Intermediate Microeconomics: A Modern Approach (Ninth Edition)

Intermediate Microeconomics: A Modern Approach (Ninth Edition)

Language: English

Pages: 832

ISBN: 0393123960

Format: PDF / Kindle (mobi) / ePub

Rigorous and modern―the #1 text for Intermediate Microeconomics from the chief economist at Google.

This best-selling text is still the most modern presentation of the subject. The Varian approach gives students tools they can use on exams, in the rest of their classes, and in their careers after graduation.

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Cornperisati~igand Equivalent Variation 254 Example: Compensating Variations Example: Compensating and Equivalent Variand Eq~~izialent ation for Quasilinear Preferences Producer's Surplus 258 Benefit-Cost Analysis 260 Rationing Calculating Gains and Losses 262 Suminary 263 Review Questions 263 Appendix 264 Example: A Fern Demand F ~ ~ n c t i o n s Example: C V , E V , and Consumer's Surplus 15 Market Demand From Individual to Market Demand 266 The Inverse Demand Function 268 Example: Adding Up

x2), it is relatively easy to draw the indifference curves: you just plot all the points (xl, x2) such that u(xl, x2) equals a constant. In mathematics, the set of all (xl, x2) such that u(xl, 5 2 ) equals a constant is called a level set. For each different value of the constant, you get a different indifference curve. EXAMPLE: Indifference Curves from Utility Suppose that the utility function is given by: u(x1, x2) = ~ 1 x 2What . do the indifference curves look like? 60 UTILITY (Ch. 4) We

increase in utility from the small change d z l , and the second term measures the increase in utility from the small change dxz. We want to pick these changes so that the total change in utility, d u , is zero. Solving for dxzldxl gives us dx2 - d u ( x 1 ,x 2 ) l a x i dx i d u ( x i ,x z ) / a x z ' which is just the calculus analog of equation (4.1) in the text. As for the second method, we now think of the indifference curve as being described by a function x2(x1). That is, for each value of

been 128 REVEALED PREFERENCE (Ch. 7) chosen when the consumer actually chose observation 1 and vice versa. This is a violation of the Weak Axiom of Revealed Preference. We can conclude that the data depicted in Tables 7.1 and 7.2 could not be generated by a consumer with stable preferences who was always choosing the best things he or she could afford. 7.6 The Strong Axiom of Revealed Preference The Weak Axiom of Revealed Preference described in the last section gives us an observable

rented at a given price p* will just be the number of people who have a reservation price greater than or equal to p*. For if the market price is p*, then everyone who is willing to pay at least p* for an apartment will want an apartment in the inner ring, and everyone who is not willing to pay p* will choose to live in the outer ring. We can plot these reservation prices in a diagram as in Figure 1.1. Here the price is depicted on the vertical axis and the number of people who are willing to pay

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