Microeconomic theory: basic principles and extensions

Microeconomic

Basic Principles and Extensions

Fourth Edition

Walter Nicholson

Microeconomic Theory

Basic Principles and Extensions

Fourth Edition

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Microeconomic Theory

Basic Principles and Extensions

Fourth Edition

Walter Nicholson

Amherst College

The Dryden Press

Chicago Fort Worth San Francisco Philadelphia

Montreal Toronto London Sydney Tokyo

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Library o f Congress Cataloging-in-Publicadon D ata

Nicholson, Walter.

M icroeconom ic theory.

Includes bibliographies and index.

1. M icroeconom ics. 1. Title.

H B 172.N 49 1989 3 3 8 .5 8 8 -25663

ISBN 0 -0 3 -0 2 1 6 6 9 -9

Printed in the United States of America

9 0 -0 3 9 -9 8 7 6 5 4 3 2

Copyright © 1989, 1985, 1 9 7 8 ,1 9 7 2 by The Dryden Press, a division of H olt,

Rinehart and W inston, Inc.

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Preface

As in prior editions, the primary goal of this fourth edition of Microeconomic

Theory: Basic Principles and Extensions is to provide a comprehensive and

intuitive approach to microeconomic theory using elementary calculus as an

analytical tool. This edition, however, represents a major revision and, I hope,

a substantial improvement on the previous versions. The primary change in

this edition has been a reorganization in the structure of the book:

• Efficiency concepts and their relationships to competitive markets are

now covered much earlier in the text. This reorganization provides a

complete development of the model of general competitive equilibrium

early in the text and thereby helps to sharpen and clarify the discussions

of market imperfections that follow. This new structure also seems to

follow current teaching practices better than the previous approach,

which left general equilibrium ideas until the book’s final chapters.

Four other major changes in this edition serve to update the book and make it

more suitable for students’ needs:

• A greater emphasis on topics from the theory of information and uncer￾tainty including new chapters on Information and Competitive Equilib￾rium (Chapter 17) and Strategy and Game Theory (Chapter 20);

• Inclusion of a number of numerical and algebraic examples that illustrate

in a concrete way the theoretical concepts being introduced;

• Major revisions to the problems in the book together with the inclusion

of new “Extension” problems that ask the student to pursue a particular

theoretical point in somewhat greater detail than is possible within the

body of the text; and

• Availability of an innovative student workbook (written by David Staple￾ton of Dartmouth College) that offers additional insights into the mate￾rial being covered. Workbook problems are of varying levels of difficulty

and include many that lead the student through the solutions in a step￾by-step manner.

This edition also incorporates many minor improvements in presentation

throughout. The most important of these are the inclusion of more results from

duality theory— a topic first approached seriously in the third edition, and a

greater attention to general equilibrium results so that students can visualize

what is happening “elsewhere” in the economy. Despite this somewhat sharper

theoretical focus, the goal in this revision has been to continue to provide a

generally intuitive approach to most topics. By proceeding in this way, I hope

that the book will continue to be accessible to any student with a mathematical

bent who has had some introductory economics.

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ACKNOWL￾EDGMENTS

Although the 25 chapters in this book represent an increase of four over the

number in the prior edition, only two of these are truly new. The remaining

expansion represents an attempt to divide some of the more difficult material

in the text into more nearly bite-sized chapters and to follow an organizational

scheme that reflects most course outlines. Still, covering all of the chapters in

the book in a single term of 1 2 -1 4 weeks may be too rushed for many users.

For those wishing to stress only core concepts, I would recommend a focus

on Chapters 3 - 7 (Demand), Chapters 10—12 (Costs and Supply), Chapters

1 4 -1 6 (Perfect Competition), and Chapters 18—19 (Imperfect Competition).

Other topics can then be added to these basic ones to meet the needs of indi￾vidual instructors.

As with previous editions, a Solutions Manual is provided to instructors

with complete, worked-out answers to the text problems. Brief descriptions

overview the nature of the problems in each chapter, and each individual prob￾lem has its own statement noting its significance and level of difficulty.

Detailed reviews by the following people were a great help to me in preparing

this fourth edition: Douglas K. Agbetsiafa, Indiana University at South Bend;

Keith Brown, Purdue University; Tran Dung, Wright State University; Belton

Fleisher, Ohio State University; Carroll B. Foster, University o f California,

Lajolla; Christopher Grandy, Barnard College, Columbia University; Kala

Krishna, Harvard University; Anthony Marino, University o f Southern Cali￾fornia; Pat McCarthy, Purdue University; Jack Meyer, Michigan State Univer￾sity; Charles Plourde, York University; Charles F. Revier, Colorado State Uni￾versity; Joaquim Silvestre, University o f California, Davis; Susan Vroman,

Georgetoum University; and Meng-Hua Ye, George Washington University. I

have tried to incorporate most of the suggestions since they invariably served

to make some of my muddled thoughts clearer. I have also benefited greatly

from conversations about the book with Bernie Saffran (Swarthmore), David

Stapleton (Dartmouth), and Frank Westhoff and Beth Yarbrough (Amherst).

Many other friends and colleagues (and even competing authors) have made

helpful suggestions about the book, and for these I am also grateful. The book

remains my own production, however, and none of these individuals are re￾sponsible for the errors I have been too bullheaded to change.

Happi Cramer of Word-for-Word, Inc., created most of this edition out of

my illegible scrawl, and she deserves great credit for keeping things organized.

At The Dryden Press, Liz Widdicombe provided her usual careful oversight for

this edition and offered the occasional prod to keep things on track. Joanne

Smith greatly helped with many facets of the text’s development. Holly Craw￾ford and Teresa Chartos organized the production of the book with remark￾able good humor given the complexities involved. Pat Lewis caught several

errors at the copyediting stage. I appreciate all of this help— producing the

book would have been impossible without it. Once again my wife (Susan) and

children (Kate, David, Tory, and Paul) suffered through the final stages of get￾Số hóa bởi Trung tâm Học liệu – ĐH TN http://www.lrc-tnu.edu.vn

ting the book out. Although they are old hands at this sort of thing, they

surely be starting to wonder when it will all end!

Walter Nicholson

Amherst, Massachusetts

December 1988

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About the Author

Walter Nicholson is professor of economics at Amherst College. He received a

B. A. degree in mathematics from Williams College and a Ph.D. in economics

from the Massachusetts Institute of Technology. Professor Nicholson’s primary

research interests focus on the econometric analysis of labor market policies.

He has published many articles on unemployment, social insurance and wel￾fare policy, and the domestic impact of international trade. He is currently

chair of the Economics Committee for the Graduate Record Examination in

Economics and is also the author of Intermediate Microeconomics and Its Ap￾plication, fourth edition (The Dryden Press, 1987). Professor Nicholson lives

in Amherst, Massachusetts. He and his wife, Susan, are beginning the process

of paying college tuition bills for their four children.

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