Page 20 - Microeconomics, Fourth Edition

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xviii CONTENTS
CHAPTER 4 Consumer Choice 103 The Effects of a Change in Price or Income: An Algebraic
Approach 160
How Much of What You Like Should You Buy?
5.2 Change in the Price of a Good: Substitution
4.1 The Budget Constraint 105
Effect and Income Effect 162
How Does a Change in Income Affect the
The Substitution Effect 163
Budget Line? 107
The Income Effect 163
How Does a Change in Price Affect the
Income and Substitution Effects When Goods Are Not
Budget Line? 107
Normal 165
4.2 Optimal Choice 110
5.3 Change in the Price of a Good: The Concept
Using the Tangency Condition to Understand When
of Consumer Surplus 173
a Basket Is Not Optimal 114
Understanding Consumer Surplus from the
Finding an Optimal Consumption Basket 115
Demand Curve 173
Two Ways of Thinking About Optimality 116
Understanding Consumer Surplus from the Optimal
Corner Points 118
Choice Diagram: Compensating Variation
4.3 Consumer Choice with Composite Goods 121 and Equivalent Variation 175
Application: Coupons and Cash Subsidies 121
5.4 Market Demand 182
Application: Joining a Club 125
Network Externalities 184
Application: Borrowing and Lending 126
Market Demand with Network Externalities 184
Application: Quantity Discounts 131
5.5 The Choice of Labor and Leisure 187
4.4 Revealed Preference 132
As Wages Rise, Leisure First Decreases, Then
Are Observed Choices Consistent with Utility
Increases 187
Maximization? 133
The Backward-Bending Supply of Labor 189
APPENDIX 1 The Mathematics of Consumer
Choice 143 5.6 Consumer Price Indices 192
LEARNING-BY-DOING EXERCISES
APPENDIX 2 The Time Value of Money 144
5.1 A Normal Good Has a Positive Income Elasticity
LEARNING-BY-DOING EXERCISES of Demand 159
4.1 Good News/Bad News and the Budget Line 110 5.2 Finding a Demand Curve (No Corner Points) 160
4.2 Finding an Interior Optimum 115 5.3 Finding a Demand Curve (with a Corner
4.3 Finding a Corner Point Solution 119 Point Solution) 161
4.4 Corner Point Solution with Perfect 5.4 Finding Income and Substitution Effects
Substitutes 120 Algebraically 168
4.5 Consumer Choice That Fails to Maximize Utility 134 5.5 Income and Substitution Effects with a
4.6 Other Uses of Revealed Preference 136 Price Increase 170
5.6 Income and Substitution Effects with a Quasilinear
CHAPTER 5 The Theory of Demand 150 Utility Function 171
5.7 Consumer Surplus: Looking at the Demand Curve 174
Why Understanding the Demand for Cigarettes Is
Important for Public Policy 5.8 Compensating and Equivalent Variations with No
Income Effect 178
5.1 Optimal Choice and Demand 152
5.9 Compensating and Equivalent Variations with
The Effects of a Change in Price 152 an Income Effect 180
The Effects of a Change in Income 155
5.10 The Demand for Leisure and the Supply of Labor 191
PART 3 PRODUCTION AND COST THEORY
CHAPTER 6 Inputs and Production Total Product Functions 205
Functions 200 Marginal and Average Product 206
Relationship Between Marginal and Average Product 210
Can They Do It Better and Cheaper?
6.3 Production Functions with More Than
6.1 Introduction to Inputs and Production One Input 210
Functions 202
Total Product and Marginal Product with Two Inputs 210
6.2 Production Functions with a Single Input 204 Isoquants 212