Chicago Price Theory
248
Chicago Price Theory
248Hardcover(New Edition)
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Overview
Price theory is a powerful analytical toolkit for measuring, explaining, and predicting human behavior in the marketplace. This incisive textbook provides an essential introduction to the subject, offering a diverse array of practical methods that empower students to learn by doing. Based on Economics 301, the legendary PhD course taught at the University of Chicago, the book emphasizes the importance of applying price theory in order to master its concepts.
Chicago Price Theory features immersive chapter-length examples such as addictive goods, urban-property pricing, the consequences of prohibition, the value of a statistical life, and occupational choice. It looks at human behavior in the aggregate of an industry, region, or demographic group, but also provides models of individuals when they offer insights about the aggregate. The book explains the surprising answers that price theory can provide to practical questions about taxation, education, the housing market, government subsidies, and much more.
- Emphasizes the application of price theory, enabling students to learn by doing
- Features chapter-length examples such as addictive goods, urban-property pricing, the consequences of prohibition, and the value of a statistical life
- Supported by video lectures taught by Kevin M. Murphy and Gary Becker
- The video course enables students to learn the theory at home and practice the applications in the classroom
Product Details
| ISBN-13: | 9780691192970 |
|---|---|
| Publisher: | Princeton University Press |
| Publication date: | 09/10/2019 |
| Edition description: | New Edition |
| Pages: | 248 |
| Product dimensions: | 6.90(w) x 10.10(h) x 1.10(d) |
About the Author
Table of Contents
Acknowledgments xiii
Chicago Price Theory: An Introduction 1
The Chicago Economics Tradition 1
Price Theory Differs from Microeconomics 2
Using Chicago Price Theory to Learn Economics 4
Example: Ethanol Fuel Subsidies 6
Example: Acquired Comparative Advantage 12
Outline of the Course 16
Part I Prices and Substitution Effects
Chapter 1 Utility Maximization and Demand 21
Utility Maximization 21
The Theory of Demand 25
Chapter 2 Cost Minimization and Demand 30
The Cost Function 30
Hicks' Generalized Law of Demand 34
Relationships between Indifference Curves and the Demand System 35
Properties of Hicksian Demand Functions 36
Chapter 3 Relating the Marshallian and Hicksian Systems 38
The Slutsky Equation 38
Adding Up and Symmetry for the Marshallian System 41
Demand System Degrees of Freedom 43
The Income Effect of a Price Change 44
Chapter 4 Price Indices: Consumer Theory Guides Measurement 48
Laspeyres and Paasche Decompositions of Expenditure Growth 48
Chained Price Indices 51
Using the Cost Function to Value Quality Change 55
Chapter 5 Nudges in Consumer Theory 59
Indifference Curves for Buyers 59
Consumer Misinformation and "Nudgeability" Is a Prediction of Consumer Theory 60
Chapter 6 Short- and Long-Run Demand, with an Application to Addiction 62
An Example: The Demand for Cars and Gasoline 62
Relating the Short-Run Demand Curve to the Overall Demand System 64
Using Consumption Stocks to Understand Addiction 66
Short- and Long-Run Price Effects on Addictive Behaviors 69
Homework Problems for Part I: Prices and Substitution Effects 73
Part II Market Equilibrium
Chapter 7 Discrete Choice and Product Quality 79
Market Demand Is a Distribution Function 79
Equilibrium Product Quality 81
Heterogeneous Firms 87
Heterogeneous Firms and Consumers 91
Chapter 8 Location Choice: An Introduction to Equilibrium Compensating Differences 94
Properties of the Rent Gradient Model 96
Chapter 9 Learning by Doing and On-the-job Investment 101
Human Capital Acquired from Training Programs Administered by the Employer 101
Learning by Doing 102
Types of Human Capital 104
Chapter 10 Production, Profits, and Factor Demand 106
Comparative Advantage and the Production-Possibility Frontier 106
The Production Function 109
Profit Maximization 110
Cost Minimization 112
The Firm's Slutsky Equation 114
Two-Input Production 116
Substitution and Scale Effects on Factor Demand 120
Acquired Comparative Advantage 121
Chapter 11 The Industry Model 126
Properties of the Industry Model 126
The Supply-Demand Perspective on Industry Behavior 128
Four Ingredients of the Industry Model 131
Industry Elasticity of Labor Demand 132
Are Labor and Capital Complements or Substitutes? 133
Chapter 12 The Consequences of Prohibition 135
The Revenue from Drug Sales 135
The Legalization Multiplier 136
Half-Hearted Prohibitions Are the Most Costly 137
Chapter 13 A Price-Theoretic Perspective on the Core 140
Looking for Gains from Trade: Indifference Curves for Buyers and Sellers 140
Exclusive Dealing, Quantity Discounts, and Other Market Outcomes That Are off the Marshallian Demand Curve 142
Chapter 14 Multiple-Factor Industry Model 145
Review of the Industry Model 145
Properties of the Multiple-Factor Industry Model 146
Analyzing Production 148
Endogenous Factor Prices 149
Homework Problems for Part II: Market Equilibrium 150
Part III Technological Progress and Markets for Durable Goods
Chapter 15 Durable Production Factors 155
Stocks and Flows for Factor Prices and Quantities 155
The Use and Investment Markets for Capital Goods 157
Four Equilibrium Conditions 157
Steady State 159
Perturbing the Steady State 159
Chapter 16 Capital Accumulation in Continuous Time 166
Perturbing the Steady State (Continued) 166
Continuous-Time Versions of the Four Equilibrium Conditions 168
Chapter 17 Investment from a Planning Perspective 172
Adjustment Costs Applied to Net Investment 174
Endogenous Interest Rates: The Neoclassical Growth Model 176
Chapter 18 Applied Factor Supply and Demand 1: Technological Progress and Capital-Income Tax Incidence 180
Definitions of Labor Productivity 180
Explaining Economic Growth in the Presence of Complementarity 180
The Consequences of Unbiased Technological Change 182
The Incidence of a Capital-Income Tax 184
Why Capital is Elastically Supplied in the Long Run 186
The Incidence of a Corporate-Income Tax 186
Chapter 19 Applied Factor Supply and Demand 2: Factor-Biased Technological Progress, Factor Shares, and the Malthusian Economy 189
The Definition of Technological Bias 189
Relating Labor's Share to Economic Growth 191
The Malthusian Special Case 195
Capital-Biased Technical Change Also Benefits Labor 195
Adding Human Capital 197
Chapter 20 Investments in Health and the Value of a Statistical Life 199
Investments in Self-Protection 200
The Value of a Statistical Life 204
Homework Problems for Part III: Technological Progress and Markets for Durable Goods 207
Notes 211
Bibliography 217
Index 221
What People are Saying About This
"A tremendous resource. This comprehensive and innovative book brings together in one great package the Chicago way of thinking about price theory."—Douglas A. Irwin, author of Free Trade under Fire "This excellent book captures the essence of the University of Chicago's unique approach to economics education. It uses many modern examples to demonstrate that price theory is a powerful tool for understanding human behavior."—Matthew E. Kahn, Johns Hopkins University