Microeconomics and Behavior

The Cost-Benefit Approach to Decisions · The Role of Economic Theory · Common Pitfalls in Decision Making · The Invisible Hand

Supply and Demand Curves · Equilibrium Quantity and Price · Adjustment to Equilibrium · Some Welfare Properties of Equilibrium

The Opportunity Set or Budget Constraint · Consumer Preferences · The Best Feasible Bundle

The Effects of Changes in Price · The Effects of Changes in Income · The Income and Substitution Effects of a Price Change · Market Demand: Aggregating Individual Demand Curves

Using the Rational Choice Model to Answer Policy Questions · Consumer Surplus · Overall Welfare Comparisons · Using Price Elasticity of Demand

The Economics of Information · The Costly-to-Fake Principle · The Full-Disclosure Principle · Choice Under Uncertainty

Present Aim and Self-Interest Standards of Rationality · The Strategic Role of Preferences · Tastes Not Only Can Differ, They Must Differ · Bounded Rationality

The Input-Output Relationship, or Production Function · Production in the Short Run · Total, Marginal, and Average Products · Production in the Long Run

Costs in the Short Run · Graphing the Total, Variable, and Fixed Cost Curves · Other Short-Run Costs · Allocating Production Between Two Processes

The Goal of Profit Maximization · The Four Conditions for Perfect Competition · The Short-Run Condition for Profit Maximization · The Shutdown Condition

Defining Monopoly · Five Sources of Monopoly · Information as a Growing Source of Economies of Scale · The Profit-Maximizing Monopolist

The Prisoner’s Dilemma: An Introduction to the Theory of Games · The Nash Equilibrium Concept · The Maximin Strategy · Strategies for Repeated Play in Prisoner’s Dilemmas

Some Specific Oligopoly Models · The Cournot Model · The Bertrand Model · The Stackelberg Model

The Perfectly Competitive Firm’s Demand for Labor · Short-Run Demand · Long-Run Demand for Labor · The Market Demand Curve for Labor

Financial Capital and Real Capital · The Demand for Real Capital · The Relationship Between the Rental Rate and the Interest Rate · The Criterion for Buying a Capital Good

The Reciprocal Nature of Externalities · Application: External Effects from Nuclear Power Plants · Property Rights · Private Property Laws and Their Exceptions

A Simple Exchange Economy · Only Relative Prices Are Determined · The Invisible Hand Theorem · Efficiency in Production

Public Goods · Optimal Quantity of Public Good · Paying for Q* · Private Provision of Public Goods