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INTERMEDIATE MICROECONOMICS AND ITS APPLICATION THIRD EDITION
The purpose of Part 1 is to provide some background material basic to the study of economics. In Chapter 1 we will investigate various definitions of “economics” and discuss the role that economic theory plays in understanding how real-world economies operate. Since this book is primarily concerned with the development of theoretical tools, it is important for us to begin with an understanding of the purpose to which these tools will be put. Chapter 1 also provides us with a general outline of the book and illustrates several important themes that occur frequently throughout the text.
Chapter 2 continues as an introduction to the book by presenting a brief historical treatment of economic analysis. In this chapter we will, first, discuss the way in which economic theory has evolved over time and, second. review the simple supply-demand model of price determination. The chapter therefore offers both historical perspective and a common background for the more detailed analysis of price determination that follows.
The Appendix to Chapter 2 summarizes a few elementary concepts from high-school algebra. We will be especially concerned with the relationship between algebraic functions and the graphical represeniations of these func
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