Microeconomics ^{5th Ed.}

For courses in intermediate microeconomics, microeconomic theory, price theory, and managerial economics.

The market leader in Intermediate Microeconomics, the book is well known for its coverage of modern topics (Game theory, Economics of Information), clarity of its writing style and graphs, and integrated use of real world examples. The book is used in both economics departments and business schools and is well received for its applied nature. The emphasis on relevance and application to both managerial and public-policy decision making are focused goals of the book. It succeeds in showing how microeconomics can be used as a tool for decision making.

• Part 1: Introduction: Markets and Prices
1. Preliminaries
1. The Themes of Microeconomics
• Theories and Models
• Positive versus Normative Analysis
2. What Is a Market?
• Competitive versus Noncompetitive Markets
• Market Price
• Market Definition — The Extent of a Market
3. Real versus Nominal Prices
4. Why Study Microeconomics?
• Corporate Decision Making: Ford's Sport Utility Vehicle
• Public Policy Design: Automobile Emission Standards for the Twenty-first Century
• Summary
• Questions for Review
• Exercises
2. The Basics of Supply and Demand
1. Supply and Demand
• The Supply Curve
• The Demand Curve
2. The Market Mechanism
3. Changes in Market Equilibrium
4. Elasticities of Supply and Demand
5. Short-Run versus Long-Run Elasticities
• Demand
• Supply
6. Understanding and Predicting the Effects of Changing Market Conditions
7. Effects of Government Intervention — Price Controls
• Summary
• Questions for Review
• Exercises
• Part 2: Producers, Consumers, and Competitive Markets
3. Consumer Behavior
• Consumer Behavior
1. Consumer Preferences
• Market Baskets
• Some Basic Assumptions About Preferences
• Indifference Curves
• Indifference Maps
• The Shape of Indifference Curves
• The Marginal Rate of Substitution
• Perfect Substitutes and Perfect Complements
2. Budget Constraints
• The Budget Line
• The Effects of Changes in Income and Prices
3. Consumer Choice
• Corner Solutions
4. Revealed Preference
5. Marginal Utility and Consumer Choice
6. Cost-of-Living Indexes
• Ideal Cost-of-Living Index
• Laspeyres Index
• Paasche Index
• Chain-Weighted Indexes
• Summary
• Questions for Review
• Exercises
4. Individual and Market Demand
1. Individual Demand
• Price Changes
• The Individual Demand Curve
• Income Changes
• Normal versus Inferior Goods
• Engel Curves
• Substitutes and Complements
2. Income and Substitution Effects
• Substitution Effect
• Income Effect
• A Special Case: The Giffen Good
3. Market Demand
• From Individual to Market Demand
• Elasticity of Demand
4. Consumer Surplus
• Consumer Surplus and Demand
5. Network Externalities
• The Bandwagon Effect
• The Snob Effect
6. Empirical Estimation of Demand
• Interview and Experimental Approaches to Demand Determination
• The Statistical Approach to Demand Estimation
• The Form of the Demand Relationship
• Summary
• Questions for Review
• Exercises
• Appendix to Chapter 4: Demand Theory — A Mathematical Treatment
• Utility Maximization
• The Method of Lagrange Multipliers
• The Equal Marginal Principle
• Marginal Rate of Substitution
• Marginal Utility of Income
• An Example
• Duality in Consumer Theory
• Income and Substitution Effects
• Exercises
5. Choice under Uncertainty
1. Describing Risk
• Probability
• Expected Value
• Variability
• Decision Making
2. Preferences Toward Risk
• Different Preferences Toward Risk
3. Reducing Risk
• Diversification
• Insurance
• The Value of Information
4. The Demand for Risky Assets
• Assets
• Risky and Riskless Assets
• Asset Returns
• The Trade-Off Between Risk and Return
• The Investor's Choice Problem
• Summary
• Questions for Review
• Exercises
6. Production
1. The Technology of Production
• The Production Function
2. Isoquants
• Input Flexibility
• The Short Run versus the Long Run
3. Production with One Variable Input (Labor)
• Average and Marginal Products
• The Slope of the Product Curve
• The Average Product of Labor Curve
• The Marginal Product of Labor Curve
• The Law of Diminishing Marginal Returns
• Labor Productivity
4. Production with Two Variable Inputs
• Diminishing Marginal Returns
• Substitution Among Inputs
• Production Functions — Two Special Cases
5. Return to Scale
• Increasing Returns to Scale
• Constant Returns to Scale
• Decreasing Returns to Scale
• Describing Returns to Scale
• Summary
• Questions for Review
• Exercises
7. The Cost of Production
1. Measuring Cost: Which Costs Matter?
• Economic Cost versus Accounting Cost
• Opportunity Cost
• Sunk Costs
• Fixed Costs and Variable Costs
• Fixed versus Sunk Costs
2. Cost in the Short Run
• The Determinants of Short-Run Costs
• The Shapes of the Cost Curves
3. Cost in the Long Run
• The User Cost of Capital
• The Cost-Minimizing Input Choice
• The Isocost Line
• Choosing Inputs
• Cost Minimization with Varying Output Levels
• The Expansion Path and Long-Run Costs
4. Long-Run versus Short-Run Cost Curves
• The Inflexibility of Short-Run Production
• Long-Run Average Cost
• Economies and Diseconomies of Scale
• The Relationship Between Short-Run and Long-Run Cost
5. Production with Two Outputs — Economies of Scope
• Production Transformation Curves
• Economies and Diseconomies of Scope
• The Degree of Economies of Scope
6. Dynamic Changes in Costs — The Learning Curve
• Graphing the Learning Curve
• Learning versus Economies of Scale
7. Estimating and Predicting Cost
• Cost Functions and the Measurement of Scale Economies
• Summary
• Questions for Review
• Exercises
• Appendix to Chapter 7: Production and Cost Theory — A Mathematical Treatment
• Cost Minimization
• Marginal Rate of Technical Substitution
• Duality in Production and Cost Theory
• The Cobb-Douglas Cost and Production Functions
• Exercises
8. Profit Maximization and Competitive Supply
1. Perfectly Competitive Markets
• When Is a Market Highly Competitive?
2. Profit Maximization
• Do Firms Maximize Profit?
3. Marginal Revenue, Marginal Cost, and Profit Maximization
• Demand and Marginal Revenue for a Competitive Firm
• Profit Maximization by a Competitive Firm
4. Choosing Output in the Short Run
• Short-Run Profit Maximization by a Competitive Firm
• The Short-Run Profit of a Competitive Firm
5. The Competitive Firm's Short-Run Supply Curve
• The Firm's Response to an Input Price Change
6. The Short-Run Market Supply Curve
• Elasticity of Market Supply
• Producer Surplus in the Short-Run
7. Choosing Output in the Long Run
• Long-Run Profit Maximization
• Long-Run Competitive Equilibrium
• Economic Rent
• Producer Surplus in the Long-Run
8. The Industry's Long-Run Supply Curve
• Constant-Cost Industry
• Increasing-Cost Industry
• Decreasing-Cost Industry
• The Effects of a Tax
• Long-Run Elasticity of Supply
• Summary
• Questions for Review
• Exercises
9. The Analysis of Competitive Markets
1. Evaluating the Gains and Losses from Government Policies — Consumer and Producer Surplus
• Review of Consumer and Producer Surplus
• Application of Consumer and Producer Surplus
2. The Efficiency of a Competitive Market
3. Minimum Prices
4. Price Supports and Production Quotes
• Price Supports
• Production Quotas
5. Import Quotas and Tariffs
6. The Impact of a Tax or Subsidy
• The Effects of a Subsidy
• Summary
• Questions for Review
• Exercises
• Part 3: Market Structure and Competitive Strategy
10. Market Power: Monopoly and Monopsony
1. Monopoly
• Average Revenue and Marginal Revenue
• The Monopolist's Output Decision
• An Example
• A Rule of Thumb for Pricing
• Shifts in Demand
• The Effect of a Tax
• The Multiplant Firm
2. Monopoly Power
• Measuring Monopoly Power
• The Rule of Thumb for Pricing
3. Sources of Monopoly Power
• The Elasticity of Market Demand
• The Number of Firms
• The Interaction Among Firms
4. The Social Costs of Monopoly Power
• Rent Seeking
• Price Regulation
• Natural Monopoly
• Regulations in Practice
5. Monopsony
• Monopsony and Monopoly Compared
6. Monopsony Power
• Sources of Monopsony Power
• The Social Costs of Monopsony Power
• Bilateral Monopoly
7. Limiting Market Power: The Antitrust Laws
• Enforcement of Antitrust Laws
• Summary
• Questions for Review
• Exercises
11. Pricing with Market Power
1. Capturing Consumer Surplus
2. Price Discrimination
• First-Degree Price Discrimination
• Second-Degree Price Discrimination
• Third-Degree Price Discrimination
3. Intertemporal Price Discrimination and Peak-Load Pricing
• Intertemporal Price Discrimination
• Peak Load Pricing
4. The Two-Part Tariff
5. Bundling
• Relative Valuations
• Mixed Bundling
• Bundling in Practice
• Tying
6. Advertising
• A Rule of Thumb for Advertising
• Summary
• Questions for Review
• Exercises
• Appendix to Chapter 11: Transfer Pricing in the Integrated Firm
• Transfer Pricing When There Is No Outside Market
• Transfer Pricing with a Competitive Outside Market
• Transfer Pricing with a Noncompetitive Outside Market
• A Numerical Example
• Exercises
12. Monopolistic Competition and Oligopoly
1. Monopolistic Competition
• The Makings of Monopolistic Competition
• Equilibrium in the Short Run and the Long Run
• Monopolistic Competition and Economic Efficiency
2. Oligopoly
• Equilibrium in an Oligopolistic Market
• The Cournot  Model
• The Linear Demand Curve — An Example
• First Mover Advantage — The Stackelberg Model
3. Price Competition
• Price Competition with Homogeneous Products — The Bertrand Model
• Price Competition with Differentiated Products
4. Competition versus Collusion: The Prisoners' Dilemma
5. Implications of the Prisoners' Dilemma for Oligopolistic Pricing
• Price Rigidity
• Price Signaling and Price Leadership
• The Dominant Firm Model
6. Cartels
• Analysis of Cartel Pricing
• Summary
• Questions for Review
• Exercises
13. Game Theory and Competitive Strategy
1. Gaming and Strategic Decisions
• Noncooperative versus Cooperative Games
2. Dominant Strategies
3. The Nash Equilibrium Revisited
• Maximin Strategies
• Mixed Strategies
4. Repeated Games
5. Sequential Games
• The Extensive Form of a Game
• The Advantage of Moving First
6. Threats, Commitments, and Credibility
• Empty Threats
• Commitment and Credibility
7. Entry Deterrence
• Strategic Trade Policy and International Competition
8. Bargaining Strategy
9. Auctions
• Auction Formats
• Valuation and Information
• Private-Value Auctions
• Common-Value Auctions
• Maximizing Auction Revenue
• Summary
• Questions for Review
• Exercises
14. Markets for Factor Inputs
1. Competitive Factor Markets
• Demand for a Factor Input When Only One Input Is Variable
• Demand for a Factor Input When Several Inputs Are Variable
• The Market Demand Curve
• The Supply of Inputs to a Firm
• The Market Supply of Inputs
2. Equilibrium in a Competitive Factor Market
• Economic Rent
3. Factor Markets with Monopsony Power
• Marginal and Average Expenditure
• The Input Purchasing Decision of the Firm
4. Factor Markets with Monopoly Power
• Monopoly Power over the Wage Rate
• Unionized and Nonunionized Workers
• Bilateral Monopoly in the Labor Market
• Summary
• Questions for Review
• Exercises
15. Investment, Time, and Capital Markets
1. Stocks versus Flows
2. Present Discounted Value
• Valuing Payment Scheme
3. The Value of a Bond
• Perpetuities
• The Effective Yield of a Bond
4. The Net Present Value Criterion for Capital Investment Decisions
• The Electric Motor Factory
• Real versus Nominal Discount Rates
• Negative Future Cash Flows
5. Adjustments for Risk
• Diversifiable versus Nondiversifiable Risk
• The Capital Asset Pricing Model
6. Investments Decisions by Consumers
7. Intertemporal Production Decision — Depletable Resources
• The Production Decision of an Individual Resource Producer
• The Behavior of Market Prices
• User Cost
• Resource Production by a Monopolist
8. How Are Interest Rates Determined?
• A Variety of Interest Rates
• Summary
• Questions for Review
• Exercises
• Part 4: Information, Market Failure, and the Role of Government
16. General Equilibrium and Economic Efficiency
1. General Equilibrium Analysis
• Two Interdependent Markets — Moving to General Equilibrium
• The Attainment of General Equilibrium
2. Efficiency in Exchange
• The Advantages of Trade
• The Edgeworth Box Diagram
• Efficient Allocations
• The Contract Curve
• Consumer Equilibrium in a Competitive Market
• The Economic Efficiency of Competitive Markets
3. Equity and Efficiency
• The Utility Possibilities Frontier
• Equity and Perfect Competition
4. Efficiency in Production
• Production in the Edgeworth Box
• Input Efficiency
• Producer Equilibrium in a Competitive Input Market
• The Production Possibilities Frontier
• Output Efficiency
• Efficiency in Output Markets
5. The Gains from Free Trade
• Comparative Advantage
• An Expanded Production Possibilities Frontier
6. An Overview — The Efficiency of Competitive Markets
7. Why Markets Fail
• Market Power
• Incomplete Information
• Externalities
• Public Goods
• Summary
• Questions for Review
• Exercises
17. Markets with Asymmetric Information
1. Quality Uncertainty and the Market for Lemons
• The Market for Used Cars
• Implications of Asymmetric Information
• The Importance of Reputation and Standardization
2. Market Signaling
• A Simple Model of Job Market Signaling
• Guarantees and Warranties
3. Moral Hazard
4. The Principal — Agent Problem
• The Principal — Agent Problem in Private Enterprises
• The Principal — Agent Problem in Public Enterprises
• Incentives in the Principal — Agent  Framework
5. Managerial Incentives in an Integrated Firm
• Asymmetric Information and Incentive Design in the Integrated Firm
• Applications
6. Asymmetrical Information in Labor Markets: Efficiency Wage Theory
• Summary
• Questions for Review
• Exercises
18. Externalities and Public Goods
1. Externalities
• Negative Externalities and Inefficiency
• Positive Externalities and Inefficiency
2. Ways of Correcting Market Failure
• An Emissions Standard
• An Emissions Fee
• Standards versus Fees
• Transferable Emissions Permits
• Recycling
3. Externalities and Property Rights
• Property Rights
• Bargaining and Economic Efficiency
• Costly Bargaining — The Role of Strategic Behavior
• A Legal Solution — Suing for Damages
4. Common Property Resources
5. Public Goods
• Efficiency and Public Goods
• Public Goods and Market Failure
6. Private Preferences for Public Goods
• Summary
• Questions for Review
• Exercises
• Appendix: The Basics of Regression
• An Example
• Estimation
• Statistical Tests
• Goodness of Fit
• Economic Forecasting

A classical text in microeconomics and usually mandatory reading in M.Sc. in Economics classes (and some MBA classes as well). Considering the subject, it is an enjoyable experience.