
| 9.7 Setting Quotas under Incomplete Information (pg. 680) | |
| 9.8 Setting Emission Fees under Incomplete Information (pg. 682) | |
| 9.9 Comparing Policy Instruments under Incomplete Information (pg. 684) | |
| 9.10 Pollution Abatement (pg. 685) | |
| 9.11 Public Goods (pg. 690) | |
| 9.12 Inefficiency of the Private Provision of Public Goods (pg. 693) | |
| 9.13 Neutrality and the Crowding-out Effect (pg. 699) | |
| 9.14 Remedies to the Underprovision of Public Goods (pg. 702) | |
| 9.15 Lindahl Equilibria (pg. 704) | |
| 9.16 Public Goods That Experience Congestion (pg. 707) | |
| 9.17 Behavioral Motives in Public Good Games (pg. 708) | |
| Appendix: More General Policy Mechanisms (pg. 718) | |
| Exercises (pg. 722) | |
| References (pg. 731) | |
| 10 Contract Theory (pg. 735) | |
| 10.1 Moral Hazard (pg. 736) | |
| 10.2 Moral Hazard with a Continuum of Effort Levels—The First-Order Approach (pg. 751) | |
| 10.3 Moral Hazard with Multiple Signals (pg. 759) | |
| 10.4 Adverse Selection—The “Lemons” Problem (pg. 761) | |
| 10.5 Adverse Selection—The Principal–Agent Problem (pg. 766) | |
| 10.6 Application of Adverse Selection—Regulation (pg. 777) | |
| Exercises (pg. 785) | |
| References (pg. 800) | |
| Mathematical Appendix (pg. 803) | |
| A.1 Sets (pg. 803) | |
| A.2 Intervals of Real Numbers (pg. 805) | |
| A.3 Inequalities (pg. 806) | |
| A.4 Sequences (pg. 808) | |
| A.5 Functions (pg. 812) | |
| A.6 Limits (pg. 816) | |
| A.7 Continuity (pg. 818) | |
| A.8 Differentiation (pg. 825) | |
| A.9 Integration (pg. 832) | |
| A.10 Introduction to Topology (pg. 835) | |
| A.11 Compactness (pg. 842) | |
| A.12 Fixed Point Theorems (pg. 845) | |
| A.13 Optimization (pg. 848) | |
| A.14 Comparative Statics (pg. 853) | |
| A.15 Monotone Comparative Statics: An Introduction (pg. 856) | |
| A.16 Introduction to Mathematical Proofs (pg. 857) | |
| References (pg. 858) | |
| Index (pg. 861) | |
Felix Muñoz-Garcia
Felix Muñoz-Garcia is Associate Professor on the School of Economic Sciences at Washington State University.
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