- 7 x 10.
- 134pp.
- figures.
- Hardcover
- 1990
- Available
- 978-0-472-09409-7
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- $84.95 U.S.
- Paper
- 1990
- Available
- 978-0-472-06409-0
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- $33.95 U.S.
The Walrasian Vision of the Microeconomy articulates the traditional vision that is conjured up in the minds of most contemporary economists as they contemplate the microeconomy. It does so by setting out a very simple general-equilibrium model containing 1 produced consumer good, 1 produced capital good, 2 factors, 2 consumers, and 2 firms. Most of the basic theoretical ingredients of perfect competition taught in microeconomic theory courses are geometrically developed in this context: market equilibrium, the derivation of consumer demand for goods and supply of factors from constrained utility maximization, the relation between cost and production functions, the derivation of firm output supply and input demand from profit maximization, and the connections between competitive equilibrium, Pareto optimality, and welfare maximization. Also included is an elementary geometric proof of the existence and uniqueness of competitive equilibrium. The underlying premise is that these elements are all components of a larger picture and, as a result, fit together into a unified whole. The book is ideally suited to accompany the fuller and more detailed expositions of standard microeconomic theory texts.
Contents
1. Introduction 1
1.1 A Description of the Economy 1
1.2 The Approach 5
2. Markets 11
2.1 Demand and Supply 11
2.2 The Operation of Markets 17
3. Individual Consumer Behavior 25
3.1 Utility Functions 26
3.2 Utility Maximization 33
3.3 Consumer Demand and Supply Functions 40
4. Production and Cost 47
4.1 Production Functions 48
4.2 Cost Minimization: The Long Run 54
4.3 Long-Run Cost Functions 58
4.4 Cost in the Short Run 61
4.5 A Comparison of Long-Run and Short-Run Cost Curves 63
5. Individual Firm Behavior 69
5.1 Revenue and Profit 70
5.2 Profit Maximization 72
5.3 Short-Run Demand and Supply Functions 76
5.4 Long-Run Demand and Supply Functions 80
6. A Walrasian Model 85
6.1 The Equations 86
6.2 Explaining Economic Reality 90
6.3 Pareto Optimality 94
6.4 Welfare Maximization 99
6.5 Existence and Uniqueness of Equilibria 103
Appendix 6.A 109
Appendix 6.B 110
7. The Walrasian Vision 111
Index 117