Intermediate Microeconomics

Synopsis

From Google's chief economist, Varian's best-selling intermediate microeconomics texts are revered as some of the best in the field. And now students can work problems online with Smartwork5, Norton's online homework system, packaged at no additional charge with the Media Update Editions. In addition to online homework, the texts now include four-colour graphs and new interactive animations.

Summary

Chapter 1: Introduction to Microeconomics

Summary:
* Definition and scope of microeconomics
* Overview of the four pillars of microeconomics: supply and demand, elasticity, consumer theory, and producer theory
* Methodology and tools used in microeconomic analysis, including graphical models and optimization

Real Example:
The U.S. government decides to impose a tax on sugar-sweetened beverages. Microeconomists analyze the impact of this tax on the market for these beverages using supply and demand models.

Chapter 2: Supply and Demand

Summary:
* The concept of equilibrium in a market
* Determinants of supply and demand
* Shifts in supply and demand curves
* Government intervention in markets: price ceilings and price floors

Real Example:
The COVID-19 pandemic causes a temporary increase in the demand for hand sanitizer. This leads to a surge in the price of hand sanitizer until supply can catch up to the new level of demand.

Chapter 3: Elasticity

Summary:
* Definition and types of elasticity: price elasticity of demand, income elasticity of demand, and cross-price elasticity of demand
* Factors affecting elasticity
* Applications of elasticity in business and policymaking

Real Example:
A company that produces a new type of coffee estimates that the price elasticity of demand for the coffee is -0.5. This means that a 10% increase in price will lead to a 5% decrease in quantity demanded.

Chapter 4: Consumer Theory

Summary:
* Utility theory and the concept of consumer preferences
* The budget constraint and consumer optimization
* Utility maximization and demand curves
* Applications of consumer theory in marketing and welfare analysis

Real Example:
A consumer has a budget of $100 and a preference for apples and oranges. Her utility function is given by U(A, O) = A^0.5 * O^0.5. The market prices of apples and oranges are $1 and $2, respectively. The consumer will purchase 50 units of apples and 25 units of oranges to maximize her utility.

Chapter 5: Producer Theory

Summary:
* Production functions and their properties
* Cost functions and their relationship to production
* Profit maximization and the supply curve
* Market structures and their impact on producer behavior

Real Example:
A manufacturing firm's production function is given by Q = 100L^0.5 * K^0.5, where Q is output, L is labor, and K is capital. The firm's fixed costs are $100,000 and the marginal cost of production is $10. The firm will produce 10,000 units of output at the profit-maximizing price of $120.