Microeconomics Analysis

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To my parents

Copyright @ 1992, 1984, 1978 by W. W. Norton & Company, Inc.

All rights reserved
Printed in the United States of America

Library of Congress Cataloging-in-Publication Data

Varian, Hal R.
Mlcroeconon~lcanalysis / Hal R. Varian. -- 3rd ed.
p. an
Includes blbllographlcal references and index.
1. Mlcroeconomlcs.
1. Title.
HB172.V35 1992

ISBN 0-393-95735-7
W. W. Norton & Company, Inc., 500 Fifth Avenue, New York, N.Y. 10110
W. W. Norton & Company, Ltd., 10 Coptic Street, London WClA 1PU



1 Technology
Measurement of inputs and outputs 1 Specification of technology 2
Example: Input requzrement set Example: Isoquant Example: Shortrun productzon posszbzlztzes set Example: Pt-oductzon functzon Example: Transformatzon functzon Example: Cobb-Douglas technology Example: Leontzef technology Activity analysis 5 Monotonic technologies
6 Convex technologies 7 Regular technologies 9 Parametric representations of technology 10 The technical rate of substitution 11
Example: T R S for a Cobb-Douglas technology The elasticity of substitution 13
Example: The elastzczty of substztutzon for the Cobb-Douglas
productzon functzon Returns to scale 14
Example: Returns to scale
and the Cobb-Douglas technology Homogeneous and homothetic technologies 17
Example: The CES productzon functzon Exercises 21

2 Profit Maximization .
Profit maximization 25 Difficulties 28
Example: The profit functzon
for Cobb-Douglas technology Properties of demand and supply functions
31 Comparative statics using the first-order conditions 32 Comparative statics using algebra 35 Recoverability 36 Exercises 39


3 Profit Function
Properties of the profit function 40
Example: The eflects of price
stabilization Supply and demand functions from the profit function 43
The envelope theorem 45 Comparative statics using the profit function
Example: The LeChatelier principle Exercises 48

4 Cost Minimization
Calculus analysis of cost minimization 49 More on second-order conditions 52 Difficulties 53
Example: Cost function for the Cobb-Douglas
technology Example: The cost function for the CES technology Example: The cost function for the Leontief technology Example: The cost
function for the linear technology Conditional factor demand functions
58 Algebraic approach to cost minimization 6 1 Exercises 63

5 Cost Function

. . I

Average and marginal costs 64
Example: The short-run Cobb-Douglas
cost functions Example...