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Modern microeconomics book explains the advanced version of traditional microeconomic theories.
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About the book
Modern microeconomics book explains the advanced version of traditional microeconomic theories. It provides the explanation from consumer utility to general equilibrium in economy. This book therefore explains the economic units such as consumers and producers and their economic behaviors. The utility maximization of these units is subject to different constraints. The utility maximization approach of consumer and firm is different but it is complementary with each other. The main emphasis in this book is given on the game theory where producer and consumer play different type of games to get high payoffs. This book covers four distinct parts of microeconomic theory. This book is written as per the syllabus of master degree in economics. In addition to postgraduate course, it is also useful to the students pursuing their doctorate in economics. They could make use of this text to explain theoretical concepts to practical analysis of different microeconomic phenomena. The author has taken help of three methods such as theoretical explanation of concepts, diagrams and equations to illustrate microeconomics models. This book is different because of number of points.
- This book provides the explanation of modern theories with simple examples. The consumer equilibrium, production function, game theory, information economics and social welfare are the major topics of this book.
- This book provides the systematic analysis of the consumer utility and behavior. It is most relevant topic to the decision making of consumer. The revealed preferences, rational choice, utility maximization, indirect utility function, Roy’s identity, Expenditure minimization function are the important topics of this book.
- This book provides an explanation of modern theory of production function. There are different types of production functions and technology is used in each production function. Input output analysis, cost minimization, short run and long run costs, homogenous and heterogeneous production function, duality of costs and different types of technology in production function is strength of this book. The theory of Kalecki and kaldor of factor share in production function is also part of this book.
- The game theory explains that every individual play a game to maximize payoff. But every game has certain rules. Nash equilibrium is explained with different examples in this book. There are co-operative and non-cooperative games which are again explained with different examples in this book. Welfare game is explained with the example of government and poor in rural economy. Both are maximizing their payoff subject to different constraints. Production related game of firm is explained as Bertrand, Cournot and Stackelberg model. These are the games related to market share of firms.
- Information economics describes the applications of game theory. Moral hazard with hidden information is an important topic and it is explained with salesman game. Similarly adverse selection is explained with Lemon theory. There are different parts of Lemon theory and it gives brief idea of behavior of seller and buyer of lemon car. Adverse section under uncertainty explains the insurance game. Signaling and screening in relation to labor market is the advantage of this book.
- The general equilibrium and social welfare is comprehensive part of this book but it is also basic strength of this book. It explains the welfare functions and the Pareto criterion. First and second theorem of welfare economics, market failure and second best is an important topic. Market failure is explained with different examples. Lastly coase theorem is explained with example.
- Students find easy explanation of modern theory of microeconomic which will help them to analyze complex phenomena of modern world. The policy makers, academicians will find many topics much more useful in this book.
- Consumer preference and utility
- Preference relations
- Utility function
- Lexicographic ordering
- Demand function
- Revealed Preference Theory
- The Weak Axiom of Revealed Preference (WARP)
- Indirect utility function
- Expenditure function
- The expenditure minimization problem
- The Hicksian demand function
- The Von Neumann-Morganstern utility function
- Measures of Risk Aversion
- The Production Function
- Inputs to output function
- Technology specification
- Input requirement set
- The transformation function
- Monotonic technologies
- Convex technology
- Regular technology
- Cobb-Douglas technology
- Leontief technology
- The technical rate of substitution
- Elasticity of substitution
- Variation in scale
- Revised technical rate of substitution
- Homogenous and heterogeneous production function
- The Envelope theorem for constrained optimization
- Duality of cost and the production function
- Michael Kalechi’s theory
- Neo-Keynesian model of distribution (Kaldor Model)
- Game Theory
- The rules of the Game
- The prisoner’s dilemma: A dominant strategy
- Equilibrium strategies
- The Cournot model
- Solution to the Cournot model by the Stackelberg equilibrium
- The Bertrand paradox
- Intertemporal dimensions
- The folk theorem
- Information Economics
- The asymmetric information model
- The principal-agent model: The production game
- Optimal contracts: The Broadway game
- Moral hazard: Hidden information
- Pooling and separating equilibrium: the salesman game
- Efficiency wage hypothesis
- Adverse selection
- Lemon models
- Adverse selection under uncertainty: Insurance game III
- General equilibrium and welfare economics
- The Walrasian equilibrium of a competitive economy
- Stability proposition
- Edgeworth’s exchange theory
- Welfare economics
- Pareto efficiency conditions
- The Edgeworth box diagram
- Welfare functions and the Pareto criterion
- First theorem of welfare economics
- The second theorem of welfare economics: (STWE)
- Market failure and second best
- Instances of market failure
- The Coase theorem
About the Author
Dr. Sanjay Rode has completed his PhD from Department of Economics, University of Mumbai in 2005. His area of research interest is Development Economics. He has worked on various national and international research projects in different areas in economics. He has written over twenty research papers and five books. He is working as a national economist on a project of the Asian Development Bank. He is teaching Macroeconomics to post-graduate students at the S. K. Somaiya College, University of Mumbai, India.
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