Cambridge University Press 978-1-108-42396-0 — a Short Course in Intermediate Microeconomics with Calculus Roberto Serrano , Allan M

Cambridge University Press 978-1-108-42396-0 — A Short Course in Intermediate Microeconomics with Calculus Roberto Serrano , Allan M. Feldman Index More Information

INDEX

adverse selection, 386, 388, 390 Coase Theorem, 339 Akerloff, G., 387 Coase, R., 337 allocation Coasian property rights, 330, 337 competitive equilibrium allocation, 293 Cobb, C., 39, 66, 167 feasible allocation, 284, 285, 293 Cobb–Douglas production function, 167, 182 non-feasible allocation, 286 Cobb–Douglas utility function, 39 Arrow, K., 290 collusion, 242, 244, 245 asymmetric information, 386, 388, 390 command policy, 361 Aumann, R., 258 comparative statics, 47 average cost, 134–137 compensating variation/equivalent variation average cost function, 135 paradox, 103, 113, 115 average product, 140, 141, 175 competitive equilibrium, 238, 239, 241, 281, 290, average total cost, 178 292, 313, 320 average variable cost, 178 competitive irm, 189 backward induction, 269 competitive limit, 256 bankruptcy, 151 competitive market, 131, 145, 189, 190, 227, 290, battle of the sexes, 258, 262 294, 311 expanded battle of the sexes, 259, 265, 266 competitive market equilibrium, 189, 196, 197 behavioral economics, 259, 272 complementary slackness, 45, 172 Bernoulli, D., 384 complements, 55 Bertrand competition, 248 completeness, 7, 9, 376 Bertrand duopoly model, 236 concavity, 131, 173 Bertrand equilibrium, 249, 263 conditional factor demand, 134, 160 Bertrand, J., 236, 248 conditional input demand, 134, 143, 160 bliss point, 25 consumer’s surplus, 112, 114, 118, 197 Bowley, A., 282 consumers’ surplus, 112, 121, 122, 197, 201, 216, budget constraint, 26 217, 283 intertemporal budget constraint, 31 consumption bundle, 7 standard budget constraint, 26 consumption/leisure model, 71, 75, 307 budget line, 27 continuity, 376 budget set, 27 contract curve, 289 bundle, 7 convexity, 7, 12, 154 core, 289, 294 cap and trade, 330, 341, 343 capital market, 83 corner solution, 35 carrot and stick, 391 cost, 133 cartel, 243 cost minimization, 158–160, 175 certainty equivalent, 380, 381 coupon rationing, 29, 30 change in consumer’s surplus, 119 Cournot competition, 236 Clarke, E., 365 Cournot equilibrium, 237, 238, 241, 263 classical school, 1 Cournot, A., 236

© in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-108-42396-0 — A Short Course in Intermediate Microeconomics with Calculus Roberto Serrano , Allan M. Feldman Index More Information

406 Index

deadweight loss, 189, 202, 204, 206, 216, 218, battle of the sexes, 258, 262 227, 239 centipede game, 276 Debreu, G., 290 chess, 267 decision problem duopoly sequential competition, 269 Newcomb’s paradox, 384 expanded battle of the sexes, 259, 265 St. Petersburg paradox, 384 matching pennies, 268 Defoe, D., 281 mutual assured destruction, 271 demand curve, 47, 51, 213 one shot game, 273 compensated demand curve, 48, 60, 61, 124 prisoners’ dilemma, 258, 259, 261 inverse demand curve, 47, 213 repeated game, 272, 273 demand function, 47 sequential-move game, 267 demand-revealing mechanism, 365–367 simultaneous-move game, 267 differentiated goods, 250, 251 tic-tac-toe, 267 diminishing returns, 131 tit for tat, 259, 274 discount factor, 32 game theory, 236, 258 distributional fairness, 285 game tree, 268 dominant strategy, 260 general equilibrium, 285 dominant strategy equilibrium, 258, 260, 263 general equilibrium analysis, 2 Douglas, P., 39, 66, 167 general equilibrium model, 306 Dresher, M., 259 Giffen good, 51 duopoly, 235 Giffen, R., 51 Groves, T., 365 economic problem, 1 economy Harsanyi, J., 258 exchange economy, 281 Hart, O., 393 Edgeworth box diagram, 282, 288 health insurance market, 388 Edgeworth, F., 1, 282 Hessian matrix, 173 eficiency, 283, 306, 335, 342, 351, 363, 365, 366 Hicks, J., 57 elasticity, 61, 62 hidden action, 386 price elasticity of demand, 62, 63, 214 hidden types, 386 endowment Holmstrom, B., 393 initial endowment, 282 homogeneity, 248 Engel curve, 47, 49 homogeneous goods, 190, 248, 249 Engel, E., 49 equity, 285 implied warranty, 399 excess demand, 196, 313 incentive compatibility constraint, 396 excess supply, 196, 313 incentive compatible, 366 expected utility property, 377 income effect, 47, 56, 58, 59 expected value, 374 income expansion path, 50 experimental economics, 259, 272 independence, 376 experimental evidence on games, 272 indifference, 8 externality, 329, 330, 351 indifference curve, 7, 9, 19 indifference relation, 8 feasible, 8 individual demand function, 47 ixed cost, 175, 176 individual rationality constraint, 397 Flood, M., 259 industry supply curve, 200 framing effect, 273 horizontal industry supply curve, 195 free entry, 190 long-run industry supply curve, 193 free exit, 190 short-run industry supply curve, 191 free rider, 351, 359 upward-sloping long-run industry supply curve, 194 gamble, 374 ineficiency, 283 game, 258, 374 inferior good, 47, 49

Index 407

inlation rate, 83 marginal cost, 134–137, 178, 214, 221, 223, 225 input demand curve, 143 marginal cost function, 135 input demand function, 173 marginal external cost, 332 insurance marginal product, 140, 153, 175 auto insurance, 391 marginal rate of substitution, 7, 14, 19, 20, 309 lood insurance, 391 marginal revenue, 214, 221, 225 homeowner’s insurance, 391 marginal unit, 118 interest rate, 84 marginal utility, 7, 19, 20, 378 nominal interest rate, 84 market real interest rate, 85 cap and trade market, 330, 341, 343 internalizing the externality, 334 market for pollution rights, 330, 340 intertemporal budget constraint, 31, 83, 84 market constraints, 130, 131 intertemporal budget line, 84 market demand, 64 inverse demand, 53 market demand curve, 48 inverse production function, 133, 144 market equilibrium, 196, 281, 356 invisible hand, 260 market failure, 329, 336, 351, 388, 390, 392, isocost line, 159 397 isofactor curve, 148 market failures, 202 isoquant, 152, 153 market for lemons, 387 isorevenue line, 148 market supply curve, 200 horizontal market supply curve, 195 Jevons, W., 1 long-run market supply curve, 193 short-run market supply curve, 191 Kaldor, N., 60 upward-sloping long-run market supply curve, Keynes, J., 151 194 Kuhn, H., 45, 172 markup, 215 labor, 70, 307 Marshall, A., 1, 52 labor market, 83 Marx, K., 1 labor supply curve, 73 McKenzie, L., 290 labor supply function, 73 microeconomics, 2 Lagrange function, 37, 43, 171 Mill, J., 1 Lagrange function method, 37, 43, 171, 350 money good, 114 Lagrange multiplier, 350 monitoring, 398 Lagrange, J., 43, 171 monopolist, 190, 212 Lagrangian, 43, 171, 350 monopolistic competition, 212, 224 law of demand, 51 monopoly, 213, 228, 238, 239, 241 legal contract, 399 legal monopoly, 213 leisure, 70, 71, 307 natural monopoly, 212 Leontief, W., 67 monopoly irm, 212 lexicographic preferences, 24, 43 monopoly market, 212 liability rules, 399 monopoly proit maximization, 213, 214 Lindahl equilibrium, 361, 363 monopsony, 213 Lindahl, E., 362 monotonic, 303 long run, 151, 190 monotonicity, 7, 9, 130, 153 long-run cost curve, 160 moral hazard, 386, 390, 392, 393 long-run cost function, 160 Morgenstern, O., 258, 373, 375 long-run market theory, 191 mutual assured destruction, 271 lottery, 374 compound lottery, 375, 376 Nash equilibrium, 258, 262, 263, 360 Luce, R., 262 mixed-strategy Nash equilibrium, 265 pure-strategy Nash equilibrium, 265 Malthus, T., 131 Nash, J., 258, 262, 265 marginal beneit, 354 neoclassical school, 1

408 Index

non-labor income, 75 private good, 351, 354 normal good, 47, 49 probability, 374 numeraire, 296, 311 producer’s surplus, 189, 199, 216, 217 numeraire good, 31, 114 producers’ surplus, 189, 200, 201, 283 production, 129 ObamaCare, 81, 389, 401 production function, 130, 150 oligopoly, 235 production model opportunity cost of leisure, 71 multiple-input/single-output production model, optimal choice, 33, 36 129, 150 order-preserving transformation, 17 single-input/single-output production model, other-regarding preferences, 272 129 overtime pay, 78 production technique, 152 proit, 129, 133 Pareto domination, 284, 308, 320 proit maximization, 137, 138, 142, 160, 164, 172, Pareto eficiency, 94, 281, 284, 308, 309, 320 180, 181, 223, 225 Pareto eficient, 284 irst-order condition for proit maximization, Pareto move, 284, 289 137 Pareto optimal, 361 irst-order conditions for proit maximization, Pareto optimality, 94, 281, 284, 288, 289, 294, 173 306, 308, 309, 320, 342, 351, 363, 365, 366 joint proit maximization, 334 Pareto, V., 1, 284 second-order condition for proit maximization, partial derivative, 19 138 partial equilibrium, 284 second-order conditions for proit partial equilibrium analysis, 2 maximization, 173 Patient Protection and Affordable Care Act of public good, 351 2010, 81, 389, 401 public good model, 353 perfect competition, 189 perfect complements, 24, 34 quasi-public good, 353 perfect information, 190, 372 quasiixed cost, 211 perfect substitutes, 23, 35 quasilinear preferences, 112, 114, 118, 354 Pigou, A., 336 quasilinearity, 112, 116, 117, 124, 354 pollution rights, 330, 340 Polonius, 84 Raiffa, H., 262 preference relation, 8 randomness, 372, 374 strict preference relation, 8 rationality, 1, 263 weak preference relation, 9 real wage, 72 preferences, 7 real-world convexity/concavity, 131 well-behaved preferences, 12 repeated games, 259 present value reservation price, 387 of consumption stream, 32 returns to scale, 155 of income stream, 32 constant returns to scale, 155, 158, 161 present value of income stream, 85 decreasing returns to scale, 156, 162 price constraints, 131 increasing returns to scale, 156, 161 price discrimination, 212, 219 revealed preference, 94, 108 common price discrimination, 219, 220 strong axiom of revealed preference, 109 irst-degree price discrimination, 219, 222 weak axiom of revealed preference, 109 perfect price discrimination, 219, 222 revenue, 133 second-degree price discrimination, 219 Ricardo, D., 1, 131 third-degree price discrimination, 219, risk averse, 378 220 risk loving, 380 price-taking behavior, 190 risk neutral, 381 principal–agent problem, 386, 392, 393, 397 Robinson Crusoe, 281 prisoners’ dilemma, 258, 259, 261 Russell, B., 70

Index 409

Samuelson optimality condition, 351, 358, 359, demand-revealing tax, 351, 365 361, 363 federal income tax, 79 Samuelson, P., 108, 359 lat tax, 70, 80, 82, 362 savings, 31 gasoline tax, 95 income effect on savings, 89 income tax, 79 substitution effect on savings, 86 just tax, 362 Schelling, T., 258 lump-sum tax, 94–96, 296 screening contract, 398 payroll tax, 79 second-price auction, 367 per head tax, 95 self-interested preferences, 272, 303 per-unit tax, 94–97, 202, 204, 206 Selten, R., 258 percentage tax, 95 set Pigouvian tax, 330, 336 less preferred set, 10 poll tax, 95 more preferred set, 10 progressive tax, 70, 79, 81, 82, 362 Shakespeare, W., 84 regressive tax, 80 short run, 174, 190 sales tax, 95 short-run cost function, 177 Social Security tax, 80 short-run demand function, 176 speciic tax, 95 short-run market theory, 191 taxation according to ability to pay, short-run production function, 175 362 short-run total cost, 177 taxation according to beneit, 362 signaling device, 398 taxation according to marginal beneit, Slutsky equation, 48, 68 362 Slutsky, E., 57 value added tax, 95 Smith, A., 1, 94, 131, 202, 260, 294 Wicksell/Lindahl tax, 351, 361 social surplus, 197, 201 tax rebate social surplus maximization, 202 per-unit tax rebate, 97 Spence, M., 387 technical rate of substitution, 154, 155 Stackelberg competition, 246 technological constraints, 130, 150 Stackelberg duopoly model, 236 technological eficiency, 152, 307, 309 Stackelberg follower, 236, 246 technological ineficiency, 307 Stackelberg leader, 236, 246 Thayler, R., 272 Stackelberg, H., 236, 246 theory of the irm Stiglitz, J., 387 long-run theory of the irm, 151 strategic behavior, 235, 258 short-run theory of the irm, 151, strategy, 260 174 mixed strategy, 265 threat, 271 pure strategy, 265 tit for tat, 259, 274 subsidy total cost, 134, 176 Pigouvian subsidy, 330, 336 total cost function, 134 substitutes, 54, 55 transfer substitution effect, 47, 56, 58, 59 lump-sum transfer, 296 Hicks substitution effect, 99 transitivity, 7, 9, 376 Kaldor substitution effect, 99 Tucker, A., 45, 172, 259 Slutsky substitution effect, 111 supply function, 145 U-shaped average cost curve, 131 supply of labor, 70 uncertainty, 372–374 supply of savings, 70, 83, 86 unemployment beneits, 76 unequal probabilities, 376 tatonnement process, 292 utility tax cardinal utility, 17, 374, 378 ad valorem tax, 95 expected utility, 377 carbon emissions tax, 98 ordinal utility, 17, 112, 373

410 Index

utility function, 7, 16 von Neumann–Morgenstern utility, 386 Cobb–Douglas utility function, 123 von Neumann–Morgenstern utility function, 373 quasilinear utility function, 119 utility maximization, 36 wage rate, 71 Walras’ Law, 298 value of average product, 142, 173 Walras, L., 1, 290 value of marginal product, 142, 173 Walras,L, 298 variable cost, 176 Walrasian equilibrium, 290, 292, 313, 320 variation Walrasian process, 292 compensating variation, 99, 101, 102, 112, 119 welfare change for many people, 121 equivalent variation, 100–102, 112, 119 welfare change for one person, 98 Veblen good, 53 welfare economics, 94 Veblen, T., 53 irst fundamental theorem of welfare Vickrey auction, 367 economics, 281, 294, 303, 321 Vickrey, W., 367 second fundamental theorem of welfare voluntary contribution mechanism, 359 economics, 281, 295, 296, 321 von Neumann, J., 258, 373, 375 Wicksell, K., 362 von Neumann–Morgenstern expected utility, 373, willingness-to-pay, 103, 118 375 naive willingness-to-pay, 104, 118 von Neumann–Morgenstern expected utility theorem, 377 zero savings point, 83