Economic Theory

Introduction to the Transaction Edition xi Preface xvii chapter 1 Introduction 1 1 What Is Economics? 1 The Role of Prices 3 2 Supply and Demand Analysis 4 PART ONE Demand Analysis chapter 2 The Scarcity Principle 11 3 Definition of Demand 11 Elasticity of Demand 12 4 The Opportunity Set 14 Income Effects 16 5 Substitution Effects 19 chapter 3 Indifference Curves 25 6 Rational Behavior 25 The Indifference System 26 7 Demand Curves 29 Engel Curves 31 8 Combined Demand Curves 35 Market Demand and Engel Curves 38 9 Differences in Tastes 42 *10 Revised Approach to Consumer Choice 45 Environmental Variables 47 Appendix 48 11 Utility Analysis 50 chapter 4 Uncertainty 57 12 Uncertainty 57 Expected Utility Theory 58 *13 Insurance and States of the World 61 14 Uncertainty and Search 65 PART TWO Supply of Products chapter 5 Fundamentals of Supply 69 15 The Firm and Profit Maximization 69 Firm and Market Supply Curves 71 16 Marginal and Average Cost 74 Economic Rent 77 17 Short and Long Run 79 18 External Effects 84 chapter 6 Competition and Monopoly 89 19 The Comparative Statics of Competitive Equilibrium 89 The Stability of Equilibrium 91 20 Monopoly 94 "Natural" Monopoly 95 21 Collusion 98 22 Price Discrimination 102 23 Non-price Rationing 106 PART THREE Production and the Demand for Factors chapter 7 Production by the Firm and Industry 113 24 Production Functions 113 The Cost-Minimizing Conditions 115 Appendix 117 25 Cost Curves 119 Increasing and Decreasing Costs 120 26 Technological Change 124 Appendix 128 *27 Induced Technological Change 129 chapter 8 Demand for Factors 135 28 Derived Demand for Factors of Production 135 Fixed Quantities of Other Factors 136 Fixed Prices of Other Factors 137 29 Substitution Between Factors 139 Appendix 142 30 Substitution Between Industries: A Numerical Example 144 A Single Industry 144 Two Industries 146 31 Substitution Between industries: A General Model 149 Appendix 150 PART FOUR Supply of Factors of Production chapter 9 Human Capital 159 32 Land, Labor, and Capital 159 Population 160 33 Labor Force Participation 162 34 Nonmarket Activities 165 Occupational Choice 166 Appendix 169 35 Investment in Training 172 36 Differences in Abilities and Opportunities 177 The Distribution of Earnings 179 Appendix 180 chapter 10 Accumulation of Capital over Time 37 Consumption and Savings 184 38 The Rate of Growth in Consumption 191 Appendix 193 *39 The Determination of Interest Rates 195 The Rate of Investment = Savings 200 *40 Growth Paths 202 Appendix 204 General Problems 210 Bibliography Reading List 214 Index 219