Tài liệu MICROECONOMICS (4th edition)

SCHAUM’S OUTLINE OF MICROECONOMICS Fourth Edition This page intentionally left blank SCHAUM’S OUTLINE OF MICROECONOMICS Fourth Edition DOMINICK SALVATORE, Ph.D. Professor of Economics Fordham University SCHAUM’S OUTLINE SERIES McGRAW-HILL New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2006, 1992, 1983, 1974 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-149171-6 The material in this eBook also appears in the print version of this title: 0-07-146236-8. All trademarks are trademarks of their respective owners. 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If you’d like more information about this book, its author, or related books and websites, please click here. PREFACE Microeconomic theory presents, in a systematic way, some of the basic analytical techniques or “tools of analysis” of economics. As such, it has traditionally been one of the most important courses in all economics and business curricula and is a requirement in practically all colleges and universities. Being highly abstract in nature, microeconomic theory is also one of the most difficult courses and often becomes a stumbling block for many students. The purpose of this book is to help overcome this difficulty by approaching microeconomic theory from a learn-by-doing methodology. While the book is primarily intended as a supplement to all current standard textbooks in microeconomic theory, the statements of theory and principles are sufficiently complete to enable its use for independent study as well. Each chapter begins with a clear statement of theory, principles, or background information, fully illustrated with examples. This is followed by a set of multiple-choice review questions with answers. Subsequently, numerous theoretical and numerical problems are presented with their detailed, step-by-step solutions. These solved problems serve to illustrate and amplify the theory, to bring into sharp focus those fine points without which the student continually feels on unsafe ground, and to provide the applications and the reinforcement so vital to effective learning. The topics are arranged in the order in which they are usually covered in intermediate microeconomic theory courses and texts. As far as content, this book contains more material than is covered in one-semester courses in undergraduate microeconomic theory. Thus, while directed primarily at undergraduates, it can also provide a useful source of reference for M.A. students, M.B.A. students and businesspeople. There is no prerequisite for its study other than a prior course in or some knowledge of elementary economics. The methodology of this book and much of its content have been tested in microeconomic theory classes at Fordham University. The students were enthusiastic and made many valuable suggestions for improvements. To all of them I am deeply grateful. I would like to express my gratitude to the entire Schaum staff of McGraw-Hill for their assistance and especially to Barbara Gibson and Adrinda Kelly. This is the fourth edition of a book that has enjoyed a very gratifying market success and has been translated into nine languages (Spanish, French, Italian, Portuguese, Greek, Chinese, Japanese, Arabic, and Indonesian) and was reprinted in India and Taiwan. All the features that made the first and second editions successful were retained in the third edition. The following revisions were included in this edition: . . A brand new chapter (Chapter 12) has been added on Game Theory and Oligopolistic Behavior. Game theory is one of the most important development in microeconomic theory and all texts now include it. A second new chapter (Chapter 15) has also been added on the Economics of Information. The economics of information is another important development in Copyright © 2006, 1992, 1983, 1974 by The McGraw-Hill Companies, Inc. Click here for terms of use. PREFACE vi microeconomic theory and reflects the fact that we now do live an information economy. . Chapter 7 was expanded with the inclusion of Section 7.8 on The Cobb-Douglas Production Function, Section 7.9 on X-Inefficiency, and Section 7.10 on Technological Progress. . New Section 11.6 on Transfer Pricing was added to new Chapter 11. . Numerous additional examples, review questions, and problems and applications were included throughout the volume. These additions should be very useful, particularly to the more eager undergraduate student, as well as to M.A. and M.B.A. students. Many other changes were also made throughout to reflect the numerous helpful comments that I received from the many professors and students who used the first two editions. Finally, the glossary of important economic terms and the sample midterm and final examinations were revised and expanded. DOMINICK SALVATORE For more information about this title, click here CONTENTS CHAPTER 1 Preface Introduction 1.1 1.2 1.3 1.4 1.5 1.6 1.7 CHAPTER 2 Demand, Supply, and Equilibrium: An Overview 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 CHAPTER 3 The Individual’s Demand for a Commodity The Law of Negatively Sloped Demand Shifts in the Individual’s Demand Curve The Market Demand for a Commodity The Single Producer’s Supply of a Commodity The Shape of the Supply Curve Shifts in the Single Producer’s Supply Curve The Market Supply of a Commodity Equilibrium Types of Equilibria Shifts in Demand and Supply, and Equilibrium The Measurement of Elasticities 3.1 3.2 3.3 3.4 3.5 3.6 CHAPTER 4 The Purpose of Theory The Problem of Scarcity The Function of Microeconomic Theory Markets, Functions, and Equilibrium Comparative Statics and Dynamics Partial Equilibrium and General Equilibrium Analysis Positive Economics and Normative Economics Price Elasticity of Demand Arc and Point Elasticity Point Elasticity and Total Expenditures Income Elasticity of Demand Cross Elasticity of Demand Price Elasticity of Supply Consumer Demand Theory 4.1 4.2 4.3 4.4 Total and Marginal Utility Consumer Equilibrium Indifference Curves: Definition The Marginal Rate of Substitution v 1 1 1 1 2 2 2 2 14 14 15 15 15 17 17 17 18 18 19 19 39 39 40 41 42 43 44 62 62 63 64 65 viii CONTENTS Characteristics of Indifference Curves The Budget Constraint Line Consumer Equilibrium Exchange The Income-Consumption Curve and the Engel Curve The Price-Consumption Curve and the Consumer’s Demand Curve 4.11 Separation of the Substitution and Income Effects 66 67 67 68 68 Advanced Topics in Consumer Demand Theory 102 The Substitution Effect According to Hicks and Slutsky The Theory of Revealed Preference Index Numbers and Changes in the Standard of Living Utility Theory Under Uncertainty A New Approach to Consumer Theory—the Demand for Characteristics Empirical Demand Curves 102 103 104 105 4.5 4.6 4.7 4.8 4.9 4.10 CHAPTER 5 5.1 5.2 5.3 5.4 5.5 5.6 CHAPTER 6 Theory of Production Production With One Variable Input: Total, Average, and Marginal Product 6.2 The Shapes of the Average and Marginal Product Curves 6.3 Stages of Production 6.4 Production With Two Variable Inputs: Isoquants 6.5 The Marginal Rate of Technical Substitution 6.6 Characteristics of Isoquants 6.7 Isocosts 6.8 Producer Equilibrium 6.9 Expansion Path 6.10 Factor Substitution 6.11 Constant, Increasing, and Decreasing Returns To Scale 69 70 106 107 118 6.1 CHAPTER 7 Costs of Production 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 Short-Run Total Cost Curves Short-Run Per-Unit Cost Curves The Geometry of Short-Run Per-Unit Cost Curves The Long-Run Average Cost Curve The Shape of The Long-Run Average Cost Curve The Long-Run Marginal Cost Curve The Long-Run Total Cost Curve The Cobb-Douglas Production Function 118 119 120 121 122 122 123 124 124 125 125 146 146 147 148 149 150 151 152 152 CONTENTS 7.9 X-Inefficiency 7.10 Technological Progress CHAPTER 8 CHAPTER 10 152 153 Midterm Examination 179 Price and Output Under Perfect Competition 184 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 CHAPTER 9 ix Perfect Competition Defined Price Determination in the Market Period Short-Run Equilibrium of the Firm: Total Approach Short-Run Equilibrium of the Firm: Marginal Approach Short-Run Profit or Loss? Short-Run Supply Curve Long-Run Equilibrium of the Firm Constant Cost Industries Increasing Cost Industries Decreasing Cost Industries 184 185 185 186 188 189 189 190 191 192 Price and Output Under Pure Monopoly 212 9.1 Pure Monopoly Defined 9.2 The MR Curve and Elasticity 9.3 Short-Run Equilibrium Under Pure Monopoly: Total Approach 9.4 Short-Run Equilibrium Under Pure Monopoly: Marginal Approach 9.5 Long-Run Equilibrium Under Pure Monopoly 9.6 Regulation of Monopoly: Price Control 9.7 Regulation of Monopoly: Lump-Sum Tax 9.8 Regulation of Monopoly: Per-Unit Tax 9.9 Price Discrimination 212 213 Price and Output Under Monopolistic Competition and Oligopoly 10.1 10.2 10.3 10.4 10.5 10.6 10.7 Monopolistic Competition Defined Short-Run Equilibrium Under Monopolistic Competition Long-Run Equilibrium Under Monopolistic Competition Oligopoly Defined The Cournot Model The Edgeworth Model The Chamberlin Model 213 214 215 216 216 217 218 238 238 238 239 239 240 240 241 x CONTENTS 10.8 10.9 10.10 10.11 10.12 CHAPTER 11 The Kinked Demand Curve Model The Centralized Cartel Model The Market-Sharing Cartel Model Price Leadership Model Long-Run Equilibrium Under Oligopoly Recent and Advanced Topics in Market Structure 11.1 The Lerner Index as a Measure of a Firm’s Monopoly Power 11.2 The Herfindahl Index as Measure of Monopoly Power in an Industry 11.3 Contestable-Market Theory 11.4 Peak-Load Pricing 11.5 Cost-Plus Pricing 11.6 Transfer Pricing CHAPTER 12 Game Theory and Oligopolistic Behavior 12.1 12.2 12.3 12.4 12.5 12.6 12.7 CHAPTER 13 Game Theory: Definitions and Objectives Dominant Strategy Nash Equilibrium The Prisoners’ Dilemma Price and Nonprice Competition and Cartel Cheating Repeated Games and Tit-For-Tat Strategy Strategic Behavior Input Pricing and Employment 241 242 243 243 244 262 262 262 262 263 264 264 272 272 272 273 273 274 274 274 283 Perfect Competition in the Product and Input Markets 13.1 Profit Maximization and Least-Cost Input Combinations 13.2 The Demand Curve of the Firm for One Variable Input 13.3 The Demand Curve of the Firm for One of Several Variable Inputs 13.4 The Market Demand Curve for an Input 13.5 The Market Supply Curve for an Input 13.6 Pricing and Level of Employment of an Input 13.7 Rent and Quasi-Rent 283 283 284 285 285 285 286 Perfect Competition in the Market and Monopoly in the Product Market 13.8 Profit Maximization and Least-Cost Input Combinations 13.9 The Demand Curve of the Firm for One Variable Input 286 286 xi CONTENTS 13.10 The Demand Curve of the Firm for One of Several Variable Inputs 13.11 The Market Demand Curve and Input Pricing 287 287 Monopsony 13.12 Input Supply Curve and Marginal Resource Costs 13.13 Pricing and Employment for One Variable Input 13.14 Pricing and Employment of Several Variable Inputs CHAPTER 14 288 289 289 General Equilibrium and Welfare Economics 312 General Equilibrium 14.1 14.2 14.3 14.4 14.5 14.6 Partial and General Equilibrium Analysis General Equilibrium of Exchange General Equilibrium of Production The Transformation Curve The Slope of the Transformation Curve General Equilibrium of Production and Exchange 312 312 313 314 315 315 Welfare Economics 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 CHAPTER 15 Welfare Economics Defined The Utility-Possibility Curve Grand Utility-Possibility Curve The Social Welfare Function The Point of Maximum Social Welfare Perfect Competition and Economic Efficiency Externalities and Market Failure Public Goods 316 316 317 317 318 318 318 319 The Economics of Information 15.1 The Economics of Search 15.2 Searching for The Lowest Price 15.3 Asymmetric Information: The Adverse Selection 15.4 Market Signaling 15.5 The Problem of Moral Hazard 15.6 The Principal-Agent Problem 15.7 The Efficiency Wage Theory 336 Market for Lemons 336 336 and 337 337 337 338 338 Final Examination 347 Index 351 This page intentionally left blank SCHAUM’S OUTLINE OF MICROECONOMICS Fourth Edition This page intentionally left blank CHAPTER 1 Introduction 1.1 THE PURPOSE OF THEORY The purpose of theory is to predict and explain. A theory is a hypothesis that has been successfully tested. A hypothesis is tested not by the realism of its assumption(s) but by its ability to predict accurately and explain, and also by showing that the outcome follows logically and directly from the assumptions. EXAMPLE 1. From talking to friends and neighbors, from observations in the butcher shop, and from our own behavior, we observe that when the price of a particular cut of meat rises, we buy less of it. From this casual real-world observation, we could construct the following general hypothesis: “If the price of a commodity rises, then the quantity demanded of the commodity declines.” In order to test this hypothesis and arrive at a theory of demand, we must go back to the real world to see whether this hypothesis is indeed true for various commodities, for various people, and at different points in time. Since these outcomes would follow logically and directly from the assumptions (i.e., consumers would want to substitute cheaper for more expensive commodities) we would accept the hypothesis as a theory. 1.2 THE PROBLEM OF SCARCITY The word scarce is closely associated with the word limited or economic as opposed to unlimited or free. Scarcity is the central fact of every society. EXAMPLE 2. Economic resources are the various types of labor, capital, land, and entrepreneurship used in producing goods and services. Since the resources of every society are limited or scarce, the ability of every society to produce goods and services is also limited. Because of this scarcity, all societies face the problems of what to produce, how to produce, for whom to produce, how to ration the commodity over time, and how to provide for the maintenance and growth of the system. In a free-enterprise economy (i.e., one in which the government does not control economic activity), all these problems are solved by the price mechanism (see Problems 1.5 to 1.9). 1.3 THE FUNCTION OF MICROECONOMIC THEORY Microeconomic theory, or price theory, studies the economic behavior of individual decision-making units such as consumers, resource owners, and business firms in a free-enterprise economy. EXAMPLE 3. During the course of business activity, firms purchase or hire economic resources supplied by households in order to produce the goods and services demanded by households. Households then use the income received from the sale of resources (or their services) to business firms to purchase the goods and services supplied by business firms. The “circular flow” of economic activity is now complete (see Problem 1.11). Thus, microeconomic theory, or price theory, studies the flow of goods and services from business firms to households, the composition of such a flow, and how the prices of goods and services in the flow are determined. It also studies the flow of the services of economic resources from resource 1 Copyright © 2006, 1992, 1983, 1974 by The McGraw-Hill Companies, Inc. Click here for terms of use. 2 INTRODUCTION [CHAP. 1 owners to business firms, the particular uses into which these resources flow, and how the prices of these resources are determined. 1.4 MARKETS, FUNCTIONS, AND EQUILIBRIUM A market is the place or context in which buyers and sellers buy and sell goods, services, and resources. We have a market for each good, service, and resource bought and sold in the economy. A function shows the relationship between two or more variables. It indicates how the value of one variable (the dependent variable) depends on and can be found by specifying the value of one or more other (independent) variables. Equilibrium refers to the market condition which once achieved, tends to persist. Equilibrium results from the balancing of market forces. EXAMPLE 4. The market demand function for a commodity gives the relationship between the quantity demanded of the commodity per time period and the price of the commodity (while keeping everything else constant). By substituting various hypothetical prices (the independent variable) into the demand function, we get the corresponding quantities demanded of the commodity per time period (the dependent variable) (see Problem 1.13). The market supply function for a commodity is an analogous concept—except that we now deal with the quantity supplied rather than the quantity demanded of the commodity (see Problem 1.14). EXAMPLE 5. The market equilibrium for a commodity occurs when the forces of market demand and market supply for the commodity are in balance. The particular price and quantity at which this occurs tend to persist in time and are referred to as the equilibrium price and the equilibrium quantity of the commodity (see Problem 1.15). 1.5 COMPARATIVE STATICS AND DYNAMICS Comparative statics studies and compares two or more equilibrium positions, without regard to the transitional period and process involved in the adjustment. Dynamics, on the other hand, deals with the time path and the process of adjustment itself. In this book we deal almost exclusively with comparative statics. EXAMPLE 6. Starting from a position of equilibrium, if the market demand for a commodity, its supply, or both vary, the original equilibrium will be disturbed and a new equilibrium usually will eventually be reached. Comparative statics studies and compares the values of the variables involved in the analysis at these two equilibrium positions (see Problem 1.17), while dynamic analysis studies how these variables change over time as one equilibrium position evolves into another. 1.6 PARTIAL EQUILIBRIUM AND GENERAL EQUILIBRIUM ANALYSIS Partial equilibrium analysis is the study of the behavior of individual decision-making units and the working of individual markets, viewed in isolation. General equilibrium analysis, on the other hand, studies the behavior of all individual decision-making units and all individual markets, simultaneously. This book deals primarily with partial equilibrium analysis. EXAMPLE 7. The change in the equilibrium condition of the commodity in Example 5 was examined only in terms of what happens in the market of that particular commodity. That is, we abstracted from all other markets by implicitly keeping everything else constant (the “ceteris paribus” assumption). We were then dealing with partial equilibrium analysis. However, when the equilibrium condition for this commodity changes, it will affect to a greater or lesser degree and directly or indirectly the market for every other commodity, service, and factor. This is examined in general equilibrium analysis in Chapter 14. 1.7 POSITIVE ECONOMICS AND NORMATIVE ECONOMICS Positive economics deals with or studies what is, or how the economic problems facing a society are actually solved. CHAP. 1] INTRODUCTION 3 Normative economics, on the other hand, deals with or studies what ought to be, or how the economic problems facing the society should be solved. This book deals primarily with positive economics. EXAMPLE 8. Suppose that a firm pollutes the air in the process of producing its output. If we study how much additional cleaning cost is imposed on the community by this pollution, we are dealing with positive economics. Suppose that the firm threatens to move out rather than pay for installing antipollution equipment. The community must then decide whether it will allow the firm to continue to operate and pollute, pay for the antipollution equipment itself, or just force the firm out with a resulting loss of jobs. In reaching these decisions, the community is dealing with normative economics. Glossary Comparative statics It studies and compares two or more equilibrium positions, without regard to the transitional period and process involved in the adjustment. Dynamics The study of the time path and process of adjustment to disequilibrium. Equilibrium Function The market condition which once achieved tends to persist. The relationship between two or more variables. General equilibrium analysis The study of the behavior of individual decision-making units and all individual markets simultaneously. Hypothesis An “if-then” statement usually obtained from a causal observation of the real world. Market The place or context in which buyers and sellers buy and sell goods, services, and resources. Microeconomic theory or price theory The study of the economic behavior of individual decision-making units such as consumers, resource owners, and business firms in a free-enterprise economy. Normative economics solved. The study of what ought to be, or how the economic problems facing the society should be Partial equilibrium analysis The study of the behavior of individual decision-making units and the working of individual markets, viewed in isolation. Positive economics The study of what is, or how the economic problems facing a society are actually solved. Scarce Limited, or economic (as opposed to unlimited, or free). Theory A hypothesis that has been successfully tested. Review Questions 1. A theory is (a) an assumption, (b) an “if-then” proposition, (c) a hypothesis, or (d ) a validated hypothesis. Ans. 2. (d ) See Section 1.1 and Example 1. A hypothesis is tested by (a) the realism of its assumption(s), (b) the lack of realism of its assumption(s), (c) its ability to predict accurately an outcome that follows logically from the assumption(s), or (d ) none of the above. Ans. (c) See Section 1.1 and Example 1. 4 3. INTRODUCTION [CHAP. 1 The meaning of the word “economic” is most closely associated with the word (a) free, (b) scarce, (c) unlimited, or (d ) unrestricted. Ans. (b) Economic factors and goods are those factors and goods which are scarce or limited in supply and thus command a price. 4. In a free-enterprise economy, the problems of what, how, and for whom are solved by (a) a planning committee, (b) the elected representatives of the people, (c) the price mechanism, or (d ) none of the above. Ans. 5. (c) See Example 2. Microeconomic theory studies how a free-enterprise economy determines (a) the price of goods, (b) the price of services, (c) the price of economic resources, or (d ) all of the above. Ans. (d ) Because microeconomic theory is primarily concerned with the determination of all prices in a free-enterprise economy, it is often referred to as price theory. 6. A market (a) necessarily refers to a meeting place between buyers and sellers, (b) does not necessarily refer to a meeting place between buyers and sellers, (c) extends over the entire nation, or (d) extends over a city. Ans. (b) Because of modern communications, buyers and sellers need not come face to face with one another to buy and sell. The market for some commodities extends over a city or a section therein; the market for other commodities may extend over the entire nation or even the world. 7. A function refers to (a) the demand for a commodity, (b) the supply of a commodity, (c) the demand and supply of a commodity, service, or resource, or (d ) the relationship between one dependent variable and one or more independent variables. Ans. (d ) See Section 1.4. Demand functions and supply functions are examples of functions, but the term “function” is a completely general term and refers to the relationship between any dependent variable and its corresponding independent variable(s). 8. The market equilibrium for a commodity is determined by (a) the market demand for the commodity, (b) the market supply of the commodity, (c) the balancing of the forces of demand and supply for the commodity, or (d ) any of the above. Ans. 9. (c) See Section 1.4 and Example 5. Which of the following is incorrect? (a) Microeconomics is concerned primarily with the problem of what, how, and for whom to produce. (b) Microeconomics is concerned primarily with the economic behavior of individual decision-making units when at equilibrium. (c) Microeconomics is concerned primarily with the time path and process by which one equilibrium position evolves into another. (d ) Microeconomics is concerned primarily with comparative statics rather than dynamics. Ans. 10. (c) Choice c is the definition of dynamics. Dynamic microeconomics is still in its infancy. Which of the following statements is most closely associated with general equilibrium analysis? (a) Everything depends on everything else. (b) Ceteris paribus. (c) The equilibrium price of a good or service depends on the balancing of the forces of demand and supply for that good or service. (d ) The equilibrium price of a factor depends on the balancing of the forces of demand and supply for that factor.