Intermediate Microeconomics: A Modern Approach

Citation

Varian, H. R., & Melitz, M. (2024). Intermediate Microeconomics: A Modern Approach (10th ed.). W. W. Norton & Company.

Chapter Summary

The tenth edition has a preface, 37 short chapters, a mathematical appendix and an online ebook chapter on information technology; the international print edition runs to 816 pages. Norton presents the book as built from short, topical chapters, and the contents list a single topic for each chapter. The sequence follows the standard intermediate course, from consumer theory to the firm, then to market structures and strategic behaviour, and finally to general equilibrium, welfare and market failure.

Chapters 1-8: The Market; Budget Constraint; Preferences; Utility; Choice; Demand; Revealed Preference; Slutsky Equation

The opening block is a complete treatment of the consumer. Chapter 1, "The Market", opens the book; Chapters 2-5 build the budget constraint, preferences, utility and optimal choice; Chapter 6 derives demand. Chapters 7 and 8 return to demand from two further angles, revealed preference and the Slutsky equation.

Chapters 9-15: Buying and Selling; Intertemporal Choice; Asset Markets; Uncertainty; Risky Assets; Consumer's Surplus; Market Demand

Consumer theory is extended to endowments (buying and selling), choices over time, asset markets, uncertainty and risky assets. Chapter 14 measures consumer's surplus, and Chapter 15 aggregates individual demands into market demand.

Chapters 16-18: Equilibrium; Measurement; Auctions

Chapter 16 puts supply and demand together in equilibrium. Chapter 17 is titled "Measurement". Chapter 18 treats auctions and comes before the chapters on the firm.

Chapters 19-24: Technology; Profit Maximization; Cost Minimization; Cost Curves; Firm Supply; Industry Supply

The producer side mirrors the consumer side: the technology a firm has, the choice of inputs and outputs that maximises profit, the minimisation of cost, the cost curves that result, and the supply of the firm and then the industry.

Chapters 25-27: Monopoly; Monopoly Behavior; Factor Markets

Two chapters on monopoly, the second on how a monopolist behaves, followed by factor markets.

Chapters 28-31: Oligopoly; Game Theory; Game Applications; Behavioral Economics

The strategic block moves from oligopoly into game theory and its applications. The block closes with a chapter on behavioral economics.

Chapters 32-34: Exchange; Production; Welfare

The economy as a whole: exchange (Chapter 32), then production (Chapter 33), followed by welfare (Chapter 34).

Chapters 35-37: Externalities; Public Goods; Asymmetric Information

The final block covers three further topics: externalities, public goods and asymmetric information.

Appendix and online chapter

A mathematical appendix follows. The publisher notes that in the calculus-based companion version this material is integrated into the text. An online and ebook chapter on information technology is listed with the end matter, and answers close the print volume.

Key Concepts

Chapters 1-15: The consumer

• Budget constraint, preferences and utility: the three building blocks of consumer choice in Chapters 2-4.
• Revealed preference and the Slutsky equation: two further ways of analysing demand (Chapters 7-8).
• Intertemporal choice and uncertainty: extensions of consumer choice across time and risk (Chapters 10-13).
• Consumer's surplus: a measure of benefit introduced in Chapter 14.

Chapters 16-37: Firms, markets and welfare

• Cost minimization and cost curves: the producer-side counterpart of consumer optimisation.
• Monopoly and oligopoly: market structures treated in Chapters 25-28.
• Game theory: strategic interaction and its applications in Chapters 29-30.
• Welfare, externalities and public goods: the topics of Chapters 34-36.
• Asymmetric information: the topic of the final chapter.

Critical Analysis

Strengths

• Short, single-topic chapters. The publisher describes the book as long valued for short chapters and interesting examples, and the contents show 37 titled units, which lets an instructor or student take one topic at a time.
• Two versions for two levels of mathematics. The tenth edition is the algebra-based version. A separate calculus-based companion, Microeconomics with Calculus (2nd edition), integrates the mathematical appendix into the text, so a student can choose the version that fits their preparation.
• Updated examples and practice. Norton lists new applications drawn from research, industry and Melitz's teaching, including the demand for electric cars and inflation after the pandemic. Interactive features appear in 17 of the most-used chapters, and the Check Your Understanding questions and Smartwork problem sets provide practice with feedback.
• Wide coverage of topics. Beyond the core consumer-and-firm sequence, the contents include auctions, behavioral economics, asymmetric information and an information-technology chapter.

Limitations

• Long for a single course. With 37 chapters and 816 pages in the international edition, the book supplies more than one semester of material, so a syllabus has to select.
• Mathematical level. The tenth edition is the algebra-based version, and its mathematics sits in an appendix. Students who want optimisation done inside the chapters need the separate calculus-based companion.
• Digital features tied to the publisher's platform. Much of the new support, such as the interactive features, the Illumine ebook and Smartwork, is delivered through Norton's platform; the print book includes an access code.

Where It Fits in the Course

This is the main intermediate text in the intermediate-microeconomics list: it takes students who have had a principles course and teaches them to derive and apply the standard models. Parkin's Microeconomics is a principles-level textbook, and Dixit's Microeconomics: A Very Short Introduction is a short non-technical overview; either can come before Varian and Melitz. Pindyck and Rubinfeld's Microeconomics is another intermediate textbook that develops the same core topics through graphs and verbal reasoning with optional calculus appendices, so the choice between it and Varian and Melitz is a matter of course preference.

After this book, Mas-Colell, Whinston and Green's Microeconomic Theory and Jehle and Reny's Advanced Microeconomic Theory are the graduate-level treatments. Both assume intermediate microeconomics, multivariable calculus and more mathematics than Varian and Melitz require.

How to Use This Book

The book is for undergraduates who have taken a principles course. Norton describes this edition as the algebra-based version, with a separate calculus-based companion, so comfort with algebra and graphs is the main requirement.

A practical plan: work through Chapters 1-8 in order, because every later chapter builds on the consumer's problem. Chapters 9-15 extend it and can be chosen according to the syllabus; Chapters 12-13 on uncertainty and risky assets matter most to students heading to finance. Then read Chapters 16 and 19-24 for the competitive firm and industry, Chapters 25-28 for market power, and Chapters 29-30 for game theory. Chapters 32-37 are the capstone on general equilibrium, welfare and market failure. Auctions (Chapter 18), behavioral economics (Chapter 31) and the online information-technology chapter are good candidates for optional reading. Use the Check Your Understanding questions after each section, and the Smartwork problems if the course provides access.