Models in Microeconomic Theory

The book contains material for a year-long undergraduate course in what is often called “Intermediate microeconomics”. It covers basic concepts and models of current microeconomics theory. Our main aim is to give the reader an understanding of the concepts of model and equilibrium in microeconomic theory. The connection between models in microeconomics and the world is subtle, and microeconomic theorists differ in their views about the purpose of their work. Ariel has expressed his views about the meaning of models in economic theory frequently, especially in his book Economic fables (Rubinstein 2012). Although we do not discuss applications and implications of the theory for policy, we strongly believe that economic models should be connected to the world; they should concern concepts we use in the real world when thinking about economic interactions. A main principle that guides us is that concepts, models and results should be stated precisely. Nevertheless, the mathematics we use is elementary, and in particular we use almost no calculus. We also have tried to avoid involved computations, both in the text and the exercises. However, many of the proofs involve sustained logical arguments.