Lecture Notes Microeconomic Theory Guoqiang TIAN Department of Economics Texas A&M University College Station, Texas 77843 (
[email protected]) January, 2004 Contents 1 Overview of Economics 1.1 1.2 I 1 Nature and Role of Modern Economics . . . . . . . . . . . . . . . . . . . . 1 1.1.1 Modern Economics and Economic Theory . . . . . . . . . . . . . . 1 1.1.2 The Standard Analytical Framework of Modern Economics . . . . . 2 1.1.3 Key Assumptions Commonly Used or Preferred in Modern Economics 4 1.1.4 Roles of Mathematics in Modern Economics . . . . . . . . . . . . . 5 1.1.5 Conversion between Economic and Mathematical Languages . . . . 5 1.1.6 Limitation and Extension of an Economic Theory . . . . . . . . . . 6 1.1.7 Distinguish Necessary and Sufficient Conditions for Statements . . . 7 Partial Equilibrium Model for Competitive Markets . . . . . . . . . . . . . 8 1.2.1 Assumptions on Competitive Market . . . . . . . . . . . . . . . . . 8 1.2.2 The Role of Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.2.3 The Competitive Firm’s Profit Maximization Problem 9 1.2.4 Partial Market Equilibrium . . . . . . . . . . . . . . . . . . . . . . 11 1.2.5 Entry and Long-Run Equilibrium . . . . . . . . . . . . . . . . . . . 12 . . . . . . . General Equilibrium Theory and Social Welfare 2 Positive Theory of Equilibrium: Existence, Uniqueness, and Stability 14 16 2