Introduction to Economic Analysis

Introduction to Economic Analysis

By R. Preston McAfee
Book Description

This book presents standard intermediate microeconomics material and some material that, in the authors' view, ought to be standard but is not. Introductory economics material is integrated. Standard mathematical tools, including calculus, are used throughout. The book easily serves as an intermediate microeconomics text, and can be used for a relatively sophisticated undergraduate who has not taken a basic university course in economics. The focus of this book is on the conceptual tools and not on fluff. As such, it reflects the approach actually adopted by the majority of economists for understanding economic activity. There are lots of models and equations, and no pictures of economists ;-) Economic analysis is used in many situations. When British Petroleum sets the price for Alaskan crude oil, it uses an estimated demand model, both for gasoline consumers and also for the refineries to which BP sells. Economic analysis was used by experts in the antitrust suit brought by the U.S. Department of Justice both to understand Microsoft's incentive to foreclose (eliminate from the market) rival Netscape and consumer behavior in the face of alleged foreclosure. Stock market analysts use economic models to forecast the profits of companies to predict the price of their stocks. When the government forecasts the budget deficit or considers a change in environmental regulations, it uses economic models. This book presents the building blocks of the models in common use by an army of economists thousands of times per day. This book, plus econometrics, provides most of the economic analysis tools to take upper division economics courses of any type.

Table of Contents
  • Brief Contents
  • Contents
  • About the Authors
  • Chapter 1: What Is Economics?
    • Normative and Positive Theories
    • Opportunity Cost
    • Economic Reasoning and Analysis
  • Chapter 2: Supply and Demand
    • Demand and Consumer Surplus
    • Supply and Profit
    • Market Demand and Supply
    • Equilibrium
    • Changes in Demand and Supply
    • Endnotes
  • Chapter 3: Quantification
    • Elasticity
    • Supply and Demand Changes
    • Endnotes
  • Chapter 4: The U.S. Economy
    • Basic Demographics
    • Education
    • Households and Consumption
    • Production
    • Government
    • Trade
    • Fluctuations
    • Endnotes
  • Chapter 5: Government Interventions
    • Effects of Taxes
    • Incidence of Taxes
    • Excess Burden of Taxation
    • Price Floors and Ceilings
    • The Politics of Price Controls
    • Price Supports
    • Quantity Restrictions and Quotas
    • Endnotes
  • Chapter 6: Trade
    • Production Possibilities Frontier
    • Comparative and Absolute Advantage
    • Factors of Production
    • International Trade
    • Endnotes
  • Chapter 7: Externalities
    • External Effects
    • Pigouvian Taxes
    • Quotas
    • Tradable Permits and Auctions
    • Coasian Bargaining
    • Fishing and Extinction
    • Endnotes
  • Chapter 8: Public Goods
    • Free-Riders
    • Provision with Taxation
    • Local Public Goods
    • Endnotes
  • Chapter 9: Producer Theory: Costs
    • Types of Firms
    • Production Functions
    • Profit Maximization
    • The Shadow Value
    • Input Demand
    • Myriad Costs
    • Endnotes
  • Chapter 10: Producer Theory: Dynamics
    • Reactions of Competitive Firms
    • Economies of Scale and Scope
    • Dynamics with Constant Costs
    • General Long-Run Dynamics
    • Endnotes
  • Chapter 11: Investment
    • Present value
    • Investment
    • Investment Under Uncertainty
    • Resource Extraction
    • A Time to Harvest
    • Collectibles
    • Summer Wheat
    • Endnotes
  • Chapter 12: Consumer Theory
    • Utility Maximization
    • Budget or Feasible Set
    • Isoquants
    • Examples
    • Substitution Effects
    • Income Effects
    • Mathematical Cleanup
    • Endnotes
  • Chapter 13: Applied Consumer Theory
    • Labor Supply
    • Urban Real Estate Prices
    • Dynamic Choice
    • Risk Aversion
    • Search
    • Endnotes
  • Chapter 14: General Equilibrium
    • Edgeworth Box
    • Equilibrium With Price System
    • General Equilibrium
    • Endnotes
  • Chapter 15: Monopoly
    • Sources of Monopoly
    • Basic Analysis
    • Effect of Taxes
    • Price Discrimination
    • Welfare Effects
    • Natural Monopoly
    • Peak-Load Pricing
    • Endnotes
  • Chapter 16: Games & Strategic Behavior
    • Matrix Games
    • A 3 x 3 game
    • Nash Equilibrium
    • Mixed Strategies
    • Examples
    • Subgame Perfection
    • Supergames
    • Endnotes
  • Chapter 17: Imperfect Competition
    • Cournot Oligopoly
    • Cournot Industry Performance
    • Hotelling Differentiation
    • The Circle Model
    • Endnotes
  • Chapter 18: Information
    • Market for Lemons
    • Myerson-Satterthwaite Theorem
    • Signaling
    • Search and Price Dispersion
    • Endnotes
  • Chapter 19: Agency Theory
    • Principals and Agents
    • Cost of Providing Incentives
    • Multi-tasking
    • Multi-tasking without Homogeneity
    • Endnotes
  • Chapter 20: Auctions
    • English Auction
    • Sealed-bid Auction
    • Dutch Auction
    • Vickrey Auction
    • The Winner’s Curse and Linkage
    • Auction Design
    • Endnotes
  • Chapter 21: Antitrust
    • Sherman Act
      • Trusts, etc., in restraint of trade illegal; penalty
      • Monopolizing trade a felony; penalty
    • Clayton Act
    • Price-Fixing
    • Mergers
    • Endnotes
  • Index
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