Introduction to Economic Analysis

Introduction to Economic Analysis

R. Preston McAfee, Tracy R. Lewis

Language: English

Pages: 328

ISBN: 0982043090

Format: PDF / Kindle (mobi) / ePub

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.




















illustrated with three arrows pointing down. Similarly, when the price is below p*, the quantity supplied qs is less than the quantity demanded qd. This causes some buyers to fail to find goods, leading to higher asking prices and higher bid prices by buyers. The tendency for the price to rise is illustrated with the arrows pointing up. The only price which doesn’t lead to price changes is p*, the equilibrium price in which the quantity supplied equals the quantity demanded. The logic of

is the amount one pays to obtain the share of stock. The value V, in contrast, varies from time to time in a random fashion. To simplify the analysis, we assume that V is uniformly distributed on the interval [0,1], so that the probability of V falling in an interval [a, b] is b-a if 0≤a≤b≤1. The option only has value if C<1, which we assume for the rest of this section. 42 It may seem that synergies between parent and subsidiary are being neglected here, but synergies should be accounted for at

sells for over $500, determined? Figure 4-24: The Porsche Speedster The theory of resource prices can be adapted to cover these items, which are in fixed supply. There are four major differences that are relevant. First, using the item doesn’t consume it; the goods are durable. I can own an “I Like Ike” campaign button for years, then sell the same button. Second, these items may depreciate. Cars wear out even when they aren’t driven, and the brilliant color of Pez dispensers fades. Every time

real world example of a numeraire occurred when the currency used was based on gold so that the prices of other goods are denominated in terms of the value of gold. Money is not necessarily the only constraint on the consumption of goods that a consumer faces. Time can be equally important. One can own all the compact discs in the world, but they are useless if one doesn’t actually have time to listen to them. Indeed, when we consider the supply of labor, time will be a major issue – supplying

circumstances. The fallacy of sunk costs is often thought to be an advantage of casinos. People who lose a bit of money gambling hope to recover their losses by gambling more, with the sunk “investment” in gambling inducing an attempt to make the investment pay off. The nature of most casino gambling is that the house wins on average, which means the average gambler (and even the most skilled slot machine or craps player) loses on average. Thus, for most, trying to win back losses is to lose more

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