Microeconomics: Theory and Applications with Calculus, 4e

Book Description

For courses in microeconomics.

 

Exploring Microeconomics: Formal Theory and Practical Problems

Significantly revised and updated with new real-world examples, exercises, and applications, this Fourth Edition of Microeconomics: Theory and Applications with Calculus remains the premiere microeconomics text to marry formal theory with robust, thoroughly analyzed real-world problems.

 

Intended as an intermediate microeconomics text, Perloff introduces economic theory through a combination of calculus, algebra, and graphs. The text integrates estimated, real-world problems and applications, using a step-by-step approach to demonstrate how microeconomic theory can be applied to solve practical problems and policy issues. Compared to other similar texts, the author also places greater emphasis on using contemporary theories—such as game theory and contract theory—to analyze markets.

 

Also available with MyEconLab®

MyEconLab is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.

 

NOTE:You are purchasing a standalone product; MyEconLab does not come packaged with this content.

 

If you would like to purchase both the physical text and MyEconLab search for:

 

0134483367 / 9780134483368 Theory and Applications with Calculus Plus MyEconLab with Pearson eText -- Access Card Package, 4/e

 

Package consists of:

 

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Table of Contents

  1. Microeconomics Theory and Applications with Calculus
  2. Microeconomics Theory and Applications with Calculus
  3. Brief Contents
  4. Contents
  5. Preface
    1. Changes in the Fourth Edition
    2. How This Book Differs from Others
    3. Alternative Organizations
    4. Teaching Resources
  6. 1 Introduction
    1. 1.1 Microeconomics: The Allocation of Scarce Resources
      1. Trade-Offs
      2. Who Makes the Decisions
      3. How Prices Determine Allocations
    2. 1.2 Models
      1. Simplifications by Assumption
      2. Testing Theories
      3. Maximizing Subject to Constraints
      4. Positive Versus Normative
    3. 1.3 Uses of Microeconomic Models
    4. Summary
  7. 2 Supply and Demand
    1. 2.1 Demand
      1. The Demand Function
        1. A Change in a Product’s Price Causes a Movement Along the Demand Curve.
        2. A Change in Another Factor Causes the Demand Curve to Shift.
      2. Summing Demand Functions
    2. 2.2 Supply
      1. The Supply Function
        1. A Change in a Product’s Price Causes a Movement Along the Supply Curve.
        2. A Change in Another Factor Causes the Supply Curve to Shift.
      2. Summing Supply Functions
      3. How Government Import Policies Affect Supply Curves
    3. 2.3 Market Equilibrium
      1. Finding the Market Equilibrium
      2. Forces That Drive a Market to Equilibrium
    4. 2.4 Shocking the Equilibrium: Comparative Statics
      1. Comparative Statics with Discrete (Relatively Large) Changes
      2. Comparative Statics with Small Changes
      3. Solved Problem 2.1
      4. Why the Shapes of Demand and Supply Curves Matter
    5. 2.5 Elasticities
      1. Demand Elasticity
      2. Solved Problem 2.2
        1. Elasticities Along the Demand Curve.
      3. Solved Problem 2.3
        1. Other Demand Elasticities.
      4. Supply Elasticity
      5. Solved Problem 2.4
      6. Long Run Versus Short Run
        1. Demand Elasticities over Time.
        2. Supply Elasticities over Time.
      7. Solved Problem 2.5
    6. 2.6 Effects of a Sales Tax
      1. Equilibrium Effects of a Specific Tax
      2. The Same Equilibrium No Matter Who Is Taxed
      3. Who Pays the Tax?
      4. Solved Problem 2.6
      5. The Similar Effects of Ad Valorem and Specific Taxes
    7. 2.7 Quantity Supplied Need Not Equal Quantity Demanded
      1. Price Ceiling
      2. Price Floor
    8. 2.8 When to Use the Supply-and-Demand Model
    9. Summary
    10. Exercises
      1. 1. Demand Demand 
      2. 2. Supply
      3. 3. Market Equilibrium
      4. 4. Shocking the Equilibrium: Comparative Statics
      5. 5. Elasticities
      6. 6. Effects of a Sales Tax
      7. 7. Quantity Supplied Need Not Equal Quantity Demanded
      8. 8. When to Use the Supply-and-Demand Model
      9. 9. Challenge
  8. 3 A Consumer’s Constrained Choice A Consumer’s Constrained Choice
    1. 3.1 Preferences
      1. Properties of Consumer Preferences
        1. Completeness.
        2. Transitivity.
        3. More Is Better.
      2. Preference Maps
      3. Indifference Curves
      4. Solved Problem 3.1
    2. 3.2 Utility
      1. Utility Function
        1. Ordinal Preferences.
        2. Utility and Indifference Curves.
      2. Willingness to Substitute Between Goods
        1. The Relationship Between the Marginal Rate of Substitution and Marginal Utility.
      3. Solved Problem 3.2
        1. Diminishing Marginal Rate of Substitution.
      4. Curvature of Indifference Curves
        1. Straight Line Indifference Curve.
        2. Right Angle Indifference Curve.
        3. Convex Indifference Curve.
      5. Solved Problem 3.3
    3. 3.3 Budget Constraint
    4. 3.4 Constrained Consumer Choice
      1. Finding an Interior Solution Using Graphs
      2. Solved Problem 3.4
      3. Finding an Interior Solution Using Calculus
        1. Substitution Method.
      4. Solved Problem 3.5
        1. Lagrangian Method.
      5. Solved Problem 3.6
        1. Finding an Interior Solution Using a Short Cut.
      6. Solved Problem 3.7
      7. Finding Corner Solutions
        1. Perfect Substitutes Utility Function.
        2. Quasilinear Utility Function.
        3. Optimal Bundles on Convex Sections of Indifference Curves.
      8. Minimizing Expenditure
      9. Solved Problem 3.8
    5. 3.5 Behavioral Economics
      1. Tests of Transitivity
      2. Endowment Effect
      3. Salience
    6. Summary
    7. Exercises
      1. 1. Preferences Preferences 
      2. 2. Utility Utility 
      3. 3. Budget Constraint Budget Constraint 
      4. 4. Constrained Consumer Choice Constrained Consumer Choice 
      5. 5. Behavioral Economics Behavioral Economics 
      6. 6. Challenge Challenge 
  9. 4 Demand
    1. 4.1 Deriving Demand Curves
      1. System of Demand Functions
      2. Graphical Interpretation
    2. 4.2 Effects of an Increase in Income
      1. How Income Changes Shift Demand Curves
      2. Solved Problem 4.1
      3. Consumer Theory and Income Elasticities
        1. Income Elasticity.
      4. Solved Problem 4.2
        1. Income-Consumption Curves and Income Elasticities.
        2. Some Goods Must Be Normal.
        3. Weighted Income Elasticities.
      5. Solved Problem 4.3
    3. 4.3 Effects of a Price Increase
      1. Income and Substitution Effects with a Normal Good
      2. Solved Problem 4.4
      3. Solved Problem 4.5
      4. Income and Substitution Effects with an Inferior Good
      5. Solved Problem 4.6
      6. Compensated Demand Curve
      7. Solved Problem 4.7
      8. Slutsky Equation
    4. 4.4 Cost-of-Living Adjustment
      1. Inflation Indexes
      2. Effects of Inflation Adjustments
        1. CPI Adjustment.
        2. True Cost-of-Living Adjustment.
        3. Size of the CPI Substitution Bias.
    5. 4.5 Revealed Preference
      1. Recovering Preferences
      2. Substitution Effect
    6. Summary
    7. Exercises
      1. 1. Deriving Demand Curves Deriving Demand Curves 
      2. 2. Effects of an Increase in Income Effects of an Increase in Income 
      3. 3. Effects of a Price Increase Effects of a Price Increase 
      4. 4. Cost-of-Living Adjustment Cost-of-Living Adjustment 
      5. 5. Revealed Preference Revealed Preference 
      6. 6. Challenge Challenge 
  10. 5 Consumer Welfare and Policy Analysis
    1. 5.1 Uncompensated Consumer Welfare
      1. Willingness to Pay
      2. An Individual’s Consumer Surplus
      3. Effect of a Price Change on Consumer Surplus
      4. Solved Problem 5.1
      5. Market Consumer Surplus
    2. 5.2 Compensated Consumer Welfare
      1. Indifference Curve Analysis
        1. Compensating Variation.
        2. Equivalent Variation.
      2. Compensated Demand Curves and Consumer Welfare
      3. Comparing the Three Welfare Measures
        1. An Example.
        2. By How Much Do These Measures Differ?
      4. Solved Problem 5.2
    3. 5.3 Effects of Government Policies on Consumer Welfare
      1. Quotas
      2. Food Stamps
    4. 5.4 Deriving Labor Supply Curves
      1. Labor-Leisure Choice
      2. Solved Problem 5.3
      3. Income and Substitution Effects
      4. Solved Problem 5.4
      5. Shape of the Labor Supply Curve
      6. Income Tax Rates and the Labor Supply Curve
      7. Solved Problem 5.5
    5. Summary
    6. Exercises
      1. 1. Uncompensated Consumer Welfare Uncompensated Consumer Welfare 
      2. 2. Compensated Consumer Welfare Compensated Consumer Welfare 
      3. 3. Effects of Government Policies on Consumer Welfare Effects of Government Policies on Consumer Welfare 
      4. 4. Deriving Labor Supply Curves Deriving Labor Supply Curves 
      5. 5. Challenge Challenge 
    7. Appendix 5 Minimizing Expenditure
  11. 6 Firms and Production
    1. 6.1 The Ownership and Management of Firms
      1. Private, Public, and Nonprofit Firms
      2. The Ownership of For-Profit Firms
      3. The Management of Firms
      4. What Owners Want
    2. 6.2 Production
      1. Production Functions
      2. Time and the Variability of Inputs
    3. 6.3 Short-Run Production: One Variable and One Fixed Input
      1. Solved Problem 6.1
      2. Interpretation of Graphs
      3. Solved Problem 6.2
      4. Law of Diminishing Marginal Returns
    4. 6.4 Long-Run Production: Two Variable Inputs
      1. Isoquants
        1. Properties of Isoquants.
        2. Shape of Isoquants.
      2. Substituting Inputs
      3. Solved Problem 6.3
      4. Diminishing Marginal Rates of Technical Substitution
      5. The Elasticity of Substitution
        1. Constant Elasticity of Substitution Production Function.
        2. Linear Production Function.
        3. Fixed-Proportion Production Function.
        4. Cobb-Douglas Production Function.
      6. Solved Problem 6.4
    5. 6.5 Returns to Scale
      1. Constant, Increasing, and Decreasing Returns to Scale
      2. Solved Problem 6.5
      3. Varying Returns to Scale
    6. 6.6 Productivity and Technical Change
      1. Relative Productivity
      2. Innovations
        1. Technical Progress.
        2. Organizational Change.
    7. Summary
    8. Exercises
      1. 1. The Ownership and Management of Firms The Ownership and Management of Firms 
      2. 2. Production Production 
      3. 3. Short-Run Production: One Variable and One Fixed Input Short-Run Production: One Variable and One Fixed Input 
      4. 4. Long-Run Production: Two Variable Inputs Long-Run Production: Two Variable Inputs 
      5. 5. Returns to Scale Returns to Scale 
      6. 6. Productivity and Technical Change Productivity and Technical Change 
      7. 7. Challenge Challenge 
  12. 7 Costs
    1. 7.1 Measuring Costs
      1. Opportunity Costs
      2. Solved Problem 7.1
      3. Opportunity Cost of Capital
      4. Sunk Costs
    2. 7.2 Short-Run Costs
      1. Short-Run Cost Measures
        1. Fixed Cost, Variable Cost, and Total Cost.
        2. Marginal Cost.
        3. Average Cost.
      2. Solved Problem 7.2
      3. Short-Run Cost Curves
      4. Production Functions and the Shape of Cost Curves
        1. Shape of the Marginal Cost Curve.
        2. Shape of the Average Cost Curve.
      5. Effects of Taxes on Costs
      6. Short-Run Cost Summary
    3. 7.3 Long-Run Costs
      1. Input Choice
        1. Isocost Line.
        2. Minimizing Cost.
      2. Solved Problem 7.3
        1. Using Calculus to Minimize Cost.
      3. Solved Problem 7.4
        1. Maximizing Output.
        2. Shortcuts for Minimizing Cost and Maximizing Output.
        3. Factor Price Changes.
      4. How Long-Run Cost Varies with Output
        1. Expansion Path.
      5. Solved Problem 7.5
        1. Long-Run Cost Function.
      6. Solved Problem 7.6
      7. The Shape of Long-Run Cost Curves
      8. Estimating Cost Curves Versus Introspection
    4. 7.4 Lower Costs in the Long Run
      1. Long-Run Average Cost as the Envelope of Short-Run Average Cost Curves
      2. Short-Run and Long-Run Expansion Paths
      3. How Learning by Doing Lowers Costs
    5. 7.5 Cost of Producing Multiple Goods
    6. Summary
    7. Exercises
      1. 1. Measuring Costs Measuring Costs 
      2. 2. Short-Run Costs Short-Run Costs 
      3. 3. Long-Run Costs Long-Run Costs 
      4. 4. Lower Costs in the Long Run Lower Costs in the Long Run 
      5. 5. Cost of Producing Multiple Goods Cost of Producing Multiple Goods 
      6. 6. Challenge
  13. 8 Competitive Firms and Markets
    1. In this chapter, we examine four main topics
    2. 8.1 Perfect Competition
      1. Price Taking
      2. Why a Firm’s Demand Curve Is Horizontal
        1. Large Number of Small Firms and Consumers.
        2. Identical Products.
        3. Full Information.
        4. Negligible Transaction Costs.
        5. Free Entry and Exit.
      3. Perfect Competition in the Chicago Commodity Exchange
      4. Deviations from Perfect Competition
      5. Derivation of a Competitive Firm’s Demand Curve
      6. Solved Problem 8.1
      7. Why Perfect Competition Is Important
    3. 8.2 Profit Maximization
      1. Profit
      2. Two Steps to Maximizing Profit
        1. Output Rules.
        2. Shutdown Rules.
    4. 8.3 Competition in the Short Run
      1. Short-Run Competitive Profit Maximization
        1. Short-Run Output Decision.
      2. Solved Problem 8.2
        1. Short-Run Shutdown Decision.
        2. The Market Price Is Above the Minimum AC.
        3. The Market Price Is Between the Minimum AC and the Minimum AVC.
        4. The Market Price Is Less than the Minimum AVC.
      3. Short-Run Firm Supply Curve
      4. Solved Problem 8.3
      5. Short-Run Market Supply Curve
        1. Short-Run Market Supply with Identical Firms.
        2. Short-Run Market Supply with Firms That Differ.
      6. Short-Run Competitive Equilibrium
      7. Solved Problem 8.4
    5. 8.4 Competition in the Long Run
      1. Long-Run Competitive Profit Maximization
      2. Long-Run Firm Supply Curve
      3. Long-Run Market Supply Curve
        1. Entry and Exit.
        2. Long-Run Market Supply with Identical Firms and Free Entry.
        3. Long-Run Market Supply When Entry Is Limited.
        4. Long-Run Market Supply When Firms Differ.
        5. Long-Run Market Supply When Input Prices Vary with Output.
        6. Long-Run Market Supply Curve with Trade.
      4. Solved Problem 8.5
      5. Long-Run Competitive Equilibrium
    6. Summary
    7. Exercises
      1. 1. Perfect Competition Perfect Competition 
      2. 2. Profit Maximization Profit Maximization 
      3. 3. Competition in the Short Run Competition in the Short Run 
      4. 4. Competition in the Long Run Competition in the Long Run 
      5. 5. Challenge Challenge 
  14. 9 Properties and Applications of the Competitive Model
    1. In this chapter, we examine six main topics
    2. 9.1 Zero Profit for Competitive Firms in the Long Run
      1. Zero Long-Run Profit with Free Entry
      2. Zero Long-Run Profit When Entry Is Limited
      3. The Need to Maximize Profit
    3. 9.2 Producer Surplus
      1. Measuring Producer Surplus Using a Supply Curve
      2. Using Producer Surplus
      3. Solved Problem 9.1
    4. 9.3 Competition Maximizes Welfare
      1. Measuring Welfare
      2. Why Producing Less Than the Competitive Output Lowers Welfare
      3. Why Producing More Than the Competitive Output Lowers Welfare
    5. 9.4 Policies That Shift Supply Curves
    6. 9.5 Policies That Create a Wedge Between Supply and Demand Curves
      1. Welfare Effects of a Sales Tax
      2. Welfare Effects of a Price Floor
        1. Traditional Price Support.
        2. Alternative Price Support.
      3. Solved Problem 9.2
      4. Welfare Effects of a Price Ceiling
      5. Solved Problem 9.3
    7. 9.6 Comparing Both Types of Policies: Trade
      1. Free Trade Versus a Ban on Imports
      2. Solved Problem 9.4
      3. Free Trade Versus a Tariff
      4. Solved Problem 9.5
      5. Free Trade Versus a Quota
      6. Rent Seeking
    8. Summary
    9. Exercises
      1. 1. Zero Profit for Competitive Firms in the Long Run Zero Profit for Competitive Firms in the Long Run 
      2. 2. Producer Surplus Producer Surplus 
      3. 3. Competition Maximizes Welfare Competition Maximizes Welfare 
      4. 4. Policies That Shift Supply Curves Policies That Shift Supply Curves 
      5. 5. Policies That Create a Wedge Between Supply and Demand Curves Policies That Create a Wedge Between Supply and Demand Curves 
      6. 6. Comparing Both Types of Policies: Trade Comparing Both Types of Policies: Trade 
      7. 7. Challenge Challenge 
  15. 10 General Equilibrium and Economic Welfare
    1. In this chapter, we examine various views on equity, focusing on five main topics
    2. 10.1 General Equilibrium
      1. Competitive Equilibrium in Two Interrelated Markets
      2. Minimum Wages with Incomplete Coverage
      3. Solved Problem 10.1
    3. 10.2 Trading Between Two People
      1. Endowments
      2. Mutually Beneficial Trades
      3. Solved Problem 10.2
      4. Deriving the Contract Curve
      5. Solved Problem 10.3
      6. Bargaining Ability
    4. 10.3 Competitive Exchange
      1. Competitive Equilibrium
      2. Solved Problem 10.4
      3. The Efficiency of Competition
      4. Obtaining Any Efficient Allocation Using Competition
    5. 10.4 Production and Trading
      1. Comparative Advantage
        1. Production Possibility Frontier.
        2. Marginal Rate of Transformation.
        3. Benefits of Trade.
      2. Solved Problem 10.5
        1. The Number of Producers.
      3. Efficient Product Mix
      4. Competition
    6. 10.5 Efficiency and Equity
      1. Role of the Government
      2. Efficiency
      3. Equity
        1. Voting.
        2. Social Welfare Functions.
      4. Efficiency Versus Equity
      5. Theory of the Second Best
    7. Summary
    8. Exercises
      1. 1. General Equilibrium General Equilibrium 
      2. 2. Trading Between Two People Trading Between Two People 
      3. 3. Competitive Exchange Competitive Exchange 
      4. 4. Production and Trading Production and Trading 
      5. 5. Efficiency and Equity Efficiency and Equity 
      6. 6. Challenge Challenge 
  16. 11 Monopoly and Monopsony
    1. In this chapter, we examine seven main topics
    2. 11.1 Monopoly Profit Maximization
      1. The Necessary Condition for Profit Maximization
      2. Marginal Revenue and the Demand Curves
      3. Solved Problem 11.1
      4. Marginal Revenue Curve and the Price Elasticity of Demand
      5. An Example of Monopoly Profit Maximization
        1. The Profit-Maximizing Output.
      6. Solved Problem 11.2
        1. The Shutdown Decision.
      7. Choosing Price or Quantity
      8. Effects of a Shift of the Demand Curve
    3. 11.2 Market Power and Welfare
      1. Market Power and the Shape of the Demand Curve
      2. The Lerner Index
      3. Solved Problem 11.3
      4. Sources of Market Power
      5. Effect of Market Power on Welfare
    4. 11.3 Taxes and Monopoly
      1. Effects of a Specific Tax
      2. Solved Problem 11.4
      3. Welfare Effects of Ad Valorem Versus Specific Taxes
    5. 11.4 Causes of Monopolies
      1. Cost Advantages
        1. Essential Facility.
        2. Superior Technology or Organization.
        3. Natural Monopoly.
      2. Solved Problem 11.5
      3. Government Actions That Create Monopolies
        1. Barriers to Entry.
        2. Patents.
    6. 11.5 Government Actions That Reduce Market Power
      1. Regulating Monopolies
        1. Optimal Price Regulation.
        2. Nonoptimal Price Regulation.
      2. Solved Problem 11.6
        1. Problems in Regulating.
      3. Increasing Competition
      4. Solved Problem 11.7
    7. 11.6 Networks, Dynamics, and Behavioral Economics
      1. Network Externalities
        1. Direct Effect.
        2. Indirect Effects.
      2. Network Externalities and Behavioral Economics
      3. Network Externalities as an Explanation for Monopolies
      4. Introductory Prices: A Two-Period Monopoly Model
    8. 11.7 Monopsony
      1. Monopsony Profit Maximization
      2. Welfare Effects of Monopsony
      3. Solved Problem 11.8
    9. Summary
    10. Exercises
      1. 1. Monopoly Profit Maximization Monopoly Profit Maximization 
      2. 2. Market Power and Welfare Market Power and Welfare 
      3. 3. Taxes and Monopoly Taxes and Monopoly 
      4. 4. Causes of Monopolies Causes of Monopolies 
      5. 5. Government Actions That Reduce Market Power Government Actions That Reduce Market Power 
      6. 6. Monopoly Decisions over Time and Behavioral Economics Monopoly Decisions over Time and Behavioral Economics 
      7. 7. Monopsony Monopsony 
      8. 8. Challenge Challenge 
  17. 12 Pricing and Advertising
    1. In this chapter, we examine seven main topics
    2. 12.1 Conditions for Price Discrimination
      1. Why Price Discrimination Pays
      2. Which Firms Can Price Discriminate
      3. Preventing Resale
      4. Not All Price Differences Are Price Discrimination
      5. Types of Price Discrimination
    3. 12.2 Perfect Price Discrimination
      1. How a Firm Perfectly Price Discriminates
        1. Graphical Analysis.
        2. Calculus Analysis.
      2. Solved Problem 12.1
      3. Perfect Price Discrimination Is Efficient but Harms Some Consumers
      4. Transaction Costs and Perfect Price Discrimination
    4. 12.3 Group Price Discrimination
      1. Prices and Elasticities
      2. Solved Problem 12.2
      3. Identifying Groups
      4. Solved Problem 12.3
      5. Welfare Effects of Group Price Discrimination
        1. Group Price Discrimination Versus Competition.
        2. Group Price Discrimination Versus Single-Price Monopoly.
    5. 12.4 Nonlinear Price Discrimination
    6. 12.5 Two-Part Pricing
      1. Two-Part Pricing with Identical Consumers
      2. Two-Part Pricing with Differing Consumers
    7. 12.6 Tie-In Sales
      1. Requirement Tie-In Sales
      2. Bundling
        1. Pure Bundling.
        2. Mixed Bundling.
    8. 12.7 Advertising
      1. Deciding Whether to Advertise
      2. How Much to Advertise
      3. Solved Problem 12.4
    9. Summary
    10. Exercises
      1. 1. Conditions for Price Discrimination Conditions for Price Discrimination 
      2. 2. Perfect Price Discrimination Perfect Price Discrimination 
      3. 3. Group Discrimination Group Discrimination 
      4. 4. Nonlinear Price Discrimination Nonlinear Price Discrimination 
      5. 5. Two-Part Pricing Two-Part Pricing 
      6. 6. Tie-In Sales Tie-In Sales 
      7. 7. Advertising Advertising 
      8. 8. Challenge Challenge 
  18. 13 Game Theory
    1. 13.1 Static Games
      1. Normal-Form Games
        1. Dominant Strategies.
        2. Best Response and Nash Equilibrium.
      2. Failure to Maximize Joint Profits
      3. Multiple Equilibria
      4. Solved Problem 13.1
      5. Mixed Strategies     MyEconLab Video
      6. Solved Problem 13.2
    2. 13.2 Dynamic Games
      1. Repeated Game
      2. Sequential Game
        1. Game Tree.
        2. Subgame Perfect Nash Equilibrium.
        3. Credibility.
        4. Dynamic Entry Game.
      3. Solved Problem 13.3                MyEconLab Video
    3. 13.3 Auctions
      1. Elements of Auctions
        1. Number of Units.
        2. Format.
        3. Value.
      2. Bidding Strategies in Private-Value Auctions
        1. Second-Price Auction Strategies.
        2. English Auction Strategy.
        3. Equivalence of Auction Outcomes.
      3. Winner’s Curse
    4. 13.4 Behavioral Game Theory
    5. Summary
    6. Exercises
      1. 1. Static Games Static Games 
      2. 2. Dynamic Games Dynamic Games 
      3. 3. Auctions Auctions 
      4. 4. Behavioral Game Theory Behavioral Game Theory 
      5. 5. Challenge Challenge 
  19. 14 Oligopoly and Monopolistic Competition
    1. 14.1 Market Structures
    2. 14.2 Cartels
      1. Why Cartels Form
      2. Why Cartels Fail
      3. Laws Against Cartels
      4. Maintaining Cartels
        1. Detection and Enforcement.
        2. Government Support.
        3. Barriers to Entry.
      5. Mergers
    3. 14.3 Cournot Oligopoly Model
      1. The Duopoly Nash-Cournot Equilibrium
      2. The Cournot Model with Many Firms
        1. General Case.
        2. Linear Case.
        3. Airline Example.
      3. The Cournot Model with Nonidentical Firms
        1. Unequal Costs.
      4. Solved Problem 14.1
        1. Differentiated Products.
      5. Solved Problem 14.2
    4. 14.4 Stackelberg Oligopoly Model
      1. Calculus Solution
      2. Graphical Solution
      3. Why Moving Sequentially Is Essential
      4. Strategic Trade Policy: An Application of the Stackelberg Model
        1. Government Subsidy for an Airline.
      5. Solved Problem 14.3
        1. Problems with Government Intervention.
      6. Comparison of Collusive, Nash-Cournot, Stackelberg, and Competitive Equilibria
    5. 14.5 Bertrand Oligopoly Model
      1. Nash-Bertrand Equilibrium with Identical Products
        1. Best-Response Curves.
        2. Bertrand Versus Cournot.
      2. Nash-Bertrand Equilibrium with Differentiated Products
        1. General Demand Functions.
        2. Cola Market.
        3. Product Differentiation and Welfare.
    6. 14.6 Monopolistic Competition
      1. Monopolistically Competitive Equilibrium
      2. Fixed Costs and the Number of Firms
      3. Solved Problem 14.4
    7. Summary
    8. Exercises
      1. 1. Market Structures Market Structures 
      2. 2. Cartels Cartels 
      3. 3. Cournot Oligopoly Cournot Oligopoly 
      4. 4. Stackelberg Oligopoly Model Stackelberg Oligopoly Model 
      5. 5. Bertrand Oligopoly Model Bertrand Oligopoly Model 
      6. 6. Monopolistic Competition Monopolistic Competition 
      7. 7. Challenge Challenge 
  20. 15 Factor Markets
    1. 15.1 Factor Markets
      1. A Firm’s Short-Run Factor Demand Curve
        1. A Competitive Firm’s Short-Run Factor Demand Curve.
        2. Effect of a Change in the Wage.
      2. Solved Problem 15.1
        1. A Noncompetitive Firm’s Short-Run Factor Demand Curve.
      3. A Firm’s Long-Run Factor Demand Curves
        1. A Competitive Firm’s Long-Run Factor Demand Curve.
        2. Comparing Short-Run and Long-Run Labor Demand Curves.
      4. Competitive Factor Markets
        1. A Factor Market Demand Curve.
        2. Competitive Factor Market Equilibrium.
      5. Solved Problem 15.2
    2. 15.2 Capital Markets and Investing
      1. Interest Rates
      2. Discount Rate
      3. Stream of Payments
      4. Investing
        1. Net Present Value Approach.
      5. Solved Problem 15.3
        1. Internal Rate of Return Approach.
      6. Solved Problem 15.4
      7. Durability
      8. Time-Varying Discounting
        1. Time Consistency.
        2. Behavioral Economics.
        3. Falling Discount Rates and the Environment.
      9. Capital Markets, Interest Rates, and Investments
      10. Solved Problem 15.5
    3. 15.3 Exhaustible Resources
      1. When to Sell an Exhaustible Resource
      2. Price of a Scarce Exhaustible Resource
        1. Price in a Two-Period Example.
        2. Rents.
        3. Rising Prices.
      3. Why Price Might Not Rise
        1. Abundance.
        2. Technical Progress.
        3. Changing Market Power.
    4. Summary
    5. Exercises
      1. 1. Factor Markets Factor Markets 
      2. 2. Capital Markets and Investing Capital Markets and Investing 
      3. 3. Exhaustible Resources Exhaustible Resources 
      4. 4. Challenge Challenge 
  21. 16 Uncertainty
    1. 16.1 Assessing Risk
      1. Probability
        1. Frequency.
        2. Subjective Probability.
        3. Probability Distributions.
      2. Expected Value
      3. Solved Problem 16.1
      4. Variance and Standard Deviation
    2. 16.2 Attitudes Toward Risk
      1. Expected Utility Theory
      2. Risk Aversion
        1. Unwillingness to Take a Fair Bet.
      3. Solved Problem 16.2
        1. The Risk Premium.
      4. Solved Problem 16.3
      5. Risk Neutrality
      6. Risk Preference
      7. Degree of Risk Aversion
        1. Arrow-Pratt Measure of Risk Aversion.
        2. Arrow-Pratt Measure and the Willingness to Gamble.
      8. Solved Problem 16.4
    3. 16.3 Reducing Risk
      1. Just Say No
      2. Obtaining Information
      3. Diversification     MyEconLab Video
      4. Insurance
        1. Determining the Amount of Insurance to Buy.
      5. Solved Problem 16.5
        1. Fairness and Insurance.
        2. Insurance Only for Diversifiable Risks.
    4. 16.4 Investing Under Uncertainty
      1. How Investing Depends on Attitudes Toward Risk
        1. Risk-Neutral Investing.
        2. Risk-Averse Investing.
      2. Investing with Uncertainty and Discounting
      3. Solved Problem 16.6
    5. 16.5 Behavioral Economics and Uncertainty
      1. Biased Assessment of Probabilities
        1. Gambler’s Fallacy.
        2. Overconfidence.
      2. Violations of Expected Utility Theory
        1. Framing.
        2. Certainty Effect.
      3. Prospect Theory
        1. Comparing Expected Utility and Prospect Theories.
        2. Properties of Prospect Theory.
    6. Summary
    7. Exercises
      1. 1. Assessing Risk
      2. 2. Attitudes Toward Risk
      3. 3. Reducing Risk
      4. 4. Investing Under Uncertainty
      5. 5. Behavioral Economics and Uncertainty  Behavioral Economics and Uncertainty 
      6. 6. Challenge  Challenge 
  22. 17 Property Rights, Externalities, Rivalry, and Exclusion
    1. 17.1 Externalities
    2. 17.2 The Inefficiency of Competition with Externalities The Inefficiency of Competition with Externalities
      1. Supply-and-Demand Analysis
      2. Cost-Benefit Analysis
    3. 17.3 Regulating Externalities
      1. Emissions Standard
      2. Emissions Fee
      3. Solved Problem 17.1
      4. Benefits Versus Costs from Controlling Pollution
      5. Emissions Fees Versus Standards Under Uncertainty
    4. 17.4 Market Structure and Externalities
      1. Monopoly and Externalities
      2. Monopoly Versus Competitive Welfare with Externalities
      3. Solved Problem 17.2
      4. Taxing Externalities in Noncompetitive Markets
    5. 17.5 Allocating Property Rights to Reduce Externalities
      1. Coase Theorem
        1. No Property Rights.
        2. Property Right to Be Free of Pollution.
        3. Property Right to Pollute.
        4. Summary.
        5. Problems with the Coase Approach.
      2. Markets for Pollution
    6. 17.6 Rivalry and Exclusion
      1. Open-Access Common Property
      2. Club Goods
      3. Public Goods
        1. Free Riding.
        2. Optimal Provision of a Public Good.
      4. Solved Problem 17.3
      5. Reducing Free Riding
      6. Valuing Public Goods
    7. Summary
    8. Exercises
      1. 1. Externalities Externalities 
      2. 2. The Inefficiency of Competition with Externalities The Inefficiency of Competition with Externalities 
      3. 3. Regulating Externalities Regulating Externalities 
      4. 4. Market Structure and Externalities Market Structure and Externalities 
      5. 5. Allocating Property Rights to Reduce Externalities Allocating Property Rights to Reduce Externalities 
      6. 6. Rivalry and Exclusion Rivalry and Exclusion 
      7. 7. Challenge Challenge 
  23. 18 Asymmetric Information
    1. 18.1 Adverse Selection
      1. Insurance Markets
      2. Products of Unknown Quality
        1. Market Equilibrium with Symmetric Information.
        2. Market Equilibrium with Asymmetric Information.
      3. Solved Problem 18.1
      4. Lemons Market with Variable Quality
      5. Solved Problem 18.2
    2. 18.2 Reducing Adverse Selection
      1. Equalizing Information
        1. Screening.
        2. Signaling.
        3. Third-Party Information.
      2. Laws to Prevent Opportunism
        1. Disclosure Requirements.
        2. Product Liability Laws.
        3. Universal Coverage.
    3. 18.3 Market Power from Price Ignorance
      1. Tourist-Trap Model
        1. When Price is not Competitive.
        2. Monopoly Price.
      2. Solved Problem 18.3
      3. Advertising and Prices
    4. 18.4 Problems Arising from Ignorance When Hiring
      1. Cheap Talk
      2. Education as a Signal
        1. Separating Equilibrium.
      3. Pooling Equilibrium
      4. Solved Problem 18.4
        1. Unique Equilibrium or Multiple Equilibria. 
        2. Efficiency.
      5. Screening in Hiring
        1. Interviews and Tests.
        2. Statistical Discrimination.
    5. Summary
    6. Exercises
      1. 1. Adverse Selection Adverse Selection 
      2. 2. Reducing Adverse Selection Reducing Adverse Selection 
      3. 3. Market Power from Price Ignorance Market Power from Price Ignorance 
      4. 4. Problems Arising from Ignorance When Hiring Problems Arising from Ignorance When Hiring 
      5. 5. Challenge Challenge 
  24. 19 Contracts and Moral Hazards
    1. 19.1 Principal-Agent Problem
      1. A Model
      2. Types of Contracts
      3. Efficiency
      4. Solved Problem 19.1
    2. 19.2 Production Efficiency
      1. Efficient Contract
      2. Full Information
        1. Fixed-Fee Rental Contract.
        2. Hire Contract.
        3. Revenue-Sharing Contract.
      3. Solved Problem 19.2
        1. Profit-Sharing Contract.
        2. Summary.
      4. Asymmetric Information
        1. Fixed-Fee Rental Contract.
        2. Hire Contract.
        3. Revenue-Sharing Contract.
        4. Profit-Sharing Contract.
    3. 19.3 Trade-Off Between Efficiency in Production and in Risk Bearing
      1. Contracts and Efficiency
        1. Lawyer Gets a Fixed Fee.
      2. Solved Problem 19.3
        1. Lawyer Is Hired by the Hour.
        2. Fee Is Contingent.
      3. Choosing the Best Contract
      4. Solved Problem 19.4
    4. 19.4 Monitoring to Reduce Moral Hazard
      1. Bonding
        1. Bonding to Prevent Shirking.
      2. Solved Problem 19.5
        1. Problems with Bonding.
      3. Deferred Payments
      4. Efficiency Wages
      5. After-the-Fact Monitoring
    5. 19.5 Contract Choice
    6. 19.6 Checks on Principals
    7. Summary
    8. Exercises
      1. 1. Principal-Agent Problem Principal-Agent Problem 
      2. 2. Production Efficiency Production Efficiency 
      3. 3. Trade-Off Between Efficiency in Production and in Risk Bearing Trade-Off Between Efficiency in Production and in Risk Bearing 
      4. 4. Monitoring to Reduce Moral Hazard Monitoring to Reduce Moral Hazard 
      5. 5. Contract Choice Contract Choice 
      6. 6. Checks on Principals Checks on Principals 
      7. 7. Challenge Challenge 
  25. Answers to Selected Exercises
    1. Chapter 2
    2. Chapter 3
    3. Chapter 4
    4. Chapter 5
    5. Chapter 6
    6. Chapter 7
    7. Chapter 8
    8. Chapter 9
    9. Chapter 10
    10. Chapter 11
    11. Chapter 12
    12. Chapter 13
    13. Chapter 14
    14. Chapter 15
    15. Chapter 16
    16. Chapter 17
    17. Chapter 18
    18. Chapter 19
  26. Definitions
  27. References
  28. Sources for Applications and Challenges
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
    14. Chapter 14
    15. Chapter 15
    16. Chapter 16
    17. Chapter 17
    18. Chapter 18
    19. Chapter 19
  29. Index
    1. A
    2. B
    3. C
    4. D
    5. E
    6. F
    7. G
    8. H
    9. I
    10. J
    11. K
    12. L
    13. M
    14. N
    15. O
    16. P
    17. Q
    18. R
    19. S
    20. T
    21. U
    22. V
    23. W
    24. Z
  30. Credits

Product Information

  • Title: Microeconomics: Theory and Applications with Calculus, 4e
  • Author(s): Jeffrey M. Perloff
  • Release date: March 2016
  • Publisher(s): Pearson
  • ISBN: 9780134167381