Books for microeconomics and macroeconomics for selected topics

Question

I am a mathematics undergraduate trying to self-learn some economics. I have no background in economics. I wish to know from which chapters of Hal Varian's "Intermediate Microeconomics" (7th edition) should I study for the following topics:

Microeconomics: Theory of consumer behaviour, theory of production,
market structure under perfect competition, monopoly, price discrimination,
duopoly with Cournot and Bertrand competition (elementary problems) and
welfare economics.

Macroeconomics: National income accounting, simple Keynesian Model of
income determination and the multiplier, IS-LM Model, models of aggregate
demand and aggregate supply, Harrod-Domar and Solow models of growth,
money, banking and inflation.

Regarding the macroeconomics part, I still do not know which book to follow and which chapters to read. It would help me a lot, if someone can guide me in this. Since the headings of the chapters differ from the names of these topics, I am unsure which portions to read without any expert's help.

P.S.: I am unsure if this is the right place for me to ask such a question.

Answer 1

From Varian (7th edition):

• Consumer behavior: at least chapters 1–6; preferably also chapters 7, 8, and 12.
• Perfect competition and Theory of production: chapters 15, 16, and 18-23.
• Monopoly price discrimination: chapter 25 (you might want to look at chapter 24; it seems a bit odd to study price discrimination without first looking at a non-discriminating monopolist).
• Bertrand/Cournot duopoly: chapter 27.
• Welfare economics is a bit tougher, because this could mean a number of things. I would suggest chapters 31 and 33 (and maybe chapters 32, 34 and 36).

Answer 2

As far as I remember, Varian's book is aimed at second year undergraduates who are normally studying a micro 2 module (or something similar). As a result, he does tend to assume some prior knowledge so it would be beneficial for you to plug the gaps in your knowledge (assuming you haven't) before you proceed with this book.

Even though you are studying mathematics, I will suggest resources in a way that will be accessible to mathematicians & non-mathematicians alike.

I would say that the prerequisites for intermediate micro are game theory & a micro 1 module. The prerequisite for a micro 1 module would be a sort of "Principles of Economics" module, where you encounter the very basics of economics.

This would be my plan for a two year "course" in micro & macro:

Year 1

No prerequisites

Micro and macro 1

• "Economics" by Sloman
• "Debunking Economics" by Keen (I would strongly suggest that you read this if you want to pursue your interest in economics)
• "Macroeconomics: Understanding the global Economy" by Miles,Scott & Breedon
• "Macroeconomics: A European Perspective" by Blanchard,Giavazzi

Before we proceed to "Year 2", ensure that you are comfortable with the following micro 1 topics:

1.Set theory & probability theory basics (Including bayes' theorem)

2.Individual choice

3.Consumption bundles

4.Inter-temporal choice

5.Choice under risk

6.Choice under uncertainty

7.Beliefs under uncertainty

8.Efficiency

9.Social choice

Year 2

Micro 2 prerequisites: Basic economics -> Micro 1

Macro 2 prerequisites: Understanding the global economy -> European perspective

Micro 2

• "Strategy:An Introduction to Game Theory" by Watson

• "Intermediate micro" by Varian

Macro 2

• "Economics of Development" by Thirlwall

• "Macroeconomics" by Dornbusch et al.

• "Macroeconomics" either the Blanchard or Mankiw version, take your pick.

And that's your basic contingent course of action... done.

However, I would like to add that if you want to understand the empirical side of economics, you should also study econometrics. In addition to this, I would stress that you study the history of economic thought. Learning economics without appreciating its historical and philosophical foundations leads to a half baked knowledge.

Now, to answer your specific question regarding the Varian book, this is how I would read it:

1. Technology (chapter 18)

2. Profit maximization (19)

3. Cost functions (20,21)

4. Firm supply (22,23)

5. Monopoly (24,25)

6. Exchange (31)

7. Production & welfare (32,33)

8. Externalities (34)

9. Public goods (36)

10. Asymmetric information (37)

Hope that helps.

Answer 3

I would not pick and choose chapters. Instead, I would try an iterative approach, visiting all topics multiple times, at increasing levels of sophistication. This really helps to get a coherent view on the broad range of topics that encompasses modern economics.

So start with e.g. Principles of Economics by Mankiw (which treats both micro and macro, but without calculus), and then go through all of Intermediate Microeconomics by Varian, and through all of Macroeconomics by Mankiw (both of which use elementary calculus). Pricing on Amazon for these books is kind of ridiculous, but you can use older editions without losing much information.

If you are still hooked by then, you can go even deeper with graduate level texts (e.g. Microeconomic Theory by Mas-Colell et al. and Advanced Macroeconomics by Romer). By that time, you probably also need to do some supporting studies on econometrics and game theory (for which there are also many good texts at various levels of sophistication).

Answer 4

Just what I wanted! Can you suggest a similar chapter allotment to the Macroeconomics part of the list of topics I mentioned? Maybe from the book Macroeconomics by Dornbusch or Macroeconomics by Blanchard.

The Dornbusch book is decent for IS-LM, but it has a tendency to focus on perfect capital flows instead of its more realistic imperfect counterpart. For a good introduction to the IS-LM framework, see "Macroeconomics: A European Perspective" by Blanchard & Giavazzi. In addition to this, "Economics of Development" is one of the better books with regards to how it approaches the H-D and Solow-Swan models.

The books suggested in my first answer should cover your learning needs (Including the keynesian, balanced-budget multipliers etc..)

If you would like a specific chapter allocation with reference to these works, let me know and I will try to help.