Table of Contents

Introduction 1

Part I: Getting Started with Microeconomics 5

Chapter 1: Discovering Why Microeconomics Is a Big Deal 7

Chapter 2: Considering Consumer Choice: Why Economists Find You Fascinating 17

Chapter 3: Looking at the Behavior of Firms: What They Are and What They Do 31

Part II: Doing the Best You Can: Consumer Theory 43

Chapter 4: Living a Life without Limits 45

Chapter 5: Considering the Art of the Possible: The Budget Constraint 55

Chapter 6: Achieving the Optimum in Spite of Constraints 69

Part III: Uncovering the Alchemy of Firms’ Inputs and Outputs 87

Chapter 7: Working with Different Costs and Cost Curves 89

Chapter 8: Squeezing Out Every Last Drop of Profit 107

Chapter 9: Supplying the Demanded Information on Supply and Demand 121

Chapter 10: Dreaming of the Consumer’s Delight: Perfect Competition 143

Part IV: Delving into Markets, Market Failure, and Welfare Economics 155

Chapter 11: Stepping into the Real World: Oligopoly and Imperfect Competition 157

Chapter 12: Appreciating the Fundamental Theorems of Welfare Economics 175

Chapter 13: The Monopoly Game 187

Chapter 14: Examining Market Failure: Pollution and Parks 203

Chapter 15: Understanding the Dangers of Asymmetric Information 215

Part V: Thinking Strategically: Life Is Just a Game! 225

Chapter 16: Playing Games with Economic Theory 227

Chapter 17: Keeping Things Stable: The Nash Equilibrium 245

Chapter 18: Knowing How to Win at Auctions 255

Chapter 19: Understanding the Game: Credible Threats and Signals 267

Part VI: The Part of Tens 277

Chapter 20: Meeting Ten Great Microeconomists 279

Chapter 21: Top Ten Tips to Take Away 287

Glossary 295

Index 301

About the Author

Lynne Pepall, PhD, is a professor of economics at Tufts University. She has taught microeconomics at both graduate and undergraduate levels since 1987.

Peter Antonioni is a senior teaching fellow at the Department of Management Science and Innovation, University College, London, and coauthor of Economics For Dummies, 2nd UK Edition.

Manzur Rashid, PhD, is a lecturer at New College of the Humanities, where he covers second-year micro- and macroeconomics.