Preface |
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xiii | |
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1 | (4) |
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Part I Theory of the Consumer |
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5 | (122) |
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2 Preferences and Utility |
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7 | (19) |
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7 | (1) |
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2.2 The Consumer's Preference Relation |
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8 | (6) |
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2.3 The Marginal Rate of Substitution |
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14 | (2) |
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2.4 The Consumer's Utility Function |
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16 | (3) |
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2.5 Utility Functions and the Marginal Rate of Substitution |
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19 | (2) |
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21 | (1) |
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22 | (3) |
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Appendix: Differentiation of Functions |
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25 | (1) |
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3 The Budget Constraint and the Consumer's Optimal Choice |
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26 | (21) |
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26 | (1) |
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3.2 The Standard Budget Constraint, the Budget Set, and the Budget Line |
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26 | (2) |
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3.3 Shifts of the Budget Line |
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28 | (1) |
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3.4 Odd Budget Constraints |
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29 | (2) |
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3.5 Income and Consumption Over Time |
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31 | (2) |
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3.6 The Consumer's Optimal Choice: Graphical Analysis |
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33 | (3) |
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3.7 The Consumer's Optimal Choice: Utility Maximization Subject to the Budget Constraint |
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36 | (2) |
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38 | (2) |
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40 | (3) |
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Appendix: Maximization Subject to a Constraint: The Lagrange Function Method |
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43 | (4) |
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47 | (23) |
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47 | (1) |
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4.2 Demand as a Function of Income |
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48 | (2) |
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4.3 Demand as a Function of Price |
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50 | (4) |
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4.4 Demand as a Function of Price of the Other Good |
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54 | (2) |
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4.5 Substitution and Income Effects |
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56 | (4) |
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4.6 The Compensated Demand Curve |
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60 | (1) |
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61 | (3) |
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4.8 The Market Demand Curve |
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64 | (2) |
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66 | (1) |
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67 | (1) |
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Appendix: The Slutsky Equation |
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68 | (2) |
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5 Supply Functions for Labor and Savings |
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70 | (24) |
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5.1 Introduction to the Supply of Labor |
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70 | (1) |
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5.2 Choice between Consumption and Leisure |
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70 | (3) |
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5.3 Substitution and Income Effects in Labor Supply |
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73 | (2) |
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5.4 Other Types of Budget Constraints |
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75 | (4) |
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5.5 Taxing the Consumer's Wages |
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79 | (4) |
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5.6 Saving and Borrowing: The Intertemporal Choice of Consumption |
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83 | (3) |
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5.7 The Supply of Savings |
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86 | (3) |
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89 | (2) |
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91 | (3) |
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6 Welfare Economics 1: The One-Person Case |
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94 | (18) |
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94 | (1) |
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6.2 Welfare Comparison of a Per-Unit Tax and an Equivalent Lump-Sum Tax |
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94 | (3) |
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6.3 Rebating a Per-Unit Tax |
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97 | (1) |
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6.4 Measuring a Change in Welfare for One Person |
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98 | (5) |
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6.5 Measuring Welfare for Many People: A Preliminary Example |
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103 | (1) |
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104 | (2) |
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106 | (2) |
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Appendix: Revealed Preference |
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108 | (4) |
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7 Welfare Economics 2: The Many-Person Case |
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112 | (15) |
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112 | (1) |
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7.2 Quasilinear Preferences |
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113 | (1) |
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114 | (4) |
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7.4 A Consumer's Surplus Example with Quasilinear Preferences |
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118 | (3) |
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121 | (2) |
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7.6 A Last Word on the Quasilinearity Assumption |
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123 | (1) |
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124 | (1) |
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125 | (2) |
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Part II Theory of the Producer |
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127 | (60) |
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8 Theory of the Firm 1: The Single-Input Model |
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129 | (21) |
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129 | (1) |
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8.2 The Competitive Firm's Problem: Focusing on Its Output |
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130 | (9) |
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8.3 The Competitive Firm's Problem: Focusing on Its Input |
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139 | (4) |
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143 | (3) |
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146 | (1) |
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147 | (3) |
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9 Theory of the Firm 2: The Long-Run, Multiple-Input Model |
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150 | (24) |
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150 | (1) |
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9.2 The Production Function in the Long Run |
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151 | (7) |
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9.3 Cost Minimization in the Long Run |
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158 | (5) |
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9.4 Profit Maximization in the Long Run |
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163 | (4) |
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167 | (2) |
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169 | (2) |
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Appendix: Two Slightly More Mathematical Techniques |
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171 | (3) |
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10 Theory of the Firm 3: The Short-Run, Multiple-Input Model |
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174 | (13) |
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174 | (1) |
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10.2 The Production Function in the Short Run |
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174 | (1) |
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10.3 Cost Minimization in the Short Run |
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175 | (5) |
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10.4 Profit Maximization in the Short Run |
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180 | (2) |
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182 | (2) |
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184 | (3) |
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Part III Partial Equilibrium: Market Structure |
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187 | (92) |
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11 Perfectly Competitive Markets |
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189 | (23) |
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189 | (1) |
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189 | (2) |
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11.3 Market/Industry Supply |
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191 | (5) |
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11.4 Equilibrium in a Competitive Market |
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196 | (1) |
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11.5 Competitive Equilibrium and Social Surplus Maximization |
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197 | (5) |
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11.6 The Deadweight Loss of a Per-Unit Tax |
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202 | (4) |
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206 | (3) |
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209 | (3) |
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12 Monopoly and Monopolistic Competition |
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212 | (23) |
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212 | (1) |
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12.2 The Classical Solution to Monopoly |
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213 | (3) |
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12.3 Deadweight Loss from Monopoly: Comparing Monopoly and Competition |
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216 | (3) |
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12.4 Price Discrimination |
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219 | (5) |
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12.5 Monopolistic Competition |
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224 | (4) |
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228 | (4) |
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232 | (3) |
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235 | (23) |
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235 | (1) |
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236 | (5) |
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241 | (1) |
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242 | (4) |
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13.5 Stackelberg Competition |
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246 | (2) |
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13.6 Bertrand Competition |
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248 | (4) |
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252 | (2) |
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254 | (2) |
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Appendix: The Competitive Limit |
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256 | (2) |
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258 | (21) |
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258 | (1) |
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14.2 The Prisoners' Dilemma, and the Idea of Dominant Strategy Equilibrium |
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259 | (2) |
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14.3 The Battle of the Sexes, and the Idea of Nash Equilibrium |
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261 | (2) |
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14.4 Multiple or No Nash Equilibria, and Mixed Strategies |
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263 | (2) |
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14.5 The Expanded Battle of the Sexes: When More Choices Make Players Worse Off |
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265 | (2) |
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14.6 Sequential-Move Games |
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267 | (4) |
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271 | (1) |
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14.8 Experimental Evidence, Behavioral Economics, and Repeated Games |
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272 | (2) |
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274 | (2) |
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276 | (3) |
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Part IV General Equilibrium |
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279 | (48) |
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281 | (25) |
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281 | (1) |
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15.2 An Economy with Two Consumers and Two Goods |
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281 | (2) |
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283 | (7) |
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15.4 Competitive or Walrasian Equilibrium |
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290 | (3) |
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15.5 The Two Fundamental Theorems of Welfare Economics |
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293 | (4) |
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297 | (3) |
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300 | (2) |
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Appendix: A Simple Proof of the First Welfare Theorem |
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302 | (4) |
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306 | (21) |
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306 | (1) |
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16.2 A Robinson Crusoe Production Economy |
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306 | (1) |
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307 | (4) |
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16.4 Walrasian or Competitive Equilibrium |
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311 | (4) |
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16.5 When There Are Two Goods, Bread and Rum |
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315 | (4) |
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16.6 The Two Welfare Theorems Revisited |
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319 | (2) |
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321 | (2) |
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323 | (4) |
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327 | (78) |
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329 | (22) |
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329 | (1) |
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17.2 Examples of Externalities |
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330 | (1) |
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17.3 The Oil Refiner and the Fish Farm |
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331 | (5) |
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17.4 Classical Solutions to the Externality Problem: Pigou and Coase |
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336 | (3) |
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17.5 Modern Solutions for the Externality Problem: Markets for Pollution Rights |
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339 | (2) |
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17.6 Modern Solutions for the Externality Problem: Cap and Trade |
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341 | (3) |
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344 | (2) |
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346 | (3) |
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Appendix: Efficient Pollution Abatement in Cap and Trade |
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349 | (2) |
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351 | (21) |
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351 | (1) |
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18.2 Examples of Public Goods |
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352 | (1) |
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18.3 A Simple Model of an Economy with a Public Good |
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353 | (5) |
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18.4 The Samuelson Optimality Condition |
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358 | (1) |
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18.5 The "Free Rider" Problem and Voluntary Contribution Mechanisms |
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359 | (2) |
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18.6 How To Get Efficiency in Economies with Public Goods |
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361 | (6) |
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367 | (2) |
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369 | (3) |
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19 Uncertainty and Expected Utility |
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372 | (14) |
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19.1 Introduction and Examples |
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372 | (1) |
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19.2 Von Neumann--Morgenstern Expected Utility: Preliminaries |
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373 | (2) |
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19.3 Von Neumann--Morgenstern Expected Utility: Assumptions and Conclusion |
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375 | (2) |
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19.4 Von Neumann--Morgenstern Expected Utility: Examples |
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377 | (5) |
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382 | (1) |
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383 | (3) |
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20 Uncertainty and Asymmetric Information |
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386 | (19) |
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386 | (1) |
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20.2 When Sellers Know More Than Buyers: The Market for "Lemons" |
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387 | (1) |
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20.3 When Buyers Know More Than Sellers: A Market for Health Insurance |
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388 | (2) |
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20.4 When Insurance Encourages Risk Taking: Moral Hazard |
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390 | (2) |
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20.5 The Principal-Agent Problem |
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392 | (6) |
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20.6 What Should Be Done about Market Failures Caused by Asymmetric Information? |
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398 | (1) |
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399 | (2) |
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401 | (4) |
Index |
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405 | |