Introduction to Economic Analysis

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Preston McAfee, Caltech
Tracy Lewis, Duke University

Pub Date: 2009

ISBN 13: 978-0-9820430-9-7

Publisher: Saylor Foundation

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Reviewed by Christine Luketic, Adjunct Professor/ Instructor, Virginia Tech, on 2/9/2017.

The title of this book is misleading. It is a book about economics and economic theory, but not about economic analyses, or econometrics. My rating … read more

 

Table of Contents

  • Chapter 1: What Is Economics?
  • Chapter 2: Supply and Demand
  • Chapter 3: Quantification
  • Chapter 4: The U.S. Economy
  • Chapter 5: Government Interventions
  • Chapter 6: Trade
  • Chapter 7: Externalities
  • Chapter 8: Public Goods
  • Chapter 9: Producer Theory: Costs
  • Chapter 10: Producer Theory: Dynamics
  • Chapter 11: Investment
  • Chapter 12: Consumer Theory
  • Chapter 13: Applied Consumer Theory
  • Chapter 14: General Equilibrium
  • Chapter 15: Monopoly
  • Chapter 16: Games and Strategic Behavior
  • Chapter 17: Imperfect Competition
  • Chapter 18: Information
  • Chapter 19: Agency Theory
  • Chapter 20: Auctions
  • Chapter 21: Antitrust

About the Book

This book presents standard intermediate microeconomics material and some material that, in the authors' view, ought to be standard but is not. Introductory economics material is integrated. Standard mathematical tools, including calculus, are used throughout. The book easily serves as an intermediate microeconomics text, and can be used for a relatively sophisticated undergraduate who has not taken a basic university course in economics.

The focus of this book is on the conceptual tools and not on fluff. As such, it reflects the approach actually adopted by the majority of economists for understanding economic activity. There are lots of models and equations, and no pictures of economists ;-)

Economic analysis is used in many situations. When British Petroleum sets the price for Alaskan crude oil, it uses an estimated demand model, both for gasoline consumers and also for the refineries to which BP sells. Economic analysis was used by experts in the antitrust suit brought by the U.S. Department of Justice both to understand Microsoft’s incentive to foreclose (eliminate from the market) rival Netscape and consumer behavior in the face of alleged foreclosure. Stock market analysts use economic models to forecast the profits of companies to predict the price of their stocks. When the government forecasts the budget deficit or considers a change in environmental regulations, it uses economic models. This book presents the building blocks of the models in common use by an army of economists thousands of times per day.

This book, plus econometrics, provides most of the economic analysis tools to take upper division economics courses of any type.

About the Contributors

Author(s)

R. Preston McAfee received his undergraduate degree in economics from the University of Florida, and master of science in mathematics and a Ph.D in economics from Purdue University. McAfee is the J. Stanley Johnson Professor of Business, Economics & Management at Caltech. He is on leave as Vice-President and Research Fellow at Yahoo!, where he heads an economic research team.

The author of many academic papers on auctions, McAfee was one of the designers of the Federal Communication Commission’s first auction of radio spectrum rights for cellular phones. Over $100 billion worth of airwaves and other items have been sold this auction design. He has run auctions in Mexico and advised several governments on auction use.

McAfee served as an economic expert in a variety of antitrust cases, including Exxon-Mobil, BP-Arco, Lockheed Martin-Northrop Grumman, and Peoplesoft-Oracle. He also testified in the U.S. versus Rambus, and has testified before three U.S. Senate committees on antitrust enforcement and gasoline pricing.

Tracy R. Lewis is the Martin L. Black Professor of Business Administration at the Fuqua School of Business, Duke University, and Director of the Duke University Innovation Center.

Other positions held by Dr. Lewis include the following: James Walter Eminent Scholar in Economics, University of Florida; Associate Director of Energy Studies, Public Utilities Research Center; Director, Program on Workable Energy Regulation (POWER); Professor of Economics, University of California, Davis; Professor of Economics, University of British Columbia; Assistant Director, Program in Natural Resource Economics; Visiting Associate Professor of Economics, California Institute of Technology; Associate Professor of Economics, University of British Columbia; Brookings Fellow, Washington, DC; Visiting Assistant Professor, University of British Columbia; Assistant Professor, University of Arizona.

In addition to the roles above, Dr. Lewis has served as Economic Advisor for the National Research Council, Academy of Sciences. He has been a consultant to numerous organizations including the Florida Attorney General’s Office, the World Bank Project on Abatement of Greenhouse Gases, Florida Power and Light Company, the Federal Trade Commission, the Department of Energy, the Rand Corporation, and many others.

Dr. Lewis has published two books, numerous articles, and has served as editor on a wide range of journals including: the Journal of Law, Economics and Organization, the B. E. journals in industrial organization, and Review of Network Economics—to name a few. He has been awarded over 15 grants, fellowships, and awards.

Tracy earned his B.A. and Ph.D. at the University of California, San Diego.