A General-Purpose Microeconomic Model

Abstract

This paper presents a general-purpose Excel model that can generate the nonlinear total (utility, product and cost) functions in use in undergraduate microeconomics by mere change of parameters. The main pedagogical advantage of the model lies in the fact that it can produce the said nonlinear functions without relying on nonlinear mathematical formulas. This is achieved by reversing the usual order of exposition which starts with the total function. Instead, I begin with a two-piece linear marginal function and construct the total function recursively on its basis. Thus the model makes it possible to avoid mathematical concepts beyond elementary algebra without sacrificing precision and completeness of analysis. Since the majority of non-major undergraduate and MBA students in economics courses have minimal mathematical backgrounds, the proposed model would be of widespread interest to both the instructors and the students in smaller institutions and possibly even in some of the state universities.