Microeconomics

Interactive visualizations for learning the ideas of MWG Microeconomic Theory, Part I (Individual Decision-Making), by moving them yourself.

• 1. Intro to Microeconomics — First steps in microeconomics — no calculus, learn by touching sliders. From gasoline prices and lunch menus to cafes, subscriptions, and cigarette taxes: see the logic behind everyday choices.
• 2. Preference and Choice — Foundations of rational choice — from the axioms of preference relations to choice rules and WARP.
• 3. Consumer Choice — The geometry of the budget set and Walrasian demand — how price and income shifts move the demand curve.
• 4. Classical Demand Theory — From indifference curves through utility maximization and the Slutsky decomposition to duality with expenditure minimization — the heart of demand theory.
• 5. Aggregate Demand — What survives when individual demands are added up — the properties of aggregate demand and the representative consumer.
• 6. Production — From isoquants through cost minimization to average and marginal cost curves — a tour of producer theory.
• 7. Choice under Uncertainty — From expected utility through the measurement of risk aversion to the demand for insurance — choice in the face of uncertain prospects.
• 8. Game Theory — The grammar of strategic choice — from normal-form games and best responses through Nash equilibrium, mixed strategies, backward induction in dynamic games, and repeated games.
• 9. Competitive Markets — Price is set where supply meets demand, and a tax wedged between them evaporates welfare exactly equal to the Harberger triangle.
• 10. Externalities and Public Goods — Two scenes of market failure — externalities, where harm to others goes unpriced, and public goods, which everyone uses but no one buys.
• 11. Market Power — The economics of the price-setter — monopoly marginal revenue, Cournot reaction functions, and the art of charging each consumer a different price.
• 12. Equilibrium and Welfare — Find competitive equilibrium in the Edgeworth box and see Pareto efficiency and the two welfare theorems with your own eyes.
• 13. The Positive Theory of Equilibrium — Does equilibrium exist, is it unique, can we get there — answered through the geometry of excess demand and tatonnement dynamics.
• 14. Foundations of Competitive Equilibrium — Why is the price mechanism justified — the cooperative foundations of competitive equilibrium, via the shrinking core and blocking coalitions.
• 15. General Equilibrium under Uncertainty — State-contingent commodities and Arrow–Debreu equilibrium — the mutuality principle of full insurance and the scarcity premium in state prices.
• 16. Equilibrium and Time — Two-period interest determination and overlapping generations — present-value budgets, credit market clearing, and the infinite-horizon warning.
• 17. Social Choice and Welfare — Arrow's impossibility theorem and social welfare functions — the trade-offs of preference aggregation and inequality aversion.
• 18. Economics of Information — Information is itself a good — how much a signal improves a decision, and when to stop searching optimally.
• 19. Adverse Selection and Signaling — When information is asymmetric, how markets unravel — and how they save themselves: the lemons market, education signaling, and screening menus.
• 20. The Principal-Agent Problem — What does a contract look like when effort is unobservable — find the optimal performance pay where incentive compatibility meets participation, then decide whether the incentives are worth buying.
• 21. Mechanism Design — Focus on direct mechanisms via the revelation principle, design the optimal auction with virtual values, then verify numerically why truth-telling is dominant in a second-price auction.
• 22. Implementation Theory — Can a desired social choice rule be "implemented" as the outcome of Nash equilibrium — see the mandatory screening test, Maskin monotonicity, with your own eyes.

Glossary