Introduction

Abstract

Following chapters are intended to explain the basic structure, rather than recent contributions, of what has been called microeconomic theory of the neo-classical economics. Originally it is theeconomics of Marshall that was called the neoclassical economics by Thorstein Veblen who was critical of classical and neo-classical economic theories. The neo-classical theory that has been predominant in the post-war period is, however, to be called as neo-Walrasian theory. In other words, it is the traditional general equilibrium theory, pioneered by Walras and Pareto, and revived by such modern theorists as Hicks, Samuelson, Arrow, Debreu and Allais. What should be also added to this Walrasian tradition is that of Edgeworth who is now regarded, withWalras, as one of the two founding fathers of the equilibrium theory of modern mathematical economics. Microeconomics tries to explain the behavior of an economy through interactions among individual firms and individual consumers while macroeconomics deals with an aggregated economy as such (see Sect. 10.1). The former is also called as the price theory, since prices play important roles for interactions among firms and consumers.