Textbook of economic theory C.1

This book is designed for students with no previous knowledge of economic theory who wish to study the elements of the subject systematically. It is hoped that some parts of the book will also be useful to more-advanced students. The book provides a general introduction to economic theory, but does not deal with the special problems of international trade, public finance and welfare economics.

The first two editions did not cover the theory of economic growth. In the third edition, we attempted to provide a comprehensive dis cussion of the theory of economic growth which by that time (1963) had reached a state where a body of doctrine was emerging. We did our best to summarise that part of growth theory on which there then appeared to be agreement, and hoped that the third edition would leave readers in a position to understand and to reach their own conclusions about current controversies in growth theory.

The fourth edition makes major changes. While the book is still aimed at anyone wishing to obtain a thorough grounding in economic theory, it has been substantially re-written. In Part One, Chapter 4 now provides an introduction to Revealed Preference. We hope that an extended discussion of Marshallian economics of the firm and industry in Chapter 7 is now more faithful to Marshall's original treatment. The discussion of costs in Chapter 5 has been expanded, as has the discussion of oligopoly in Chapter 9. An introduction to discounted cash flow analysis has been added to Chapter 14, and a summary of general-equilibrium analysis, which is in the European rather than the Anglo-Saxon tradition, has been added to Chapter 16. The remainder of Part One has been brought up to date.

Part Two, on Macro-Economic Theory, has been so radically re-written as to be almost new. While continuing to give an intro duction to Keynesian macro-economics, Part Two also covers the main changes that later writers have made to the original Keynesian model.