The Topics and Perspectives of Modern Economic Theory By Kk Dewett: A Review
Modern Economic Theory By Kk Dewett.pdf: A Comprehensive Review
Modern economic theory is a broad term that encompasses various schools of thought and approaches to the study of economic phenomena. It covers topics such as microeconomics, macroeconomics, money and banking, international economics, public finance, economic systems, development and planning, and welfare economics. In this article, we will review one of the most popular textbooks on modern economic theory, written by Kk Dewett.
Modern Economic Theory By Kk Dewett.pdf
Introduction
What is modern economic theory?
Modern economic theory is a term that refers to the development of economic thought since the late 19th century. It is characterized by the use of mathematical models, empirical methods, rational expectations, optimization techniques, game theory, behavioral economics, institutional economics, and other tools to analyze economic problems. Modern economic theory aims to explain how individuals, firms, markets, governments, and other agents interact in various situations and contexts.
Who is Kk Dewett and why is his book important?
Kk Dewett was a renowned Indian economist who taught at various universities in India. He wrote several books on economics, including Modern Economic Theory, which was first published in 1946. His book is one of the most comprehensive textbooks on modern economic theory that covers both microeconomics and macroeconomics as well as other branches of economics. His book is widely used by students, teachers, researchers, policymakers, and practitioners who want to learn about the basic concepts, theories, models, applications, criticisms, and recent developments in modern economic theory.
What are the main topics covered in the book?
The book is divided into six parts, each consisting of several chapters. The six parts are:
Price Theory or Microeconomics
Theory of Income and Employability or Macroeconomics
Money and Banking
International Economics
Public Finance
Economic Systems, Development and Planning
In each part, the author explains the basic concepts, assumptions, theories, models, applications, criticisms, and recent developments in each topic. He also provides examples, diagrams, tables, graphs, equations, and exercises to illustrate and reinforce the concepts. He also compares and contrasts different schools of thought and perspectives on each topic. He also discusses the policy implications and relevance of each topic for the real world.
Price Theory or Microeconomics
Scope and method of microeconomics
Microeconomics is the branch of economics that studies the behavior and decisions of individual economic agents, such as consumers, producers, workers, firms, households, etc. It also studies how these agents interact in markets and how they respond to changes in prices, incomes, tastes, preferences, technology, etc. The scope of microeconomics includes topics such as demand and supply analysis, consumer behavior, production theory, cost theory, market structure, price determination, factor markets, welfare economics, etc.
The method of microeconomics is based on the use of logical reasoning, mathematical models, and empirical evidence to analyze economic problems. Microeconomics uses various assumptions and simplifications to abstract from the complexity of reality and focus on the essential features of economic phenomena. Microeconomics also uses various tools such as indifference curves, budget constraints, production functions, isoquants, isocosts, marginal analysis, elasticity, etc. to derive and test hypotheses and predictions about economic behavior.
Partial equilibrium and general equilibrium analysis
Partial equilibrium analysis is a method of microeconomics that studies the equilibrium in a single market or a group of related markets. It assumes that other markets are unaffected by the changes in the market under study. For example, partial equilibrium analysis can be used to study how the demand and supply of apples determine the price and quantity of apples in the market.
General equilibrium analysis is a method of microeconomics that studies the equilibrium in all markets simultaneously. It takes into account the interdependence and feedback effects among different markets. For example, general equilibrium analysis can be used to study how the demand and supply of apples affect not only the price and quantity of apples but also the prices and quantities of other goods and services in the economy.
Statics, dynamics and comparative statics
Statics is a method of microeconomics that studies the equilibrium conditions in a given market or economy at a given point in time. It assumes that there are no changes in the variables that affect the equilibrium. For example, statics can be used to study how the demand and supply curves intersect at a given price and quantity in a market.
Dynamics is a method of microeconomics that studies how the equilibrium conditions change over time due to changes in the variables that affect the equilibrium. It analyzes how the demand and supply curves shift over time due to changes in factors such as income, preferences, technology, etc. For example, dynamics can be used to study how an increase in income affects the demand curve over time.
Comparative statics is a method of microeconomics that compares two static equilibria resulting from different values of a variable that affects the equilibrium. It analyzes how a change in one variable affects the equilibrium values of other variables. For example, comparative statics can be used to study how an increase in income affects the equilibrium price and quantity in a market.
Theory of demand and indifference curve analysis
The theory of demand is a branch of microeconomics that studies how consumers choose among different goods and services based on their preferences, incomes, prices, etc. It explains how consumers allocate their limited budgets to maximize their satisfaction or utility. The theory of demand also derives the demand curve for a good or service that shows the relationship between its price and quantity demanded by consumers.
Indifference curve analysis is a tool used in the theory of demand to represent consumer preferences graphically. An indifference curve shows all the combinations of two goods or services that give the same level of satisfaction or utility to a consumer. The slope of an indifference curve reflects the marginal rate of substitution (MRS) between two goods or services. The MRS measures how much of one good or service a consumer is willing to give up for another good or service while maintaining the same level of satisfaction or utility.
Recent developments in demand theory
Recent developments in 71b2f0854b