Microeconomics: A Very Short Introduction

Very Short Introductions #386

by Avinash K. Dixit

Microeconomics - individuals' choices of where to live and work, how much to save, what to buy, and firms' decisions about location, hiring, firing, and investment - involves issues that concern us on a daily basis. But when people think about economics, they tend to place importance on the bigger picture - macroeconomics - including issues such as unemployment, inflation, and the competitiveness of nations.In this Very Short Introduction, Avinash Dixit argues that the microeconomy has a large impact on the economic world, arguably as much as the issues of macroeconomics.Dixit steers a clear path through the huge number of issues related to microeconomics, explaining what happens when things go well, as well as showing how they fail, why that happens, and what can be done about it. Using real-life examples from around the world, using the minimum of mathematics and including simple graphs, he provides insights into economics from psychology and sociology to explain economic behaviour and rational choice. An ideal introduction for anyone interested in businessand economics.ABOUT THE The Very Short Introductions series from Oxford University Press contains hundreds of titles in almost every subject area. These pocket-sized books are the perfect way to get ahead in a new subject quickly. Our expert authors combine facts, analysis, perspective, new ideas, and enthusiasm to make interesting and challenging topics highly readable.

Genres: Economics, Nonfiction, Finance, Business, Social Science, Science

153 pages, Kindle Edition

First published April 6, 2014

About the author

Avinash Kamalakar Dixit (born August 6, 1944 in Bombay, India) is an Indian-American economist. He is currently John J. F. Sherrerd '52 University Professor of Economics Emeritus at Princeton University, Distinguished Adjunct Professor of Economics at Lingnan University (Hong Kong) and Senior Research Fellow at Nuffield College, Oxford.

Dixit received a B.Sc. from Bombay University in 1963 in Mathematics and Physics, a B.A. from Cambridge University in 1965 in Mathematics (Corpus Christi College, First Class), and a Ph.D. in 1968 from the Massachusetts Institute of Technology in Economics.

Dixit has been the John J. F. Sherrerd '52 University Professor of Economics at Princeton University since July 1989. He is also Distinguished Adjunct Professor of Economics at Lingnan University (Hong Kong) and Senior Research Fellow at Nuffield College, Oxford. He previously taught at Massachusetts Institute of Technology, at the University of California, Berkeley, at Balliol College, Oxford and at the University of Warwick. In 1994 Dixit received the first-ever CES Fellow Award from the Center for Economic Studies at the University of Munich.

Dixit has also held visiting scholar positions at the International Monetary Fund and the Russell Sage Foundation. He was President of the Econometric Society in 2001, and was Vice-President (2002) and President (2008) of the American Economic Association. He was elected to the American Academy of Arts and Sciences in 1992 and the National Academy of Sciences in 2005.

With Robert Pindyck he is author of “Investment Under Uncertainty” (Princeton University Press, 1994; ISBN 0691034109), the first text-book exclusively about the real options approach to investments, and described as “a born-classic” in view of its importance to the theory.

(from Wikipedia)

Reviews

[Chitraketu Pandey · Rating 4 out of 5]

This book makes you familiar with the basic jargons of Microeconomics like Pareto efficiency, principles of substitution, extarnalities and Coasian and Pigovian solutions for that. Similarly, there are lots of interesting analogies provided in the book which might makes it easier sometimes to grasp the content which would have been otherwise abstruse. Its a good book for beginners. Makes you think about the general transaction, how insurance companies work and how recessions or bank failures happen.

[Rashmi Satyal · Rating 4 out of 5]

A good read for a brief introduction. This was my first book on economics and it has surely left me wanting to read more about the subject. The approach the writer has taken to explain various concepts through examples was particularly helpful. I have never before been so hooked to a non-fiction.
What surprised me was the fact that a consumer's 'willingness to pay' can be taken a quantitative measure. Also, I didn't know there was a solid method to categorize commodities into luxury and necessity :D. Glad to have read the book!

[Wasim Khan · Rating 5 out of 5]

I sure did not know that a tea and a coffee company could merge and profit more by raising prices to optimum and a computer and a software company could merge and profit more by lowering prices to optimum. This book presents us with lots of things which we haven't had the time or diligence to think over and even make sense to everyone. It is indeed a very short introduction to microeconomics introducing a myriad of topics in a simple and clear manner. It introduces consumers, markets, cartels, hedge funds, investing, auctions, prisoner's dilemma, externalizes. It's a book which can not be hurried because you could miss some details and deserves a second read just like course books.

[Frank · Rating 3 out of 5]

I've read a number of books in the AVSI series and, by and large, have been impressed by their content, which can be challenging. So, I was surprised and anxious when this volume explained what a graph was, as if I were a beginning secondary school student. Things did get better though and, although there is nowhere an equation in the whole text, AKD manages to convey a lot of general principles in a brisk fashion, some of which will likely have escaped you unless you had some acquaintance with economics. The level of presentation is comparable to reading one of the better articles in the New York Times or, perhaps, just slightly higher.

[Luke Gompertz · Rating 3 out of 5]

This book gives an interesting and intuitive introduction to economic concepts we've all heard about like the law of supply and demand. Towards the end it also had some surprisingly insightful and fascinating things to say. Mainly it was brought down but being too short, which I guess is good praise.

[J · Rating 3 out of 5]

I read this for work because I'm going to teach a related subject soon.

Though I was glad to see the different aspects explained independently, it also would have been useful to show how they were interrelated. Otherwise, economics is just isolated models that don't match the complexities of real life.

While I agreed with the author's conclusion that a mixed economy is most ideal, there were a couple places where he lost objectivity and poked at one extreme more than the other. In a few places, he came to the end of an explanation about a particular point and said something like "and that's why socialism doesn't work" even though he hadn't been talking about socialism anywhere in the point. It seemed oddly out of place. Later, he gave examples of the exact same problems (eg. produces without incentives to care about consumers and consumers suffering as a result) that were a direct result of capitalism, yet he said nothing about this being a failure of capitalism. It just seemed off that he'd mention the same problem from two different causes (several times) and only call out one of the causes. Had he done the reverse, I would still have this complaint.

He also didn't show any counterexamples about price floors and ceilings. An economist I work with recently explained price ceilings related to rent prices (same example as Dixit in this book). I asked some unusual questions about confounding factors because I knew nothing about economics. She went to bring up some concrete examples from real life. Some did show what her, and Dixit's, model predicted, but there were more that showed different results. A multitude of other factors are at play, and the simple model doesn't reflect reality in all cases. It is a bit too hasty to simply dismiss the concept itself as a failure when it can be made to work in real life. (It can also fail spectacularly, but my only point is that there's a bit of nuance there--failure is not truly a mathematical guarantee just because the model says so.)

There was also one point where Dixit blamed people for not predicting the future when he'd given no indication of how that was even possible. Definitely a 3 star read.

[Allen Radtke · Rating 3 out of 5]

In search of a quick introduction to micro, but not anticipating satisfaction from a wiki, or someone's casual thoughts on a blog or web posting, I thought this seemed like a decent choice for some easy bedtime reading. The reputation of the "A Very Short Introduction" series from Oxford University Press has proven generally reliable, if for no other reason than the suggestions for further reading are typically of a good quality. These suggestions are, for me, typically of a greater utility than the books themselves. This item provided some of what I wanted, but I was left with the sense that microeconomics is just too broad a topic to successfully compress into this format. There is a terminology in micro that's opaque to non-economist laypersons, so I picked up a bit of vocabulary and terms of art. Given that I am a regular reader of the Financial Times newspaper, this also seemed to be bog-standard conventional micro, and while I didn't expect a radical critique this didn't offer much by way of an exposition of the predominant arguments in the field. It's puzzling too why the author spent the last portion of the penultimate chapter on auctions. This is possibly something of greater interest to those more versed in the area than readers seeking an introduction and a broad overview of micro. Overall, I got a taste of the field, and a refresher of basic concepts, and that is good. But I was not left feeling like I had gained a solid grounding in the full scope and reach of microeconomics and that may be unfair given the growing controversies and disputes that currently plague the discipline of economics.

[Neeraj Adhikari · Rating 4 out of 5]

This is a very good short introduction. It has satisfied a lot of my curiosities on the topic and has left me hungering for more. In some 120-odd pages Dixit does a good job of giving you a good basic understanding of the concepts and mechanisms of microeconomics. The book forces you to take a good look at and analyze the everyday concepts of markets, producers, consumers, supply, demand and prices.

In my opinion it is vital for even lay-people to garner a basic understanding of the economic forces that shape our day-to-day lives, so that we can make sense of phenomena largely beyond our control and make better decisions when those decisions matter. This book is a good choice for that.

[Chris Ereth · Rating 4 out of 5]

This book was recommended reading for a intermediate microeconomics course that I took last year. For a 118-page book that fits in your back pocket, this book does a solid job of covering the basics of consumer theory, producer theory, and the intricacies of various market structures. There are several lesser-known examples and theories covered in this text that an introductory textbook might not explore. This text would be a good supplementary text for any introductory economics course. However, it probably does not provide enough graphical examples to stand on its own.

[Dylan Groves · Rating 4 out of 5]

i had never read one of this introductory books. it was suprisingly good, even if you are familiar with the subject.

[Wing · Rating 4 out of 5]

This delightful little book is a meditation on the intricate concept of price and its foundation on human behaviour, aggregate or otherwise. Naturally the book is predominantly about supply and demand. Human behaviour is a good mix of rationality, folly, and immorality. Microeconomics formalises this description. The market fails frequently and is obviously neither omnipotent nor even efficient. These are very well explained through examples of externalities, information asymmetries, monopolies and collective goods. The abominable rent-seeking political activities that rot societies are painfully outlined. All these ills are the root causes of the financial crisis of 2007-8, which is used as an illustrative cautionary tale of “moral hazard and adverse selection poorly controlled by incentives, and made worse by government policies” (p.96). Ways of governing stable transaction platforms, both market and non-market based, are also discussed. The final note on the vital importance of checks and balances is timely as well as perennial. Four stars.

[James · Rating 4 out of 5]

Seems like a really solid introduction to microeconomics. This book helped me understand at the gears level some results that I had known about before but basically filed under "economics magic" - efficient markets, risk pooling, externalities, public goods, etc. Markets now seem much less mysterious. In particular, a lot of the mystery goes away when you realize that two of the assumptions, perfect rationality and perfect information, essentially amount to "nobody ever takes a deal that harms them, or refuses a deal in which they benefit". Perfect efficient markets don't make exploitation impossible, they *require* that exploitation is impossible.

[Dominic Muresan · Rating 4 out of 5]

This is a very short introduction, very literally speaking. But that doesn't mean it's easy. I don't think there is an instance when economics can be a walk in the park. The book gets difficult from the second chapter, making me stop and analyse every bit of information and trying to decode the graphs. Was it worth it? I don't know. I certainly got some valuable ideas from it, I learned some names that I might go back to when I'll need them. Overall, it's not a bad introduction at all. It touches every important detail (I think) and gets really heavy sometimes, dabbling in game theory and what-not.

[Nicolas Perrault · Rating 4 out of 5]

Anyone who believes that the market alone or the government alone can solve all problems should read this book. As in most things, reality is complex. The solution to creating wealth in societies is not as simple as giving the markets or the governments the power to do everything. Rather, it is to use each one to guard against the excesses of the other.

[Rajesh BATTULA · Rating 4 out of 5]

Anyone who wants to know about microeconomics should know read this. It's a short book and it covered the subject in layman's language. I enjoyed reading the book even though I do not much about economics. All I know about it is through YouTube, stock market. All in all a good book covering an important subject in an interesting manner.

[David Allison · Rating 2 out of 5]

The sort of book you have to read because it's on your course's mandatory reading list... though to be fair, this puts it above those books that you have to pretend to read because they were on your course's mandatory reading list.

[Jay · Rating 4 out of 5]

Great overview for beginners. He includes a further recommended reads section at the end.

To immensely simplify, it seems like the takeaway is that humans are self-interested and the government and the free market must coexist, striking a delicate balance in promoting societal good.

[Fotis Koutoulakis · Rating 5 out of 5]

For a small book (around 150 pages), it even managed to teach me a couple things, which, considering the fact that I picked it up just for revision of macroeconomic topics, it left me very surprised and pleased.

[Matthew · Rating 4 out of 5]

Brief introduction to Microeconomics, but packs a lot in. Would be taxing if unfamiliar with economics (at least compared to other VSIs I have read), but useful as a refresher to someone who knows the basics.

[Takeshi · Rating 5 out of 5]

a wonderful VSI book with clarity and brevity

[John Norell · Rating 5 out of 5]

The target group is people who have no previous training in economics but are interested in the subject. For that target group it's a great book.

[Luke Crawford · Rating 5 out of 5]

short and to the point. Not really that in depth, but that's a necessary consequence of the length. Dixit isn't the writer Krugman is, but they're certainly top quintile.

[Musa · Rating 3 out of 5]

Just a simple, straightforward guide to microeconomics for beginners. Mostly well-explained, but either drags some simple topics or rushes through more complex ones at times.

[Mills College Library]

currently-reading

[Tonydefreitas · Rating 4 out of 5]

Intro to economics

Recommend to folks trying to get basics understood, good intro to concepts. Needs a part 2 , to build on intro

[Dave · Rating 4 out of 5]

Serves its purpose well. Much breadth, quite limited depth.