microeconomics
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Description
Book Introduction
Preface to the 8th Edition
It gives me great satisfaction when I hear from readers that this book has helped them study difficult economics with peace of mind.
Since I first wrote the book and revised it several times, my top priority has always been to make it easier for readers to learn economics.
This has been such an enjoyable challenge for me, and judging by the readers' responses, it feels like my efforts have been somewhat successful.
More than 30 years have passed since this book was first published, so it seems time to inject some new blood and breathe new life into it.
After much persuasion, we succeeded in recruiting Professor Seung-Joo Choi, who was so busy with his own research that he was running out of time, as a co-author.
With the addition of Professor Choi, who has established a solid position in the economics community in recognition of his active research activities, this book has reached a new milestone.
Although this revised edition is not significantly different from the 7th edition in its overall structure, you will find that the discussions have been refined here and there.
We have also significantly expanded the number of practice problems to provide readers with more opportunities to develop their skills on their own.
We are proud to say that through these updates, this book faithfully reflects the latest trends.
Of course, there are still many shortcomings, but we promise to gradually improve them through future revisions.
I also received a lot of help from many people during the process of preparing this revised edition.
First and foremost, I would like to express my deepest gratitude to Professor Myung-Hwan Jo of Seoul City University.
Thanks to his help, we were able to add many new and challenging practice problems.
And this time, we cannot forget to express our gratitude to the Paris-based up-and-coming artist Shinbi A, who took time out of her busy schedule to create this wonderful cover.
Finally, I would like to express my gratitude to President Kim Young-hoon and Manager Jeon Young-wan of Moonwoo Publishing for their unwavering support at every stage of the revision process.
The revision work started a little late, so the schedule was quite tight. I'm so happy that they responded quickly and were able to complete the work without any problems.
It gives me great satisfaction when I hear from readers that this book has helped them study difficult economics with peace of mind.
Since I first wrote the book and revised it several times, my top priority has always been to make it easier for readers to learn economics.
This has been such an enjoyable challenge for me, and judging by the readers' responses, it feels like my efforts have been somewhat successful.
More than 30 years have passed since this book was first published, so it seems time to inject some new blood and breathe new life into it.
After much persuasion, we succeeded in recruiting Professor Seung-Joo Choi, who was so busy with his own research that he was running out of time, as a co-author.
With the addition of Professor Choi, who has established a solid position in the economics community in recognition of his active research activities, this book has reached a new milestone.
Although this revised edition is not significantly different from the 7th edition in its overall structure, you will find that the discussions have been refined here and there.
We have also significantly expanded the number of practice problems to provide readers with more opportunities to develop their skills on their own.
We are proud to say that through these updates, this book faithfully reflects the latest trends.
Of course, there are still many shortcomings, but we promise to gradually improve them through future revisions.
I also received a lot of help from many people during the process of preparing this revised edition.
First and foremost, I would like to express my deepest gratitude to Professor Myung-Hwan Jo of Seoul City University.
Thanks to his help, we were able to add many new and challenging practice problems.
And this time, we cannot forget to express our gratitude to the Paris-based up-and-coming artist Shinbi A, who took time out of her busy schedule to create this wonderful cover.
Finally, I would like to express my gratitude to President Kim Young-hoon and Manager Jeon Young-wan of Moonwoo Publishing for their unwavering support at every stage of the revision process.
The revision work started a little late, so the schedule was quite tight. I'm so happy that they responded quickly and were able to complete the work without any problems.
index
Part 1: Introduction to Microeconomics
Chapter 1: The Nature of Microeconomics
1.1 Economics and Microeconomic Theory
What is economics?
Microeconomic theory and macroeconomic theory
1.2 Methodology of Economics
economic model
Deductive and inductive methods
1.3 Optimization and Balance
rationality
Optimization
Balance
summation
Practice problems
Chapter 2 Markets and Supply and Demand
2.1 Market
What is a market?
Prices and market mechanisms
2.2 Market demand
market demand curve
Elasticity of demand
2.3 Market Supply
market supply curve
Elasticity of supply
summation
Practice problems
Chapter 3 Market Equilibrium
3.1 Analysis of market equilibrium
The meaning of balance
Changes in balance
3.2 Stability of Balance
static stability
dynamic stability
3.3 Application of Balance Analysis
Effects of imposing excise taxes
The effects of price regulation
summation
Practice problems
Part 2: Consumer Theory
Chapter 4 Consumer Preference System
4.1 Nature of the preference system
Product bundle
Preference relationship
4.2 Utility function
Meaning of utility function
Utility surface
Indiscriminate map
4.3 Indifference Curves
Basic characteristics of indifference curves
marginal rate of substitution
Indifference curves of exceptional preference systems
summation
Practice problems
Chapter 5: Consumer Optimal Choice
5.1 Budget constraints
Budget line
Changes in income and prices and the budget line
5.2 Maximizing Consumer Utility
Conditions for utility maximization
Meaning of the utility maximization condition
5.3 Changes in income and prices and optimal choice
Changes in income
Price changes
5.4 Market Demand Curve and Network Effects
market demand curve
network effects
5.5 Substitution and Income Effects
Two implications of price changes
Slutsky equation
Compensation demand curve
Compensatory changes and equivalent changes
summation
Appendix: Mathematical Derivation of Consumer Theory
Practice problems
?
Chapter 6: Applications and Extensions of Consumer Theory
6.1 Application of Consumer Theory
Decisions on labor supply
Analysis of the social welfare system
Combined effect of tax and income subsidy
6.2 Present Preference Theory
The significance of present preference theory
Basic assumptions of revealed preference theory
Derivation of indifference curves
6.3 The problem of exponents
Quantitative index
price index
Cost of Living Index
6.4 Consumer surplus
Derivation of consumer surplus
Consumer surplus and the ordinary demand curve
Tax Burden Incidence Analysis
Effects of tariff imposition
summation
Appendix Indirect Utility Function and Expenditure Function
Practice problems
Chapter 7 Choice under Uncertainty
7.1 Uncertainty and contingent products
Uncertainty and Risk
Budget constraints related to contingent products
Decision maker's preference system and optimal choice
Risk diversification and insurance
7.2 Theory of Expected Utility
Basic assumptions of expected utility theory
von Neumann–Morgenstern utility function
The nature of expected utility
7.3 Theory of Risky Asset Selection
Characteristics of the portfolio
Portfolio Selection Model
Diversification to reduce risk
summation
Practice problems
Part 3: Producer Theory
Chapter 8 Enterprises and Production Technology
8.1 Nature of the company
The reason for a company's existence
Scope of corporate activities
Corporate goals
8.2 Production Technology: Basic Discussion
Factors of production and the period considered
production function
Total production, marginal production, and average production
8.3 Production Technology: The Case of Two Variable Inputs
production surface
Basic characteristics of isoquants
marginal rate of technological substitution
Elasticity of substitution
8.4 Return on scale
Definition of returns to scale
Cobb-Douglas production function
Causes of scale gains
8.5 Technological Advancement
The meaning of technological progress
Source of technological progress
summation
Appendix: Theory of Vertical Integration
Practice problems
Chapter 9 Production Costs
9.1 Concept of Cost
Opportunity cost and accounting cost
sunk costs
Private costs and social costs
9.2 Choices for cost minimization
isocost curve
Conditions for cost minimization
Extension path
Effects of changes in factor prices
9.3 Production costs in the short run
short-run aggregate cost of production
short-term average cost
short-run marginal cost
9.4 Production costs in the long term
long-term average cost
long-term marginal cost
9.5 Returns to scale and long-term production costs
In the case of constant returns to scale
In the case of increased profits from scale
In the case of diminishing returns to scale
Returns to scale in reality
9.6 Economies of Scope
9.7 Shifts in Cost Curves
technological advancement
Changes in input price
Learning effect
summation
Appendix Two Approaches to Cost Minimization
Practice problems
Chapter 10: Maximizing Corporate Profits
10.1 Choosing the Output to Maximize Profit
Profit-maximizing output
Derivation based on the concept of limits
Derivation of the marginal revenue curve
10.2 Profit-maximizing choice of joint product
production transformation curve
Iso-income curve and profit maximization
10.3 Reconsidering the Profit Maximization Hypothesis
Criticism of the profit maximization hypothesis
Several alternative hypotheses
Argument for the profit maximization hypothesis
summation
Practice problems
Part 4: Theory of Market Organization
Chapter 11 Perfectly Competitive Markets
11.1 Characteristics of a Perfectly Competitive Market
The meaning of competition
Conditions for a perfectly competitive market
11.2 Short-run equilibrium under perfect competition
Short term and long term
Maximizing corporate profits
A firm's short-run supply curve
Short-run supply curve of an industry
short-term equilibrium of industry
11.3 Long-run equilibrium under perfect competition
Long-term adjustment process
long-run equilibrium
11.4 Long-Run Supply Curve of Industry
Constant cost industry
Cost-increasing industries and cost-decreasing industries
11.5 The Welfare Economic Significance of Perfect Competition
summation
Practice problems
Chapter 12 Monopoly Markets
12.1 Nature of the Monopoly Market
The meaning of exclusivity
Causes of monopoly occurrence
12.2 Short-term and long-term equilibrium under pure monopoly
short-term equilibrium
long-run equilibrium
12.3 Price Discrimination
Conditions under which price discrimination may become possible
Price and output under price discrimination
Other forms of price discrimination
Intertemporal price discrimination
The Welfare Economic Implications of Price Discrimination
12.4 Other sales strategies
Setting the two-part price
Bundling
12.5 The Welfare Economic Implications of Monopoly
Monopolies and Social Welfare: A Basic Discussion
The Social Costs of Monopolies: A Comprehensive Assessment
12.6 Regulation of Monopolies
Basic structure of the monopoly policy
Various methods of price regulation
summation
Practice problems
Chapter 13 Oligopoly Markets and Monopolistic Competition Markets
13.1 Characteristics of an oligopoly market
General personality
strategic situation
Measurement of monopoly
13.2 Models based on assumed changes: Independent behavior
Cournot model
Stackelberg model
Bertrand model
Bendable demand curve model
13.3 Price Leadership Model: Incomplete Collusion
13.4 Cartel Model: Perfect Collusion
Cartel profit maximization
The instability of cartels
13.5 Advertising Theory
The nature of advertising
Model of optimal advertising
The Welfare Economic Implications of Advertising
13.6 Other Oligopoly Market Theories
Pricing by cost surcharge
Model of a competitive market
13.7 Monopolistic Competition Market
Basic assumptions of the model
Short-run equilibrium under monopolistic competition
long-run equilibrium
Characteristics of resource allocation
summation
Appendix Generalization of the Cournot Model
Practice problems
Chapter 14 Game Theory
14.1 Basic model of game theory
The significance of game theory
The basic framework of game theory
Game balance
14.2 Minimax Strategy and Saddle Point
Minimization strategy
Matching game and saddle point
14.3 The Suspect's Dilemma and Cartels
Suspect's Dilemma
Cartel stability
Repeat game
14.4 Sequential games
The meaning of sequential games
Strategy and Nash Equilibrium in Sequential Games
Perfect balance
Promises and Strategic Actions
14.5 Evolution Game
The nature of evolution games
Hawk-Dove Game
14.6 Games under incomplete or inaccurate information
The meaning of incomplete information games and incomplete information games
Entry game under poor information
14.7 Auction Theory
The significance of auctions and auction theory
Different types of auctions
Design of the auction system
Equal income theorem
The Winner's Misfortune
summation
Practice problems
Part 5: Factor Markets and Income Distribution
Chapter 15: High-Quantity and Prices of Factors of Production
15.1 Demand for Factors of Production
Profit maximization and demand for production factors
Demand for factors of production: when there is only one variable input
Demand for factors of production: When there are multiple variable inputs
market demand curve
Determinants of price elasticity of demand for production factors
15.2 Determination of production factors' quantity and price
Market supply curve for factors of production
equilibrium in the factor markets
Economic and quasi-economic zones
15.3 Imperfect Competition and Factor Markets
Imperfect competition in product markets
Monopoly in the factor market
Bilateral monopoly
15.4 Prices of Factors of Production and Distribution of Income
Marginal productivity and the share of distribution
Problems with marginal productivity theory
summation
Practice problems
Chapter 16 Labor Market and Capital Market
16.1 Labor Supply
Utility maximization and the determination of working hours
Limitations of labor supply models based on utility maximization
16.2 Demand for Capital Services
The many faces of capital
Demand for capital services
User costs of capital
16.3 Investment Theory
Nature of investment
Criteria for deciding whether to invest or not
16.4 Model of Intertemporal Resource Allocation
Capital and intertemporal resource allocation
Model of intertemporal resource allocation
summation
Appendix: The Problem of Exhaustable Resources
Practice problems
Part 6: Markets and Efficiency
Chapter 17 General Equilibrium Theory
17.1 Meaning of general equilibrium
17.2 General Equilibrium in a Pure Exchange Economy
Edgeworth Box
Occurrence of exchange
contract curve
Search process
Walrasian equilibrium
17.3 Existence of general competitive equilibrium
The meaning of the existence of general competitive equilibrium
Walras's law
relative pricing system
Conditions for the existence of general competitive equilibrium
Examples of the existence of general competitive equilibrium
17.4 General competitive balance and efficiency
First Theorem of Welfare Economics
The Second Theorem of Welfare Economics
summation
Practice problems
Chapter 18 Welfare Economics
18.1 Criteria for Social Welfare Evaluation
18.2 Efficient Use of Economic Resources
Basic model of analysis
Production efficiency
Efficiency of exchange
Comprehensive efficiency of production and exchange
Utility possibility frontier
18.3 Perfect Competition and Efficiency in Resource Allocation
Production efficiency
Efficiency of exchange
Comprehensive efficiency of production and exchange
18.4 Social welfare function
Social welfare function and social indifference curve
Deriving the most 'desirable' distribution
Impossibility theorem
18.5 Lane Theory
Contents of the theory
Example by picture
summation
Practice problems
Chapter 19 Market Failure
19.1 Market Failure and Resource Allocation
Market performance
Several factors of failure
Market Failure and the Role of Government
19.2 The Public Goods Problem
The problem of free riders
Optimal production level of public goods
19.3 The Problem of Externalities and Environmental Pollution
The essence of the environmental pollution problem
Appropriate management of the environment
Methods of proper management
19.4 Coase's Theorem
19.5 The Tragedy of the Commons
summation
Practice problems
Part 7: New Horizons in Microeconomic Theory
Chapter 20: Information Economics Theory
20.1 Statement of the problem
20.2 Reverse selection
Dog Apricot Market
Adverse selection in the insurance market
Adverse selection in commodity markets
20.3 Signal Transmission and Selection
Signaling and Selection in the Labor Market
An example of a monopolist who practices price discrimination
20.4 The Principal-Agent Problem
The basic nature of the problem
Real-life examples
20.5 Moral hazard
The nature of moral hazard
Moral hazard in the insurance market
Moral hazard in commodity markets
20.6 Problems with manned design
20.7 Theory of Efficiency Wages
summation
Appendix Information Theory
Practice problems
Chapter 21: Law and Economics
21.1 Nature of Theory
21.2 Problems with property law
The meaning of property rights and property law
Intellectual property rights issues
Alternatives to the Intellectual Property Rights System
Coase's theorem
21.3 Problems of contract law
Meaning of contract
Meaning of contract law
Efficient breach of contract
21.4 Economic Analysis of Tort Law
Contents and significance of the Tort Act
Optimal level of attention
Principles of liability under tort law
When the victim's preventive efforts are problematic
21.5 Economic Theory of Crime and Punishment
Background information
Optimal crime level
summation
Practice problems
Chapter 22: Theory of Financial Markets
22.1 Capital Asset Pricing Model
Diversifiable and Non-Diversifiable Risks
Determination of risk premium
22.2 Gift
Forward and futures contracts
Economic functions of the futures market
Theoretical Futures Prices: Spot-Futures Valuation Theory
22.3 Options
What are options?
Options as an investment vehicle
Determination of Option Value: A Basic Discussion
Determination of Option Value: Binomial Model
summation
Theoretical price derivation process for appendix options
Practice problems
Chapter 23: Behavioral Economics
23.1 Background Information
23.2 Problems with Traditional Economic Theory
Assumptions of rationality and selfishness
The nature of consumer preference systems
The explanatory power of expected utility theory
23.3 Prospect Theory
Background information
A peculiar phenomenon that appears in relation to choices under uncertainty
The basic framework of prospect theory
23.4 Behavioral Game Theory
Background information
Ultimatum Game and Dictator Game
Public Goods Game
23.5 Nudge Policy
23.6 Evaluation and Prospects of Behavioral Economics Theory
summation
Practice problems
Item Index
Biographical Index
Chapter 1: The Nature of Microeconomics
1.1 Economics and Microeconomic Theory
What is economics?
Microeconomic theory and macroeconomic theory
1.2 Methodology of Economics
economic model
Deductive and inductive methods
1.3 Optimization and Balance
rationality
Optimization
Balance
summation
Practice problems
Chapter 2 Markets and Supply and Demand
2.1 Market
What is a market?
Prices and market mechanisms
2.2 Market demand
market demand curve
Elasticity of demand
2.3 Market Supply
market supply curve
Elasticity of supply
summation
Practice problems
Chapter 3 Market Equilibrium
3.1 Analysis of market equilibrium
The meaning of balance
Changes in balance
3.2 Stability of Balance
static stability
dynamic stability
3.3 Application of Balance Analysis
Effects of imposing excise taxes
The effects of price regulation
summation
Practice problems
Part 2: Consumer Theory
Chapter 4 Consumer Preference System
4.1 Nature of the preference system
Product bundle
Preference relationship
4.2 Utility function
Meaning of utility function
Utility surface
Indiscriminate map
4.3 Indifference Curves
Basic characteristics of indifference curves
marginal rate of substitution
Indifference curves of exceptional preference systems
summation
Practice problems
Chapter 5: Consumer Optimal Choice
5.1 Budget constraints
Budget line
Changes in income and prices and the budget line
5.2 Maximizing Consumer Utility
Conditions for utility maximization
Meaning of the utility maximization condition
5.3 Changes in income and prices and optimal choice
Changes in income
Price changes
5.4 Market Demand Curve and Network Effects
market demand curve
network effects
5.5 Substitution and Income Effects
Two implications of price changes
Slutsky equation
Compensation demand curve
Compensatory changes and equivalent changes
summation
Appendix: Mathematical Derivation of Consumer Theory
Practice problems
?
Chapter 6: Applications and Extensions of Consumer Theory
6.1 Application of Consumer Theory
Decisions on labor supply
Analysis of the social welfare system
Combined effect of tax and income subsidy
6.2 Present Preference Theory
The significance of present preference theory
Basic assumptions of revealed preference theory
Derivation of indifference curves
6.3 The problem of exponents
Quantitative index
price index
Cost of Living Index
6.4 Consumer surplus
Derivation of consumer surplus
Consumer surplus and the ordinary demand curve
Tax Burden Incidence Analysis
Effects of tariff imposition
summation
Appendix Indirect Utility Function and Expenditure Function
Practice problems
Chapter 7 Choice under Uncertainty
7.1 Uncertainty and contingent products
Uncertainty and Risk
Budget constraints related to contingent products
Decision maker's preference system and optimal choice
Risk diversification and insurance
7.2 Theory of Expected Utility
Basic assumptions of expected utility theory
von Neumann–Morgenstern utility function
The nature of expected utility
7.3 Theory of Risky Asset Selection
Characteristics of the portfolio
Portfolio Selection Model
Diversification to reduce risk
summation
Practice problems
Part 3: Producer Theory
Chapter 8 Enterprises and Production Technology
8.1 Nature of the company
The reason for a company's existence
Scope of corporate activities
Corporate goals
8.2 Production Technology: Basic Discussion
Factors of production and the period considered
production function
Total production, marginal production, and average production
8.3 Production Technology: The Case of Two Variable Inputs
production surface
Basic characteristics of isoquants
marginal rate of technological substitution
Elasticity of substitution
8.4 Return on scale
Definition of returns to scale
Cobb-Douglas production function
Causes of scale gains
8.5 Technological Advancement
The meaning of technological progress
Source of technological progress
summation
Appendix: Theory of Vertical Integration
Practice problems
Chapter 9 Production Costs
9.1 Concept of Cost
Opportunity cost and accounting cost
sunk costs
Private costs and social costs
9.2 Choices for cost minimization
isocost curve
Conditions for cost minimization
Extension path
Effects of changes in factor prices
9.3 Production costs in the short run
short-run aggregate cost of production
short-term average cost
short-run marginal cost
9.4 Production costs in the long term
long-term average cost
long-term marginal cost
9.5 Returns to scale and long-term production costs
In the case of constant returns to scale
In the case of increased profits from scale
In the case of diminishing returns to scale
Returns to scale in reality
9.6 Economies of Scope
9.7 Shifts in Cost Curves
technological advancement
Changes in input price
Learning effect
summation
Appendix Two Approaches to Cost Minimization
Practice problems
Chapter 10: Maximizing Corporate Profits
10.1 Choosing the Output to Maximize Profit
Profit-maximizing output
Derivation based on the concept of limits
Derivation of the marginal revenue curve
10.2 Profit-maximizing choice of joint product
production transformation curve
Iso-income curve and profit maximization
10.3 Reconsidering the Profit Maximization Hypothesis
Criticism of the profit maximization hypothesis
Several alternative hypotheses
Argument for the profit maximization hypothesis
summation
Practice problems
Part 4: Theory of Market Organization
Chapter 11 Perfectly Competitive Markets
11.1 Characteristics of a Perfectly Competitive Market
The meaning of competition
Conditions for a perfectly competitive market
11.2 Short-run equilibrium under perfect competition
Short term and long term
Maximizing corporate profits
A firm's short-run supply curve
Short-run supply curve of an industry
short-term equilibrium of industry
11.3 Long-run equilibrium under perfect competition
Long-term adjustment process
long-run equilibrium
11.4 Long-Run Supply Curve of Industry
Constant cost industry
Cost-increasing industries and cost-decreasing industries
11.5 The Welfare Economic Significance of Perfect Competition
summation
Practice problems
Chapter 12 Monopoly Markets
12.1 Nature of the Monopoly Market
The meaning of exclusivity
Causes of monopoly occurrence
12.2 Short-term and long-term equilibrium under pure monopoly
short-term equilibrium
long-run equilibrium
12.3 Price Discrimination
Conditions under which price discrimination may become possible
Price and output under price discrimination
Other forms of price discrimination
Intertemporal price discrimination
The Welfare Economic Implications of Price Discrimination
12.4 Other sales strategies
Setting the two-part price
Bundling
12.5 The Welfare Economic Implications of Monopoly
Monopolies and Social Welfare: A Basic Discussion
The Social Costs of Monopolies: A Comprehensive Assessment
12.6 Regulation of Monopolies
Basic structure of the monopoly policy
Various methods of price regulation
summation
Practice problems
Chapter 13 Oligopoly Markets and Monopolistic Competition Markets
13.1 Characteristics of an oligopoly market
General personality
strategic situation
Measurement of monopoly
13.2 Models based on assumed changes: Independent behavior
Cournot model
Stackelberg model
Bertrand model
Bendable demand curve model
13.3 Price Leadership Model: Incomplete Collusion
13.4 Cartel Model: Perfect Collusion
Cartel profit maximization
The instability of cartels
13.5 Advertising Theory
The nature of advertising
Model of optimal advertising
The Welfare Economic Implications of Advertising
13.6 Other Oligopoly Market Theories
Pricing by cost surcharge
Model of a competitive market
13.7 Monopolistic Competition Market
Basic assumptions of the model
Short-run equilibrium under monopolistic competition
long-run equilibrium
Characteristics of resource allocation
summation
Appendix Generalization of the Cournot Model
Practice problems
Chapter 14 Game Theory
14.1 Basic model of game theory
The significance of game theory
The basic framework of game theory
Game balance
14.2 Minimax Strategy and Saddle Point
Minimization strategy
Matching game and saddle point
14.3 The Suspect's Dilemma and Cartels
Suspect's Dilemma
Cartel stability
Repeat game
14.4 Sequential games
The meaning of sequential games
Strategy and Nash Equilibrium in Sequential Games
Perfect balance
Promises and Strategic Actions
14.5 Evolution Game
The nature of evolution games
Hawk-Dove Game
14.6 Games under incomplete or inaccurate information
The meaning of incomplete information games and incomplete information games
Entry game under poor information
14.7 Auction Theory
The significance of auctions and auction theory
Different types of auctions
Design of the auction system
Equal income theorem
The Winner's Misfortune
summation
Practice problems
Part 5: Factor Markets and Income Distribution
Chapter 15: High-Quantity and Prices of Factors of Production
15.1 Demand for Factors of Production
Profit maximization and demand for production factors
Demand for factors of production: when there is only one variable input
Demand for factors of production: When there are multiple variable inputs
market demand curve
Determinants of price elasticity of demand for production factors
15.2 Determination of production factors' quantity and price
Market supply curve for factors of production
equilibrium in the factor markets
Economic and quasi-economic zones
15.3 Imperfect Competition and Factor Markets
Imperfect competition in product markets
Monopoly in the factor market
Bilateral monopoly
15.4 Prices of Factors of Production and Distribution of Income
Marginal productivity and the share of distribution
Problems with marginal productivity theory
summation
Practice problems
Chapter 16 Labor Market and Capital Market
16.1 Labor Supply
Utility maximization and the determination of working hours
Limitations of labor supply models based on utility maximization
16.2 Demand for Capital Services
The many faces of capital
Demand for capital services
User costs of capital
16.3 Investment Theory
Nature of investment
Criteria for deciding whether to invest or not
16.4 Model of Intertemporal Resource Allocation
Capital and intertemporal resource allocation
Model of intertemporal resource allocation
summation
Appendix: The Problem of Exhaustable Resources
Practice problems
Part 6: Markets and Efficiency
Chapter 17 General Equilibrium Theory
17.1 Meaning of general equilibrium
17.2 General Equilibrium in a Pure Exchange Economy
Edgeworth Box
Occurrence of exchange
contract curve
Search process
Walrasian equilibrium
17.3 Existence of general competitive equilibrium
The meaning of the existence of general competitive equilibrium
Walras's law
relative pricing system
Conditions for the existence of general competitive equilibrium
Examples of the existence of general competitive equilibrium
17.4 General competitive balance and efficiency
First Theorem of Welfare Economics
The Second Theorem of Welfare Economics
summation
Practice problems
Chapter 18 Welfare Economics
18.1 Criteria for Social Welfare Evaluation
18.2 Efficient Use of Economic Resources
Basic model of analysis
Production efficiency
Efficiency of exchange
Comprehensive efficiency of production and exchange
Utility possibility frontier
18.3 Perfect Competition and Efficiency in Resource Allocation
Production efficiency
Efficiency of exchange
Comprehensive efficiency of production and exchange
18.4 Social welfare function
Social welfare function and social indifference curve
Deriving the most 'desirable' distribution
Impossibility theorem
18.5 Lane Theory
Contents of the theory
Example by picture
summation
Practice problems
Chapter 19 Market Failure
19.1 Market Failure and Resource Allocation
Market performance
Several factors of failure
Market Failure and the Role of Government
19.2 The Public Goods Problem
The problem of free riders
Optimal production level of public goods
19.3 The Problem of Externalities and Environmental Pollution
The essence of the environmental pollution problem
Appropriate management of the environment
Methods of proper management
19.4 Coase's Theorem
19.5 The Tragedy of the Commons
summation
Practice problems
Part 7: New Horizons in Microeconomic Theory
Chapter 20: Information Economics Theory
20.1 Statement of the problem
20.2 Reverse selection
Dog Apricot Market
Adverse selection in the insurance market
Adverse selection in commodity markets
20.3 Signal Transmission and Selection
Signaling and Selection in the Labor Market
An example of a monopolist who practices price discrimination
20.4 The Principal-Agent Problem
The basic nature of the problem
Real-life examples
20.5 Moral hazard
The nature of moral hazard
Moral hazard in the insurance market
Moral hazard in commodity markets
20.6 Problems with manned design
20.7 Theory of Efficiency Wages
summation
Appendix Information Theory
Practice problems
Chapter 21: Law and Economics
21.1 Nature of Theory
21.2 Problems with property law
The meaning of property rights and property law
Intellectual property rights issues
Alternatives to the Intellectual Property Rights System
Coase's theorem
21.3 Problems of contract law
Meaning of contract
Meaning of contract law
Efficient breach of contract
21.4 Economic Analysis of Tort Law
Contents and significance of the Tort Act
Optimal level of attention
Principles of liability under tort law
When the victim's preventive efforts are problematic
21.5 Economic Theory of Crime and Punishment
Background information
Optimal crime level
summation
Practice problems
Chapter 22: Theory of Financial Markets
22.1 Capital Asset Pricing Model
Diversifiable and Non-Diversifiable Risks
Determination of risk premium
22.2 Gift
Forward and futures contracts
Economic functions of the futures market
Theoretical Futures Prices: Spot-Futures Valuation Theory
22.3 Options
What are options?
Options as an investment vehicle
Determination of Option Value: A Basic Discussion
Determination of Option Value: Binomial Model
summation
Theoretical price derivation process for appendix options
Practice problems
Chapter 23: Behavioral Economics
23.1 Background Information
23.2 Problems with Traditional Economic Theory
Assumptions of rationality and selfishness
The nature of consumer preference systems
The explanatory power of expected utility theory
23.3 Prospect Theory
Background information
A peculiar phenomenon that appears in relation to choices under uncertainty
The basic framework of prospect theory
23.4 Behavioral Game Theory
Background information
Ultimatum Game and Dictator Game
Public Goods Game
23.5 Nudge Policy
23.6 Evaluation and Prospects of Behavioral Economics Theory
summation
Practice problems
Item Index
Biographical Index
GOODS SPECIFICS
- Date of issue: March 5, 2024
- Format: Hardcover book binding method guide
- Page count, weight, size: 832 pages | 188*257*21mm
- ISBN13: 9791197967689
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