Review of Amos Witztum's Economics: An Analytical Introduction
Economics: An Analytical Introduction is a textbook by Amos Witztum, a senior lecturer at the London School of Economics. The book aims to provide a clear and rigorous introduction to the fundamental principles of economics, with an emphasis on the logic and analytical tools of economic reasoning. The book covers topics such as consumer theory, production theory, market equilibrium, welfare economics, game theory, public goods, externalities, asymmetric information, general equilibrium, and macroeconomics.
The book is designed to teach students how to apply these principles to real life examples and problems. It also includes numerous exercises and questions throughout the chapters to help students test their understanding and grasp of the concepts. The book is suitable for undergraduate students who have some background in mathematics and are interested in learning more about economics.
One of the main features of the book is its companion website, which offers additional resources for students and instructors. The website contains a downloadable pdf version of the book, as well as solutions to selected exercises, lecture slides, sample exams, and links to relevant websites and articles. The website also allows students to interact with the author and other users through a discussion forum.
The book has received positive reviews from academics and students alike. It has been praised for its clarity, rigor, depth, and relevance. Some reviewers have also noted that the book is challenging and demanding, but rewarding and stimulating. The book has been adopted by several universities around the world as a core or supplementary text for courses in economics.
Economics: An Analytical Introduction is a valuable resource for anyone who wants to learn more about the foundations and applications of economics. It offers a comprehensive and focused view of the logical core of economic analysis, while also exposing students to the diversity and complexity of economic phenomena. The book is available for purchase from Oxford University Press or for free download from the Internet Archive.
In this section, we will review some of the main topics and concepts covered in the book. We will also provide some examples and applications of these concepts to illustrate their relevance and usefulness.
Consumer theory is the study of how consumers make choices and allocate their income among different goods and services. The basic assumption of consumer theory is that consumers are rational and try to maximize their utility, which is a measure of their satisfaction or happiness from consuming various goods and services. Utility depends on the preferences of the consumer, which reflect their tastes and values.
To analyze consumer behavior, we need to introduce some key concepts such as budget constraints, indifference curves, marginal utility, and demand functions. A budget constraint shows the combinations of goods and services that a consumer can afford given their income and prices. An indifference curve shows the combinations of goods and services that give the same level of utility to the consumer. Marginal utility is the change in utility from consuming one more unit of a good or service. A demand function shows the relationship between the quantity demanded of a good or service and its price, holding other factors constant.
Using these concepts, we can derive some important results such as the law of demand, which states that the quantity demanded of a good or service decreases as its price increases, and vice versa. We can also explain how consumers respond to changes in income, prices, and preferences. For example, we can distinguish between normal goods and inferior goods. A normal good is a good whose demand increases as income increases, while an inferior good is a good whose demand decreases as income increases. We can also classify goods as substitutes or complements. Two goods are substitutes if an increase in the price of one good leads to an increase in the demand for the other good. Two goods are complements if an increase in the price of one good leads to a decrease in the demand for the other good.
Production theory is the study of how firms produce goods and services using inputs such as labor, capital, land, and technology. The basic assumption of production theory is that firms are rational and try to maximize their profits, which are the difference between their revenues and costs. Revenues depend on the quantity and price of the output produced by the firm, while costs depend on the quantity and price of the inputs used by the firm.
To analyze production behavior, we need to introduce some key concepts such as production functions, isoquants, marginal products, and cost functions. A production function shows the relationship between the output produced by a firm and the inputs used by the firm. An isoquant shows the combinations of inputs that produce the same level of output. Marginal product is the change in output from using one more unit of an input. A cost function shows the relationship between the total cost incurred by a firm and the output produced by the firm.
Using these concepts, we can derive some important results such as the law of diminishing returns, which states that as more and more units of an input are used, holding other inputs constant, the marginal product of that input eventually decreases. We can also explain how firms respond to changes in input prices, output prices, and technology. For example, we can distinguish between fixed costs and variable costs. Fixed costs are costs that do not vary with output level, such as rent or depreciation. Variable costs are costs that vary with output level, such as wages or materials. We can also classify inputs as substitutes or complements. Two inputs are substitutes if an increase in the price of one input leads to an increase in the use of the other input. Two inputs are complements if an increase in the price of one input leads to a decrease in the use of