The study of microeconomics isn't for the faint of heart. Fortunately, Microeconomics For Dummies is here to help make this tough topic accessible to the masses. If you're a business or finance major looking to supplement your college-level microeconomics coursework—or a professional who wants to expand your general economics knowledge into the microeconomics area—this friendly and authoritative guide will take your comprehension of the subject from micro to macro in no time! Cutting through confusing jargon and complemented with tons of step-by-step instructions and explanations, it helps you discover how real individuals and businesses use microeconomics to analyze trends from the bottom up in order to make smart decisions.

Snagging a job as an economist is fiercely competitive—and highly lucrative. Having microeconomics under your belt as you work toward completing your degree will put you head and shoulders above the competition and set you on the course for career advancement once you land a job. So what are you waiting for?

• Analyze small-scale market mechanisms
• Determine the elasticity of products within the market systems
• Decide upon an efficient way to allocate goods and services
• Score higher in your microeconomics class

Everything you need to make microeconomics your minion is a page away!

Lynne Pepall, PhD, is a professor of economics at Tufts University. She has taught microeconomics at both graduate and undergraduate levels since 1987. Peter Antonioni is a senior teaching fellow at the Department of Management Science and Innovation, University College, London, and coauthor of Economics For Dummies, 2nd UK Edition. Manzur Rashid, PhD, is a lecturer at New College of the Humanities, where he covers second-year micro- and macroeconomics.

Introduction 1

Part I: Getting Started with Microeconomics 5

Chapter 1: Discovering Why Microeconomics Is a Big Deal 7

Chapter 2: Considering Consumer Choice: Why Economists Find You Fascinating 17

Chapter 3: Looking at the Behavior of Firms: What They Are and What They Do 31

Part II: Doing the Best You Can: Consumer Theory 43

Chapter 4: Living a Life without Limits 45

Chapter 5: Considering the Art of the Possible: The Budget Constraint 55

Chapter 6: Achieving the Optimum in Spite of Constraints 69

Part III: Uncovering the Alchemy of Firms’ Inputs and Outputs 87

Chapter 7: Working with Different Costs and Cost Curves 89

Chapter 8: Squeezing Out Every Last Drop of Profit 107

Chapter 9: Supplying the Demanded Information on Supply and Demand 121

Chapter 10: Dreaming of the Consumer’s Delight: Perfect Competition 143

Part IV: Delving into Markets, Market Failure, and Welfare Economics 155

Chapter 11: Stepping into the Real World: Oligopoly and Imperfect Competition 157

Chapter 12: Appreciating the Fundamental Theorems of Welfare Economics 175

Chapter 13: The Monopoly Game 187

Chapter 14: Examining Market Failure: Pollution and Parks 203

Chapter 15: Understanding the Dangers of Asymmetric Information 215

Part V: Thinking Strategically: Life Is Just a Game! 225

Chapter 16: Playing Games with Economic Theory 227

Chapter 17: Keeping Things Stable: The Nash Equilibrium 245

Chapter 18: Knowing How to Win at Auctions 255

Chapter 19: Understanding the Game: Credible Threats and Signals 267

Part VI: The Part of Tens 277

Chapter 20: Meeting Ten Great Microeconomists 279

Chapter 21: Top Ten Tips to Take Away 287

Glossary 295

Index 301