,Intermediate Microeconomics
A Modern Approach
Eighth Edition
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, Intermediate
Microeconomics
A Modern Approach
Eighth Edition
Hal R. Varian
University of California at Berkeley
W. W. Norton & Company • New York • London
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,To Carol
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, CONTENTS
Preface xix
1 The Market
Constructing a Model 1 Optimization and Equilibrium 3 The De-
mand Curve 3 The Supply Curve 5 Market Equilibrium 7 Com-
parative Statics 9 Other Ways to Allocate Apartments 11 The Dis-
criminating Monopolist • The Ordinary Monopolist • Rent Control •
Which Way Is Best? 14 Pareto Efficiency 15 Comparing Ways to Al-
locate Apartments 16 Equilibrium in the Long Run 17 Summary 18
Review Questions 19
2 Budget Constraint
The Budget Constraint 20 Two Goods Are Often Enough 21 Prop-
erties of the Budget Set 22 How the Budget Line Changes 24 The
Numeraire 26 Taxes, Subsidies, and Rationing 26 Example: The
Food Stamp Program Budget Line Changes 31 Summary 31 Review
Questions 32
, VIII CONTENTS
3 Preferences
Consumer Preferences 34 Assumptions about Preferences 35 Indif-
ference Curves 36 Examples of Preferences 37 Perfect Substitutes
• Perfect Complements • Bads • Neutrals • Satiation • Discrete
Goods • Well-Behaved Preferences 44 The Marginal Rate of Substitu-
tion 48 Other Interpretations of the MRS 50 Behavior of the MRS
51 Summary 52 Review Questions 52
4 Utility
Cardinal Utility 57 Constructing a Utility Function 58 Some Exam-
ples of Utility Functions 59 Example: Indifference Curves from Utility
Perfect Substitutes • Perfect Complements • Quasilinear Preferences
• Cobb-Douglas Preferences • Marginal Utility 65 Marginal Utility
and MRS 66 Utility for Commuting 67 Summary 69 Review
Questions 70 Appendix 70 Example: Cobb-Douglas Preferences
6 Demand
Normal and Inferior Goods 96 Income Offer Curves and Engel Curves
97 Some Examples 99 Perfect Substitutes • Perfect Complements
• Cobb-Douglas Preferences • Homothetic Preferences • Quasilinear
Preferences • Ordinary Goods and Giffen Goods 104 The Price Offer
Curve and the Demand Curve 106 Some Examples 107 Perfect
Substitutes • Perfect Complements • A Discrete Good • Substitutes
and Complements 111 The Inverse Demand Function 112 Summary
114 Review Questions 115 Appendix 115
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