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Microeconomic Theory Basic Principles and Extensions
1st Europe Middle East Africa Edition Christopher M
Snyder Digital Instant Download
Author(s): Christopher M Snyder, Walter Nicholson, Robert B Stewart
ISBN(s): 9781473729483, 1473729483
Edition: 1st
File Details: PDF, 6.96 MB
Year: 2015
Language: english
 Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

04787_00_FM_pi-x.indd 1 2/7/15 1:55 AM

 Microeconomic Theory, 1st Edition © 2015, Cengage Learning EMEA
Christopher Snyder, Walter Nicholson & ALL RIGHTS RESERVED. No part of this work covered by the copyright
Robert Stewart herein may be reproduced, transmitted, stored or used in any form
Publisher: Andrew Ashwin or by any means graphic, electronic, or mechanical, including but not
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.

ISBN: 978-1-4737-0478-7
Cengage Learning EMEA
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 SOURCES iii
Brief Contents

About the authors vii PArt 5 Competitive markets 305

Preface viii 11 The partial equilibrium competitive
Supplements ix model 306
Acknowledgements x 12 General equilibrium and welfare 342

PArt 1 introduction 1
PArt 6 factor market pricing 375
1 Economic models 2 13 Labour markets 376
2 Mathematics for microeconomics 17

PArt 7 Market power 409

PArt 2 Choice and demand 73
14 Monopoly 410
3 Preferences and utility 74 15 Imperfect competition 434
4 Utility maximisation and choice 94
5 Income and substitution effects 113
6 Demand relationships among goods 145 PArt 8 Market failure 471
16 Asymmetric information 472
PArt 3 Uncertainty and strategy 159
17 Externalities and public goods 504

7 Uncertainty 160
8 Game theory 189 Glossary of frequently used terms 529
Index 534

PArt 4 Production and supply 229

9 Production and cost functions 230
10 Proit maximisation 280

iii

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 Contents

About the authors vii 4 Utility maximisation and choice 94

Preface viii An initial survey 95
Supplements ix The two-good case: a graphical analysis 95
Acknowledgements x The n-good case 98
Indirect utility function 104
The lump sum principle 105
Expenditure minimisation 107
PArt 1 Properties of expenditure functions 109
introDUCtion 1
5 income and substitution effects 113
1 economic models 2 Demand functions 113
Theoretical models 2 Changes in income 115
Verification of economic models 2 Changes in a good’s price 116
General features of economic models 4 The individual’s demand curve 119
Development of the economic theory Compensated (Hicksian) demand curves and
of value 7 functions 122
Modern developments 15 A mathematical development of response to
price changes 125
Demand elasticities 129
2 Mathematics for microeconomics 17
Consumer surplus 135
Maximisation of a function of one variable 17 Revealed preference and the substitution effect 139
Functions of several variables 21
Maximisation of functions of several variables 28
The envelope theorem 30 6 Demand relationships among goods 145
Constrained maximisation 34 The two-good case 145
Envelope theorem in constrained maximisation Substitutes and complements 147
problems 40 Gross (Marshallian) substitutes and
Inequality constraints 40 complements 148
Second-order conditions and curvature 42 Asymmetry of the gross definitions 148
Homogeneous functions 49 Net (Hicksian) substitutes and complements 149
Integration 51 Substitutability with many goods 150
Dynamic optimisation 56 Composite commodities 151
Mathematical statistics 60 Composite commodity theorem 151
Generalisations and limitations 152
Home production, attributes of goods and
implicit prices 154
PArt 2
CHoiCe AnD DeMAnD 73
PArt 3
3 Preferences and utility 74 UnCertAintY AnD
Axioms of rational choice 74 strAteGY 159
Utility 75
Trades and substitution 77
The mathematics of indifference curves 80 7 Uncertainty 160
Utility functions for specific preferences 85 Mathematical statistics 160
The many-good case 89 Fair gambles and the expected utility hypothesis 160

iv

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 CONTENTS v

Expected utility 161 10 Profit maximisation 280

The von Neumann–Morgenstern theorem 163 The nature and behaviour of firms 280
Risk aversion 164 Profit maximisation 281
Measuring risk aversion 166 Marginal revenue 283
Methods for reducing uncertainty Short-run supply by a price-taking firm 288
and risk 171 Profit functions 291
Insurance 171 Profit maximisation and input demand 296
Diversification 172
Flexibility 173
Types of options 173
Information 179
The state-preference approach to choice
PArt 5
under uncertainty 180 CoMPetitiVe
Asymmetry of information 185 MArKets 305
8 Game theory 189 11 the partial equilibrium competitive
Basic concepts 189 model 306
Prisoners’ Dilemma 190 Market demand 306
Nash equilibrium 192 Timing of the supply response 310
Mixed strategies 197 Pricing in the very short run 310
Existence of equilibrium 202 Short-run price determination 311
Continuum of actions 202 Shifts in supply and demand curves:
Sequential games 205 a graphical analysis 315
Repeated games 210 Mathematical model of market
Incomplete information 212 equilibrium 317
Simultaneous Bayesian games 213 Long-run analysis 320
Signalling games 217 Long-run equilibrium: constant
Experimental games 223 cost case 321
Evolutionary games and learning 225 Shape of the long-run supply curve 323
Long-run elasticity of supply 325
Comparative statics analysis of long-run
equilibrium 326
PArt 4 Producer surplus in the long run 329
ProDUCtion AnD Economic efficiency and welfare
sUPPLY 229 analysis 331
Price controls and shortages 334
Tax incidence analysis 335
9 Production and cost functions 230
Marginal productivity 230
Isoquant maps and the rate of technical
12 General equilibrium and
substitution 233
welfare 342
Returns to scale 237 Perfectly competitive price system 342
The elasticity of substitution 239 A graphical model of general equilibrium
Four simple production functions 241 with two goods 343
Technical progress 246 Comparative statics analysis 351
Definitions of costs 249 General equilibrium modelling and factor
Cost-minimising input choices 251 prices 353
Cost functions 256 A mathematical model of exchange 354
Cost functions and shifts in cost curves 260 A mathematical model of production and
Shephard’s lemma and the elasticity of exchange 363
substitution 270 Computable general equilibrium
Short-run, long-run distinction 270 models 366

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 vi CONTENTS

PArt 6 Product differentiation 443

Tacit collusion 448
fACtor MArKet Longer-run decisions: investment, entry
PriCinG 375 and exit 452
Strategic entry deterrence 457
Signalling 458
13 Labour markets 376
How many firms enter? 461
Allocation of time 376 Innovation 465
A mathematical analysis of labour supply 379
Market supply curve for labour 383
Labour market equilibrium 383
Wage variation 384 PArt 8
Monopsony in the labour market 388
Labour unions 390
MArKet fAiLUre 471
Capital and the rate of return 392
Determining the rate of return 394 16 Asymmetric information 472
The firm’s demand for capital 399 Complex contracts as a response to
Present discounted value approach to investment asymmetric information 472
decisions 401 Principal–agent model 473
Hidden actions 474
Owner–manager relationship 476
Moral hazard in insurance 480
PArt 7 Hidden types 484
MArKet PoWer 409 Nonlinear pricing 485
Adverse selection in insurance 491
Market signaling 496
14 Monopoly 410
Auctions 498
Barriers to entry 410
Profit maximisation and output choice 411
Monopoly and resource allocation 416 17 externalities and public goods 504
Monopoly, product quality and durability 419 Defining externalities 504
Price discrimination 421 Externalities and allocative inefficiency 506
Second-degree price discrimination through price Solutions to the externality problem 509
schedules 425 Attributes of public goods 512
Regulation of monopoly 427 Public goods and resource allocation 514
Dynamic views of monopoly 430 Lindahl pricing of public goods 518
Voting and resource allocation 520
A simple political model 522
15 imperfect competition 434
Voting mechanisms 525
Short-run decisions: pricing and output 434
Bertrand model 435
Cournot model 436 Glossary of frequently used terms 529
Capacity constraints 442 Index 534

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 ABoUt tHe AUtHors

CHristoPHer M. snYDer is a Professor of Economics at Dartmouth College. He received his BA in

economics and mathematics from Fordham University and his PhD in economics from the Massachusetts Institute of
Technology (MIT). He is Research Associate in the National Bureau of Economic Research, a member of the Industrial
Organisation Society board, and Associate Editor of the International Journal of Industrial Organization and Review of
Industrial Organization. His research covers various theoretical and empirical topics in industrial organisation, contract
theory, and law and economics.

WALter niCHoLson is the Ward H. Patton Professor of Economics at Amherst College. He received a
BA in mathematics from Williams College and a PhD in economics from MIT. Professor Nicholson’s primary research
interests are in the econometric analyses of labour market problems, including welfare, unemployment and the impact of
international trade. For many years, he has been Senior Fellow at Mathematica, Inc. and has served as an advisor to the US
and Canadian governments.

roBert steWArt is an economics lecturer based in Johannesburg, South Africa and formerly taught in the
department of economics and econometrics at the University of Johannesburg.

vii

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 PrefACe

his first Europe, Middle East and Africa adaptation of the 11th edition of Microeconomic Theory: Basic Principles and
t Extensions represents a significant effort to continue refining and modernising our treatment of microeconomics. The
text retains all of the elements that have made it successful for so many editions, including the basic approach being a focus
on building intuition about economic models while providing students with the mathematical tools needed to go further
in their studies. The text also seeks to facilitate that linkage by providing many numerical examples, advanced problems
and extended discussions of empirical implementation – all of which are intended to show students how microeconomic
theory is used today. New developments continue to keep the field exciting, and we hope this edition manages to capture
that excitement.
To tailor the text better to the course structures and teaching needs of the Europe, Middle East and Africa market, this
new edition adapted by Robert Stewart, an Economics lecturer based in Johannesburg, South Africa, includes the following
changes:
● Some content reordering, restructuring and rewriting, to more closely it typical EMEA course outlines, including:
● Merging of former Chapter 9 (‘Production Functions’) and Chapter 10 (‘Cost Functions’) into single Chapter 9,
‘Production and Cost Functions’.
● Content changes within Part Six to be newly titled ‘Factor Market Pricing’ (instead of ‘Pricing in Input Markets’).
● Revisions to end-of-chapter Problems and Analytical Problems.
● A streamlined book encouraging blended print and digital learning, with Chapter Extensions, Brief Answers to Queries
and Solutions to Odd-Numbered Problems now on the companion website.
● Complete conversion from Imperial to metric, for all units of measure.
● Currency revisions.
● Europe, Middle East and Africa contextualisation in examples and language.
● New text design and appearance.

viii

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 sUPPLeMents

ix

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 ACKnoWLeDGeMents

t he authors and publisher would like to thank the following reviewers for their helpful feedback and support during the
writing and development process:
Maarten Pieter Schinkel at the University of Amsterdam, The Netherlands
Adriaan Soetevent, University of Groningen, The Netherlands
Wieland Müller, University of Vienna and VCEE, Austria
Craig Webb, Manchester University, UK
Moyo Busani, UNISA, South Africa

04787_00_FM_pi-x.indd 10 2/7/15 1:55 AM

 PArt 1
introDUCtion

1. eConoMiC MoDeLs
2. MAtHeMAtiCs for MiCroeConoMiCs

t his part contains two chapters. Chapter 1 examines the general philosophy of how economists build models of
economic behaviour. Chapter 2 then reviews some of the mathematical tools used in the construction of these
models. The mathematical tools from Chapter 2 will be used throughout the remainder of this book.

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 1 eConoMiC MoDeLs

t he main goal of this book is to introduce you to the most important models that economists use to explain the
behaviour of consumers, irms and markets. These models are central to the study of all areas of economics.
Therefore, it is essential to understand both the need for such models and the basic framework used to develop them.
The goal of this chapter is to begin this process by outlining some of the conceptual issues that determine the ways in
which economists study practically every question that interests them.

tHeoretiCAL MoDeLs
A modern economy is a complicated entity. Thousands of firms engage in producing millions of different goods.
Many millions of people work in all sorts of occupations and make decisions about which of these goods to buy. Let’s
use peanuts as an example. Peanuts must be harvested at the right time and shipped to processors who turn them into
peanut butter, peanut oil, peanut brittle and numerous other peanut delicacies. These processors, in turn, must make
certain that their products arrive at thousands of retail outlets in the proper quantities to meet demand.
Because it would be impossible to describe the features of even these peanut markets in complete detail, econom-
ists have chosen to abstract from the complexities of the real world and develop rather simple models that capture the
‘essentials’. Just as a road map is helpful even though it does not record every house or every store, economic models
of, say, the market for peanuts are also useful even though they do not record every minute feature of the peanut eco-
nomy. In this book we will study the most widely used economic models. We will see that, even though these models
often make heroic abstractions from the complexities of the real world, they nonetheless capture essential features
that are common to all economic activities.
The use of models is widespread in the physical and social sciences. In physics, the notion of a ‘perfect’ vacuum
or an ‘ideal’ gas is an abstraction that permits scientists to study real-world phenomena in simplified settings. In
chemistry, the idea of an atom or a molecule is actually a simplified model of the structure of matter. Architects use
mock-up models to plan buildings. Television repairers refer to wiring diagrams to locate problems. Economists’
models perform similar functions. They provide simplified portraits of the way individuals make decisions, the way
firms behave, and the way in which these two groups interact to establish markets.

VerifiCAtion of eConoMiC MoDeLs

Of course, not all models prove to be ‘good’. For example, the earth-centred model of planetary motion devised by
Ptolemy was eventually discarded because it proved incapable of accurately explaining how the planets move around
the sun. An important purpose of scientific investigation is to sort out the ‘bad’ models from the ‘good’. Two general
methods have been used for verifying economic models: (1) a direct approach, which seeks to establish the validity of
the basic assumptions on which a model is based; and (2) an indirect approach, which attempts to confirm validity by
showing that a simplified model correctly predicts real-world events. To illustrate the basic differences between the
two approaches, let’s briefly examine a model that we will use extensively in later chapters of this book – the model
of a firm that seeks to maximise profits.

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 CHAPTER 1 ECONOMIC MODELS 3

the Profit-Maximisation Model

The model of a firm seeking to maximise profits is obviously a simplification of reality. It ignores the personal
motivations of the firm’s managers and does not consider conflicts among them. It assumes that profits are the only
relevant goal of the firm; other possible goals, such as obtaining power or prestige, are treated as unimportant. The
model also assumes that the firm has sufficient information about its costs and the nature of the market to which it
sells to discover its profit-maximising options. Most real-world firms, of course, do not have this information readily
available. Yet such shortcomings in the model are not necessarily serious. No model can exactly describe reality. The
real question is whether this simple model has any claim to being a good one.

testing Assumptions
One test of the model of a profit-maximising firm investigates its basic assumption: do firms really seek maximum
profits? Some economists have examined this question by sending questionnaires to executives, asking them to spe-
cify the goals they pursue. The results of such studies have been varied. Businesspeople often mention goals other
than profits or claim they only do ‘the best they can’ to increase profits given their limited information. On the other
hand, most respondents also mention a strong ‘interest’ in profits and express the view that profit maximisation is an
appropriate goal. Therefore, testing the profit-maximising model by testing its assumptions has provided inconclusive
results.

testing Predictions
Some economists, most notably Milton Friedman, deny that a model can be tested by inquiring into the ‘reality’ of
its assumptions.1 They argue that all theoretical models are based on ‘unrealistic’ assumptions; the very nature of
theorising demands that we make certain abstractions. These economists conclude that the only way to determine the
validity of a model is to see whether it is capable of predicting and explaining real-world events. The ultimate test of
an economic model comes when it is confronted with data from the economy itself.
Friedman provides an important illustration of that principle. He asks what kind of theory one should use to
explain the shots expert pool players will make. He argues that the laws of velocity, momentum and angles from
theoretical physics would be a suitable model. Pool players shoot shots as if they follow these laws. But most players
asked whether they precisely understand the physical principles behind the game of pool will undoubtedly answer
that they do not. Nonetheless, Friedman argues, the physical laws provide accurate predictions and therefore should
be accepted as appropriate theoretical models of how experts play pool.
Thus, a test of the profit-maximisation model would be provided by predicting the behaviour of real-world firms
by assuming that these firms behave as if they were maximising profits. (See Example 1.1 later in this chapter.) If
these predictions are reasonably in accord with reality, we may accept the profit-maximisation hypothesis. However,
we would reject the model if real-world data seem inconsistent with it. Hence the ultimate test of any theory is its
ability to predict real-world events.

importance of empirical Analysis

The primary concern of this book is the construction of theoretical models. But the goal of such models is always to
learn something about the real world.2

1
See M. Friedman, Essays in Positive Economics, Chap. 1 (Chicago: University of Chicago Press, 1953). For an alternative view stressing
the importance of using ‘realistic’ assumptions, see H. A. Simon, ‘Rational Decision Making in Business Organizations’, American Eco-
nomic Review, 69, no. 4 (September 1979): 493–513.
2
For an intermediate-level text containing an extensive set of real-world applications, see W. Nicholson and C. Snyder, Intermediate
Microeconomics and Its Application, 11th ed. (Mason, OH: Thomson/Southwestern, 2010).

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 4 PART 1 INTRODUCTION

GenerAL feAtUres of eConoMiC MoDeLs

The number of economic models in current use is, of course, large. Specific assumptions used and the degree of detail
provided vary greatly depending on the problem being addressed. The models used to explain the overall level of eco-
nomic activity in South Africa, for example, must be considerably more aggregated and complex than those that seek
to interpret the pricing of Western Cape oranges. Despite this variety, practically all economic models incorporate
three common elements: (1) the ceteris paribus (other things the same) assumption; (2) the supposition that economic
decision-makers seek to optimise something; and (3) a careful distinction between ‘positive’ and ‘normative’ ques-
tions. Because we will encounter these elements throughout this book, it may be helpful at the outset to describe the
philosophy behind each of them.

the Ceteris Paribus Assumption

As in most sciences, models used in economics attempt to portray relatively simple relationships. A model of the
market for wheat, for example, might seek to explain wheat prices with a small number of quantifiable variables, such
as wages of farm workers, rainfall and consumer incomes. This parsimony in model specification permits the study
of wheat pricing in a simplified setting in which it is possible to understand how the specific forces operate. Although
any researcher will recognise that many ‘outside’ forces (e.g., presence of wheat diseases, changes in the prices of
fertilisers or of tractors, or shifts in consumer attitudes about eating bread) affect the price of wheat, these other forces
are held constant in the construction of the model. It is important to recognise that economists are not assuming that
other factors do not affect wheat prices; rather, such other variables are assumed to be unchanged during the period of
study. In this way, the effect of only a few forces can be studied in a simplified setting. Such ceteris paribus assump-
tions are used in all economic modelling.
Use of the ceteris paribus assumption does pose some difficulties for the verification of economic models from
real-world data. In other sciences the problems may not be so severe because of the ability to conduct controlled
experiments. For example, a physicist who wishes to test a model of the force of gravity probably would not do
so by dropping objects from the Eiffel Tower. Experiments conducted in that way would be subject to too many
extraneous forces (e.g., wind currents, particles in the air, variations in temperature) to permit a precise test of the
theory. Rather, the physicist would conduct experiments in a laboratory, using a partial vacuum in which most other
forces could be controlled or eliminated. In this way, the theory could be verified in a simple setting, without con-
sidering all the other forces that affect falling bodies in the real world.
With a few notable exceptions, economists have not been able to conduct controlled experiments to test their
models. Instead, they have been forced to rely on various statistical methods to control for other forces when
testing their theories. Although these statistical methods are as valid in principle as the controlled experiment
methods used by other scientists, in practice they raise a number of thorny issues. For that reason, the limitations
and precise meaning of the ceteris paribus assumption in economics are subject to greater controversy than in the
laboratory sciences.

structure of economic Models

Most of the economic models you will encounter in this book will have a mathematical structure. They will highlight
the relationships between factors that affect the decisions of households and firms and the results of those decisions.
Economists tend to use different names for these two types of factors (or, in mathematical terms, variables). Variables
that are outside of a decision-maker’s control are called exogenous variables. Such variables are inputs into economic
models. For example, in consumer theory we will usually treat individuals as price-takers. The prices of goods are
determined outside of our models of consumer behaviour, and we wish to study how consumers adjust to them. The
results of such decisions (e.g., the quantities of each good that a consumer buys) are endogenous variables. These
variables are determined within our models. This distinction is pictured schematically in Figure 1.1. Although the
actual models developed by economists may be complicated, they all have this basic structure. A good way to start
studying a particular model is to identify precisely how it fits into this framework.
This distinction between exogenous and endogenous variables will become clearer as we explore a variety
of economic models. Keeping straight which variables are determined outside a particular model and which

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 CHAPTER 1 ECONOMIC MODELS 5

fiGUre 1.1
structure of a typical Microeconomic Model

EXOGENOUS VARIABLES
Households: Prices of goods
Firms: Prices of inputs and output

ECONOMIC MODEL
Households: Utility maximization
Firms: Profit maximization

ENDOGENOUS VARIABLES
Households: Quantities bought
Firms: Output produced, inputs hired

variables are determined within a model can be confusing; therefore, we will try to remind you about this as
we go along. The distinction between exogenous and endogenous variables is also helpful in understanding the
way in which the ceteris paribus assumption is incorporated into economic models. In most cases we will want
to study how the results of our models change when one of the exogenous variables changes. It is possible,
even likely, that the change in such a single variable will change all the results calculated from the model. For
example, as we will see, it is likely that the change in the price of a single good will cause an individual to
change the quantities of practically every good he or she buys. Examining all such responses is precisely why
economists build models. The ceteris paribus assumption is enforced by changing only one exogenous variable,
holding all others constant. If we wish to study the effects of a change in the price of petrol on a household’s
purchases, we change that price in our model, but we do not change the prices of other goods (and in some cases
we do not change the individual’s income either). Holding the other prices constant is what is meant by studying
the ceteris paribus effect of an increase in the price of petrol.

optimisation Assumptions
Many economic models start from the assumption that the economic actors being studied are rationally pursuing
some goal. We briefly discussed such an assumption when investigating the notion of firms maximising profits.
Example 1.1 shows how that model can be used to make testable predictions. Other examples we will encounter in
this book include consumers maximising their own well-being (utility), firms minimising costs and government reg-
ulators attempting to maximise public welfare. Although, as we will show, all these assumptions are unrealistic, and
all have won widespread acceptance as good starting places for developing economic models. There seem to be two
reasons for this acceptance. First, the optimisation assumptions are useful for generating precise, solvable models,
primarily because such models can draw on a variety of mathematical techniques suitable for optimisation problems.
Many of these techniques, together with the logic behind them, are reviewed in Chapter 2. A second reason for the
popularity of optimisation models concerns their apparent empirical validity. Such models seem to be fairly good at
explaining reality. In all, then, optimisation models have come to occupy a prominent position in modern economic
theory.

04787_01_Ch01_p001-016.indd 5 2/6/15 7:40 PM

 6 PART 1 INTRODUCTION

exAMPLe 1.1
Profit Maximisation
The profit-maximisation hypothesis provides a good illustration of how optimisation assumptions can be used to
generate empirically testable propositions about economic behaviour. Suppose that a firm can sell all the output that
it wishes at a price of p per unit and that the total costs of production, C, depend on the amount produced, q. Then
profits are given by

profits = π = pq − C(q). (1.1)

Maximisation of profits consists of finding that value of q which maximises the profit expression in Equation 1.1.
This is a simple problem in calculus. Differentiation of Equation 1.1 and setting that derivative equal to 0 give the
following first-order condition for a maximum:

dπ
= p − C′(q) = 0 or p = C′(q). (1.2)
dq

In words, the profit-maximising output level (q*) is found by selecting that output level for which price is equal to
marginal cost, C′(q). This result should be familiar to you from your introductory economics course. Notice that in
this derivation the price for the firm’s output is treated as a constant because the firm is a price-taker. That is, price
is an exogenous variable in this model.
Equation 1.2 is only the first-order condition for a maximum. Taking account of the second-order condition can
help us to derive a testable implication of this model. The second-order condition for a maximum is that at q* it must
be the case that

d 2π
= −C ″(q) < 0 or C ″(q* ) > 0. (1.3)
dq2

That is, marginal cost must be increasing at q* for this to be a true point of maximum profits.
Our model can now be used to ‘predict’ how a firm will react to a change in price. To do so, we differentiate
Equation 1.2 with respect to price ( p), assuming that the firm continues to choose a profit-maximising level of q:

d[ p − C′(q* ) = 0] dq*
dp
= 1 − C ″(q* ) · dp
= 0. (1.4)

Rearranging terms a bit gives

dq* 1
= > 0. (1.5)
dp C ″(q* )

Here the final inequality again reflects the fact that marginal cost must be increasing at q* if this point is to be a true
maximum. This then is one of the testable propositions of the profit-maximisation hypothesis – if other things do not
change, a price-taking firm should respond to an increase in price by increasing output. On the other hand, if firms
respond to increases in price by reducing output, there must be something wrong with our model.

04787_01_Ch01_p001-016.indd 6 2/6/15 7:40 PM

 CHAPTER 1 ECONOMIC MODELS 7

Although this is a simple model, it reflects the way we will proceed throughout much of this book. Specifically,
the fact that the primary implication of the model is derived by calculus, and consists of showing what sign a derivat-
ive should have, is the kind of result we will see many times. Notice that in this model there is only one endogenous
variable – q, the quantity the firm chooses to produce. There is also only one exogenous variable – p, the price of the
product, which the firm takes as a given. Our model makes a specific prediction about how changes in this exogenous
variable affect the firm’s output choice.
QUerY: In general terms, how would the implications of this model be changed if the price a firm obtains for its
output were a function of how much it sold? That is, how would the model work if the price-taking assumption were
abandoned?

Positive–normative Distinction
A final feature of most economic models is the attempt to differentiate carefully between ‘positive’ and ‘normat-
ive’ questions. Thus far we have been concerned primarily with positive economic theories. Such theories take the
real world as an object to be studied, attempting to explain those economic phenomena that are observed. Positive
economics seeks to determine how resources are in fact allocated in an economy. A somewhat different use of
economic theory is normative analysis, taking a definite stance about what should be done. Under the heading of
normative analysis, economists have a great deal to say about how resources should be allocated. For example, an
economist engaged in positive analysis might investigate how prices are determined in the British National Health
Service economy. The economist also might want to measure the costs and benefits of devoting even more resources
to healthcare by, for example, offering government-subsidised health insurance. But when he or she specifically
advocates that such an insurance plan should be adopted, the analysis becomes normative.
Some economists believe that the only proper economic analysis is positive analysis. Drawing an analogy with
the physical sciences, they argue that ‘scientific’ economics should concern itself only with the description (and
possibly prediction) of real-world economic events. To take political positions and to plead for special interests are
considered to be outside the competence of an economist acting as such. Of course, an economist, like any other cit-
izen, is free to express his or her views on political matters. But when doing so he or she is acting as a citizen, not an
economist. For other economists, however, the positive-normative distinction seems artificial. They believe that the
study of economics necessarily involves the researchers’ own views about ethics, morality and fairness. According
to these economists, searching for scientific ‘objectivity’ in such circumstances is hopeless. Despite some ambiguity,
this book tries to adopt a positivist tone, leaving normative concerns for you to decide for yourself.

DeVeLoPMent of tHe eConoMiC tHeorY

of VALUe
Because economic activity has been a central feature of all societies, it is surprising that these activities were not
studied in any detail until fairly recently. For the most part, economic phenomena were treated as a basic aspect of
human behaviour that was not sufficiently interesting to deserve specific attention. It is, of course, true that indi-
viduals have always studied economic activities with a view toward making some kind of personal gain. Roman
traders were not above making profits on their transactions. But investigations into the basic nature of these activit-
ies did not begin in any depth until the eighteenth century.3 Because this book is about economic theory as it stands
today, rather than the history of economic thought, our discussion of the evolution of economic theory will be brief.
Only one area of economic study will be examined in its historical setting: the theory of value.

3
For a detailed treatment of early economic thought, see the classic work by J. A. Schumpeter, History of Economic Analysis, pt II,
Chapters 1–3 (New York: Oxford University Press, 1954).

04787_01_Ch01_p001-016.indd 7 2/6/15 7:40 PM

 8 PART 1 INTRODUCTION

early economic thoughts on Value

The theory of value, not surprisingly, concerns the determinants of the ‘value’ of a commodity. This subject is at
the centre of modern microeconomic theory and is closely intertwined with the fundamental economic problem
of allocating scarce resources to alternative uses. The logical place to start is with a definition of the word ‘value’.
Unfortunately, the meaning of this term has not been consistent throughout the development of the subject. Today we
regard value as being synonymous with the price of a commodity.4 Earlier philosopher-economists, however, made a
distinction between the market price of a commodity and its value. The term value was then thought of as being, in
some sense, synonymous with ‘importance,’ ‘essentiality’ or (at times) ‘godliness’. Because ‘price’ and ‘value’ were
separate concepts, they could differ, and most early economic discussions centred on these divergences. For example,
St Thomas Aquinas believed value to be divinely determined. Because prices were set by humans, it was possible for
the price of a commodity to differ from its value. A person accused of charging a price in excess of a good’s value was
guilty of charging an ‘unjust’ price. St Thomas believed that, in most cases, the ‘just’ rate of interest was zero. Any
lender who demanded a payment for the use of money was charging an unjust price and could be – and sometimes
was – prosecuted by Church officials.

the founding of Modern economics

During the latter part of the eighteenth century, philosophers began to take a more scientific approach to economic
questions. The 1776 publication of The Wealth of Nations by Adam Smith (1723–1790) is generally considered the
beginning of modern economics. In his vast, all-encompassing work, Smith laid the foundation for thinking about
market forces in an ordered and systematic way. Still, Smith and his immediate successors, such as David Ricardo
(1772–1823), continued to distinguish between value and price. To Smith, for example, the value of a commodity
meant its ‘value in use’, whereas the price represented its ‘value in exchange’. The distinction between these two
concepts was illustrated by the famous water–diamond paradox. Water, which obviously has great value in use, has
little value in exchange (it has a low price); diamonds are of little practical use but have a great value in exchange.
The paradox with which early economists struggled derives from the observation that some useful items have low
prices whereas certain non-essential items have high prices.

Labour theory of exchange Value

Neither Smith nor Ricardo ever satisfactorily resolved the water–diamond paradox. The concept of value in use was left
for philosophers to debate, while economists turned their attention to explaining the determinants of value in exchange
(i.e., to explaining relative prices). One obvious possible explanation is that exchange values of goods are determined by
what it costs to produce them. Costs of production are primarily influenced by labour costs – at least this was so in the
time of Smith and Ricardo – and therefore it was a short step to embrace a labour theory of value. For example, to para-
phrase an example from Smith, if catching a deer takes twice the number of labour hours as catching a beaver, then one
deer should exchange for two beavers. In other words, the price of a deer should be twice that of a beaver. Similarly, dia-
monds are relatively costly because their production requires substantial labour input, whereas water is freely available.
To students with even a passing knowledge of what we now call the law of supply and demand, Smith’s and
Ricardo’s explanation must seem incomplete. Did they not recognise the effects of demand on price? The answer to
this question is both yes and no. They did observe periods of rapidly rising and falling relative prices and attributed
such changes to demand shifts. However, they regarded these changes as abnormalities that produced only a tempor-
ary divergence of market price from labour value. Because they had not really developed a theory of value in use,
they were unwilling to assign demand any more than a transient role in determining relative prices. Rather, long-run
exchange values were assumed to be determined solely by labour costs of production.

the Marginalist revolution

Between 1850 and 1880, economists became increasingly aware that to construct an adequate alternative to the labour
theory of value, they had to devise a theory of value in use. During the 1870s, several economists discovered that it is

4
This is not completely true when ‘externalities’ are involved, and a distinction must be made between private and social value (see
Chapter 19).

04787_01_Ch01_p001-016.indd 8 2/6/15 7:40 PM

 CHAPTER 1 ECONOMIC MODELS 9

not the total usefulness of a commodity that helps to determine its exchange value, but rather the usefulness of the last
unit consumed. For example, water is certainly useful – it is necessary for all life. However, because water is relatively
plentiful, consuming one more litre (ceteris paribus) has a relatively low value to people. These ‘marginalists’ redefined
the concept of value in use from an idea of overall usefulness to one of marginal, or incremental, usefulness – the useful-
ness of an additional unit of a commodity. The concept of the demand for an incremental unit of output was now contras-
ted with Smith’s and Ricardo’s analysis of production costs to derive a comprehensive picture of price determination.5

Marshallian supply–Demand synthesis

The clearest statement of these marginal principles was presented by the English economist Alfred Marshall (1842–
1924) in his Principles of Economics, published in 1890. Marshall showed that demand and supply simultaneously
operate to determine price. As Marshall noted, just as you cannot tell which blade of a scissors does the cutting, so
too you cannot say that either demand or supply alone determines price. That analysis is illustrated by the famous
Marshallian cross shown in Figure 1.2. In the diagram the quantity of a good purchased per period is shown on the
horizontal axis, and its price appears on the vertical axis. The curve DD represents the quantity of the good demanded
per period at each possible price. The curve is negatively sloped to reflect the marginalist principle that, as quantity
increases, people are willing to pay less for the last unit purchased. It is the value of this last unit that sets the price
for all units purchased. The curve SS shows how (marginal) production costs increase as more output is produced.
This reflects the increasing cost of producing one more unit as total output expands. In other words, the upward slope
of the SS curve reflects increasing marginal costs, just as the downward slope of the DD curve reflects decreasing
marginal value. The two curves intersect at p*, q*. This is an equilibrium point – both buyers and sellers are content
with the quantity being traded and the price at which it is traded. If one of the curves should shift, the equilibrium
point would shift to a new location. Thus, price and quantity are simultaneously determined by the joint operation of
supply and demand.

Paradox resolved
Marshall’s model resolves the water–diamond paradox. Prices reflect both the marginal evaluation that demanders
place on goods and the marginal costs of producing the goods. Viewed in this way, there is no paradox. Water is
low in price because it has both a low marginal value and a low marginal cost of production. On the other hand,
diamonds are high in price because they have both a high marginal value (because people are willing to pay quite
a bit for one more) and a high marginal cost of production. This basic model of supply and demand lies behind
much of the analysis presented in this book.

fiGUre 1.2
Price
the Marshallian supply–Demand Cross D
S

p*

D
S

q* Quantity per period

5
Ricardo had earlier provided an important first step in marginal analysis in his discussion of rent. Ricardo theorised that as the produc-
tion of corn increased, land of inferior quality would be used and this would cause the price of corn to increase. In his argument Ricardo
recognised that it is the marginal cost – the cost of producing an additional unit – that is relevant to pricing. Notice that Ricardo implicitly
held other inputs constant when discussing decreasing land productivity; that is, he used one version of the ceteris paribus assumption.

04787_01_Ch01_p001-016.indd 9 2/6/15 7:40 PM

 10 PART 1 INTRODUCTION

exAMPLe 1.2
supply–Demand equilibrium
Although graphical presentations are adequate for some purposes, economists often use algebraic representations
of their models both to clarify their arguments and to make them more precise. As an elementary example, suppose
we wished to study the market for peanuts and, based on the statistical analysis of historical data, concluded that the
quantity of peanuts demanded each week (q, measured in bushels) depended on the price of peanuts ( p, measured in
Euros per bushel) according to the equation:

quantity demanded = qD = 1000 − 100p. (1.6)

Because this equation for qD contains only the single independent variable p, we are implicitly holding constant all
other factors that might affect the demand for peanuts. Equation 1.6 indicates that, if other things do not change, at
a price of €5 per bushel people will demand 500 bushels of peanuts, whereas at a price of €4 per bushel they will
demand 600 bushels. The negative coefficient for p in Equation 1.6 reflects the marginalist principle that a lower
price will cause people to buy more peanuts.
To complete this simple model of pricing, suppose that the quantity of peanuts supplied also depends on price:

quantity supplied = qS = −125 + 125p. (1.7)

Here the positive coefficient of price also reflects the marginal principle that a higher price will call forth increased
supply – primarily because (as we saw in Example 1.1) it permits firms to incur higher marginal costs of production
without incurring losses on the additional units produced.

equilibrium Price Determination

Therefore, Equations 1.6 and 1.7 reflect our model of price determination in the market for peanuts. An equilibrium
price can be found by setting quantity demanded equal to quantity supplied:

qD = qS (1.8)

or

1000 − 100p = −125 + 125p (1.9)

or

225p = 1125 (1.10)

thus,

p* = 5. (1.11)

At a price of €5 per bushel, this market is in equilibrium: At this price people want to purchase 500 bushels, and that
is exactly what peanut producers are willing to supply. This equilibrium is pictured graphically as the intersection
of D and S in Figure 1.3.

04787_01_Ch01_p001-016.indd 10 2/6/15 7:40 PM

Other documents randomly have
different content
The old man replied, Sir, I am a fisher, but one of the poorest and most
miserable of the trade; I went from my house about noon to go a fishing,
and from that time to this I have not been able to catch one fish; and at the
same time I have a wife and small children, and nothing to maintain them.

The caliph, moved with compassion, said to the fisherman, Hast thou the
courage to go back and cast thy net once more? We will give thee a hundred
sequins for what thou shalt bring up. At this proposal, the fisherman,
forgetting all his day’s toil, took the caliph at his word; and with him, Giafar
and Mesrour, returned to the Tigris; he saying to himself: These gentlemen
seem to be too honest and reasonable not to reward my pains; and if they
give me the hundredth part of what they promise me, it will be a great deal.

They came to the bank of the river, and the fisherman throwing in his net,
when he drew it again, brought up a trunk, close shut, and very heavy. The
caliph made the grand vizier pay him a hundred sequins immediately, and
sent him away. Mesrour, by his master’s order, carried the trunk on his
shoulder; and the caliph was so very eager to know what was in it, that he
returned to the palace with all speed. When the trunk was opened, they
found in it a large basket made of palm leaves, shut up, and the covering of
it sewed with red thread. To satisfy the caliph’s impatience, they would not
take time to unrip it, but cut the thread with a knife, and they took out of the
basket a bundle wrapt up in a sorry piece of hanging, and bound about with
a rope, which being untied, and the bundle opened, they found, to their
great amazement, the corpse of a young lady, whiter than snow, all cut in
pieces.
 The astonishment of the caliph at this dreadful spectacle may be more
easily imagined than expressed; his surprise was instantly changed into
passion, and darting an angry look at the vizier, Ah! thou wretch, said he, is
this your inspection into the actions of my people? Do they commit such
impious murders under thy ministry in my capital city, and throw my
subjects into the Tigris, that they may cry for vengeance against me at the
day of judgment? If thou dost not speedily revenge the murder of this
woman by the death of her murderer, I swear by heaven, that I will cause
thee to be hanged, and forty more of thy kindred. Commander of the
faithful, replied the grand vizier, I beg your majesty to grant me time to
make inquiry. I will allow thee no more, said the caliph, than three days;
therefore, thou must look to it.

The vizier Giafar went home in great confusion of mind. Alas! said he,
how is it possible, that in such a vast and populous city as Bagdad, I should
be able to detect a murderer, who undoubtedly committed the crime without
witness, and perhaps may be already gone from hence? Any other but I
would take some wretched person out of prison, and cause him to die, to
satisfy the caliph; but I will not burden my conscience with such a
barbarous action; I will rather die than save my life at that rate.

He ordered the officers of the police and justice to make strict search for
the criminal; they sent their servants about, and they themselves were not
idle, for they were no less concerned in this matter than the vizier. But all
their endeavours amounted to nothing; what pains soever they took they
could not find out the murderer; so that the vizier concluded his life to be
gone, unless some remarkable providence hinder it.

The third day being come, an officer came to this unfortunate minister
with a summons to follow him, which the vizier obeyed. The caliph asked
him for the murderer. He answered, with tears in his eyes, Commander of
the faithful, I have not found any person that could give me the least
account of him. The caliph, full of fury and rage, gave him many
reproachful words, and ordered that he and forty Bermecides [55] more
should be hanged up at the gate of the palace.

In the mean while, the gibbets were preparing, and orders were sent to
seize forty Bermecides more in their houses; a public crier was sent about
the city to cry thus, by the caliph’s order:— Those who have a desire to see
the grand vizier Giafar hanged, and forty more Bermecides of his kindred,
let them come to the square before the palace.

When all things were ready, the criminal judge and a great many officers
belonging to the palace, brought out the grand vizier with the forty
Bermecides, and set each of them at the foot of the gibbet designed for
them, and a rope was put about each of their necks. The multitude of people
that filled the square, could not without grief and tears behold this tragical
sight; for the grand vizier and the Bermecides were loved and honoured on
account of their probity, bounty, and impartiality, not only in Bagdad, but
through all the dominions of the caliph.

Nothing could prevent the execution of this prince’s too severe and
irrevocable sentence, and the lives of the most honest people in the city
were just going to be taken away, when a young man of handsome mien and
good apparel, pressed through the crowd till he came where the grand vizier
was, and after he had kissed his hand, said, Most excellent vizier, chief of
the emirs of this court, and comforter of the poor, you are not guilty of the
crime for which you stand here. Withdraw, and let me expiate the death of
the lady that was thrown into the Tigris. It was I who murdered her, and I
deserve to be punished for it.

Though these words occasioned great joy to the vizier, yet he could not
but pity the young man, in whose look he saw something, that instead of
being ominous, was engaging; but as he was about to answer him, a tall
man, pretty well in years, who had likewise forced his way through the
crowd, came up to him, saying, Sir, do not believe what this young man
tells you; I killed that lady who was found in the trunk, and this punishment
ought only to fall upon me. I conjure you in the name of God not to punish
the innocent for the guilty. Sir, said the young man to the vizier, I do protest
that I am he who committed this vile act, and nobody else had any hand in
it. —My son, said the old man, it is despair that brought you hither, and you
would anticipate your destiny. I have lived a long time in the world, and it is
time for me to be gone; let me, therefore, sacrifice my life for yours. Sir,
said he again to the vizier, I tell you once more I am the murderer; let me
die without any more ado.

The controversy between the old man and the young one obliged the
grand vizier Giafar to carry them both before the caliph, which the judge
criminal consented to, being very glad to serve the vizier. When he came
before the prince, he kissed the ground seven times, and spake after this
manner: Commander of the faithful, I have brought here before your
majesty this old man and this young man, who both confess themselves to
be the sole murderers of the lady. Then the caliph asked the criminals,
which of them it was that so cruelly murdered the lady, and threw her into
the Tigris. The young man assured him it was he, but the old man
maintained the contrary. Go, said the caliph to the grand vizier, and cause
them both to be hanged. But, sir, said the vizier, if only one of them be
guilty, it would be unjust to take the lives of both. At these words, the
young man spoke again —I swear by the great God, who has raised the
heaven so high, that I am the man who killed the lady, cut her in quarters,
and threw her into the Tigris about four days ago. I renounce my part of
happiness amongst the just at the day of judgment, if what I say be not true;
therefore I am he that ought to suffer. The caliph being surprised at this
oath, believed him, especially since the old man made no answer to this.
Whereupon, turning to the young man, Thou wretch, said he, what was it
that made thee commit that detestable crime, and what is it that moves thee
to offer thyself voluntarily to die? Commander of the faithful, said he, if all
that has passed between that lady and me were set down in writing, it would
be a history that might be very useful for other men. I command thee, then,
to relate it, said the caliph. The young man obeyed, and began. His history
was thus:
The Story of the Lady that was murdered, and of the young
Man, her Husband.
Commander of the faithful, your majesty may be pleased to know, that
this murdered lady was my wife, the daughter of this old man you see here,
who is my own uncle by the father’s side. She was not above twelve years
old when he gave her to me, and it is now eleven years ago. I have three
children by her, all boys, yet alive; and I must do her that justice to say, that
she never gave me the least occasion for offence. She was chaste, of good
behaviour, and made it her whole business to please me; and, for my part, I
loved her entirely, and rather prevented her in granting any thing she
desired, than opposed it.

About two months ago, she fell sick; I took all imaginable care of her, and
spared nothing that could procure her a speedy recovery. After a month she
began to grow better, and had a mind to go to the bath. Before she went out
of the house, Cousin, said she, (for so she used to call me out of familiarity,)
I long for some apples; if you would get me any, you would please me
extremely. I have longed for them a great while; and I must own it is come
to that height, that if I be not satisfied very soon, I fear some misfortune
will befall me. With all my heart, said I, I will do all that is in my power to
make you easy.

I went immediately round all the markets and shops in the town to seek
for apples, but I could not get one, though I offered to pay a sequin a-piece.
I returned home very much dissatisfied at my disappointment; and for my
wife, when she returned from the bagnio, and saw no apples, she became so
very uneasy, that she could not sleep all night I got up betimes in the
morning, and went through all the gardens, but had no better success than
the day before; only I happened to meet an old gardener, who told me that
all my pains would signify nothing, for I could not expect to find apples any
where but in your majesty’s garden at Balsora. As I loved my wife
passionately, and would not have any neglect to satisfy her chargeable upon
me, I dressed myself in a traveller’s habit, and after I had told her my
design, I went to Balsora, and made my journey with so great diligence, that
I returned at the end of fifteen days, with three apples, which cost me a
sequin a-piece; there were no more left in the garden, so that the gardener
would not let me have them cheaper. As soon as I came home, I presented
them to my wife; but her longing was over, so she satisfied herself with
receiving them, and laid them down by her. In the mean time, she continued
sickly, and I knew not what remedy to get for her.

Some few days after I returned from my journey, I was sitting in my shop
in the public place where all sorts of fine stuffs are sold, and saw an ugly,
tall, black slave come in, with an apple in his hand, which I knew to be one
of those I had brought from Balsora. I had no reason to doubt it, because I
was certain there was not one to be had in all Bagdad, nor in any of the
gardens about it. I called to him, and said, Good slave, prithee tell me where
thou hadst this apple? It is a present, said he, smiling, from my mistress. I
went to see her to-day, and found her out of order. I saw three apples lying
by her, and asked her where she had them. She told me, the good man, her
husband, had made a fortnight’s journey on purpose for them, and brought
them her. We had a collation together, and when I took my leave of her, I
brought away this apple that you see.

This discourse put me out of my senses. I rose, shut up my shop, ran

home with all speed, and going to my wife’s chamber, looked immediately
for the apples; and seeing only a couple, asked what was become of the
third. Then my wife turning her head to the place where the apples lay, and
perceiving there were but two, answered me coldly, Cousin, I know not
what is become of it. At this answer, I did verily believe what the slave told
me to be true; and at the same time, giving myself up to madness and
jealousy, I drew my knife from my girdle, and thrust it into the unfortunate
creature’s throat. I afterwards cut off her head, and divided her body into
four quarters, which I packed up in a bundle, and hiding it in a basket,
sewed it up with a thread of red yarn, put all together in a trunk, and when
night came, I carried it on my shoulder down to the Tigris, where I sunk it.

The two youngest of my children were already put to bed and asleep, the
third was gone abroad; but at my return, I found him sitting by my gate,
weeping very sore. I asked him the reason: Father, said he, I took this
morning from my mother, without her knowledge, one of those three apples
you brought her, and I kept it a long while; but as I was playing some time
ago with my little brother, in the street, a tall slave that went by, snatched it
out of my hands, and carried it with him. I ran after him, demanded it back,
and besides, told him, that it belonged to my mother, who was sick, and that
you had made a fortnight’s journey to fetch it; but all to no purpose —he
would not restore it. And as I still followed him, crying out, he turned and
beat me, and then ran away as fast as he could from one lane to another, till
at length I lost sight of him. I have since been walking without the town
expecting your return, to pray you, dear father, not to tell my mother of it,
lest it should make her worse; and when he had said these words, he fell a
weeping again more bitterly than before.

My son’s discourse afflicted me beyond all measure. I then found myself

guilty of an enormous crime, and repented too late of having so easily
believed the calumnies of a wretched slave, who, from what he had learnt of
my son, invented that fatal lie.

My uncle here present, came just at the time to see his daughter; but
instead of finding her alive, understood from me that she was dead, for I
concealed nothing from him; and without staying for his censure, declared
myself the greatest criminal in the world.

Upon this, instead of reproaching me, he joined his tears with mine, and
we wept three days together, without intermission; he for the loss of a
daughter whom he always loved tenderly, and I for the loss of a dear wife,
of whom I had deprived myself after so cruel a manner, by giving too easy
credit to the report of a lying slave.

This, commander of the faithful, is the sincere confession your majesty

commanded from me. You have heard now all the circumstances of my
crime, and I most humbly beg of you to order the punishment due for it;
how severe soever it may be, I shall not in the least complain, but esteem it
too easy and gentle.

The caliph was very much astonished at the young man’s relation. But
this just prince, finding that he was rather to be pitied than condemned,
began to speak in his favour: This young man’s crime, said he, is
pardonable before God, and excusable with men. The wicked slave is the
sole cause of this murder —it is he alone that must be punished; wherefore,
said he, looking upon the grand vizier, I give you three day’s time to find
him out; if you do not bring him within that space, you shall die in his
stead. The unfortunate Giafar, who thought himself now out of danger, was
terribly perplexed at this new order of the caliph; but as he durst not return
any answer to this prince, whose hasty temper he knew too well, he
departed from his presence, and retired to his house with tears in his eyes,
persuading himself he had but three days to live; for he was so fully
persuaded that he should not find the slave, that he made not the least
inquiry about him. Is it possible, said he, that in such a city as Bagdad,
where there is an infinite number of negro slaves, I should be able to find
him out that is guilty? So that unless God be pleased to bring it about, as he
hath already detected the murderer, nothing can save my life.

He spent the two first days in mourning with his family, who sat around
him weeping and complaining of the caliph’s cruelty. The third day being
come, he prepared himself to die with courage, as an honest minister, and
one that had nothing to trouble his conscience; he sent for notaries and
witnesses, who signed the last will he made in their presence. After which,
he took leave of his wife and children, and bid them the last farewell. All
his family were drowned in tears, so that there never was a more sorrowful
spectacle. At last, the messenger came from the caliph to tell him that he
was out of all patience, haring heard nothing from him, nor concerning the
negro slave which he had commanded him to search for; I am therefore
ordered, said he, to bring you before his throne. The afflicted vizier made
ready to follow the messenger; but as he was going out, they brought him
his youngest daughter, about five or six years of age. The nurses that
attended her, presented her to her father to receive his last blessing.

As he had a particular love for that child, he prayed the messenger to give
him leave to stop for a moment; and taking his daughter in his arms, he
kissed her several times. As he kissed her, he perceived she had somewhat
in her bosom that looked bulky, and had a sweet scent. My dear little one,
said he, what hast thou in thy bosom? My dear father, said she, it is an
apple, upon which is written the name of our lord and master, the caliph;
our slave Rihan [56] sold it me for two sequins.

At these words apple and slave, the grand vizier cried out with surprise,
intermixed with joy, and putting his hand into the child’s bosom, pulled out
the apple. He caused the slave, who was not far off, to be brought
immediately; and when he came, Rascal, said he, where hadst thou this
apple? My lord, said the slave, I swear to you, that I neither stole it in your
house, nor out of the commander of the faithful’s garden, but the other day,
as I was going along a street where three or four small children were at play,
one of them having it in his hand, I snatched it from him, and carried it
away. The child ran after me, telling me it was none of his own, but
belonged to his mother, who was sick, and that his father, to save her
longing, had made a long journey, and brought home three apples, whereof
this was one, which he had taken from his mother, without her knowledge.
He said what he could to make me give it him back, but I would not; and so
I brought it home, and sold it for two sequins to the little lady, your
daughter; and this is the whole truth of the matter.

Giafar could not enough admire, how the roguery of a slave had been the
cause of an innocent woman’s death, and almost of his own. He carried the
slave along with him; and when he came before the caliph, he gave that
prince an exact account of all that the slave had told him, and the chance
that had brought him to the discovery of his crime.

Never was any surprise so great as that of the caliph, yet he could not
prevent himself from falling into excessive fits of laughter. At last, he
recovered himself, and with a serious mien, told the vizier, that since his
slave had been the occasion of a strange accident, he deserved an exemplary
punishment. Sir, I must own it, said the vizier, but his guilt is not
irremissible. I remember a strange story of a vizier of Cairo, called
Nourreddin Ali, [57] and Bedreddin Hassan, [58] of Balsora; and since your
majesty delights to hear such things, I am ready to tell it, upon condition,
that if your majesty finds it more astonishing than that which gives me
occasion to tell it, you will be pleased to pardon my slave. I am content,
said the caliph; but you undertake a hard task, for I do not believe you can
save your slave, the story of the apples being so very singular. Upon this,
Giafar began his story thus:

The Story of Nourreddin Ali and Bedreddin Hassan.

 Commander of the faithful, there was in former days a sultan of Egypt, a
strict observer of justice, gracious, merciful, and liberal; and his valour
made him terrible to his neighbours. He loved the poor, and protected the
learned, whom he advanced to the highest dignities. This sultan had a vizier,
who was prudent, wise, sagacious, and well versed in other sciences. This
minister had two sons, very handsome men, and who, in every thing,
followed his own footsteps. The eldest was called Schemseddin [59]
Mohammed, and the younger Nourreddin Ali. The last especially was
endowed with all the good qualities that any man could possess.

The vizier, their father, being dead, the sultan sent for them; and after he
had caused them both to put on the usual robes of a vizier, I am as sorry,
said he, for the loss of your father as you yourselves; and because I know
you live together, and love one another entirely, I will bestow his dignity
upon you conjunctly. Go, and imitate your father’s conduct.

The two new viziers humbly thanked the sultan, and went home to their
house, to make due preparation for their father’s interment. They did not go
abroad for a month, and then went to court, where they appeared
continually on council days. When the sultan went out a hunting, one of the
brothers went along with him, and this honour they had by turns. One
evening, as they were talking after supper, the next day being the elder
brother’s turn to go a hunting with the sultan, he said to his younger brother,
Since neither of us is yet married, and we live so lovingly together, a
thought is come into my head: let us both marry in one day, and let us
choose two sisters out of some family that may suit our quality; —what do
you think of this fancy? I must tell you, brother, answered Nourreddin Ali,
that it is very suitable to our friendship —there cannot be a better thought;
for my part, I am ready to agree to any thing you should think fit. But hold,
this is not all, said Schemseddin Mohammed; my fancy carries me farther:
suppose both our wives should conceive the first night of our marriage, and
should happen to be brought to bed on one day, yours of a son, and mine of
a daughter —we will give them to one another in marriage, when they come
to age. Nay, said Nourreddin Ali, aloud, I must acknowledge that this
prospect is admirable; such a marriage will perfect our union, and I
willingly consent to it. But then, brother, said he farther, if this marriage
should happen, would you expect that my son should settle a jointure on
your daughter? There is no difficulty in that, replied the other; for I am
persuaded, that besides the usual articles of the marriage contract, you will
not fail to promise, in his name, at least three thousand sequins, three good
manors, and three slaves. No, said the younger, I will not consent to that:
are we not brethren, and equal in title and dignity? Do not you and I both
know what is just? The male being nobler than the female, it is your part to
give a large dowry with your daughter. By what I perceive, you are a man
that would have your business done at another man’s charge.

Although Nourreddin Ali spoke these words in jest, his brother, being of
an ill-temper, was offended at it, and falling into a passion, A mischief upon
your son, said he, since you prefer him before my daughter! I wonder you
had so much confidence as to believe him worthy of her; —you must needs
have lost your judgment to think you are my equal, and say we are
colleagues. —I would have you to know, you fool, that since you are so
impudent, I would not marry my daughter to your son, though you would
give him more than you are worth. This pleasant quarrel between two
brothers about the marriage of their children before they were born, went so
far, that Schemseddin Mohammed concluded with threatening: Were I not
to-morrow, said he, to attend the sultan, I would treat you according as you
deserve; but at my return, I shall make you sensible that it does not become
a younger brother to speak so insolently to his elder brother, as you have
done to me. Upon this, he retired to his apartment, and his brother went to
bed.

Schemseddin Mohammed rose very early next morning, and goes to the
palace to attend the sultan, who went to hunt about Cairo, near the
pyramids. As for Nourreddin Ali, he was very uneasy all the night; and,
considering that it would not be possible for him to live longer with a
brother, who treated him with so much haughtiness, he provided a good
mule, furnished himself with money, jewels, provisions and victuals, and
having told his people that he was going on a private journey for two or
three days, he departed.

When he was out of Cairo, he rode by the desert towards Arabia; but his
mule happening to tire by the way, he was forced to continue his journey on
foot. A courier that was going to Balsora, by good fortune, overtaking him,
took him up behind him. As soon as the courier came to Balsora,
Nourreddin Ali alighted, and returned him thanks for his kindness. As he
went about to seek for a lodging, he saw a person of quality, with a great
retinue, coming along, to whom all the people showed the greatest respect,
and stood still till he passed by; Nourreddin Ali stopt among the rest. This
was the grand vizier to the sultan of Balsora, who walked through the city
to see that the inhabitants kept good order and discipline.

This minister casting his eyes by chance on Nourreddin Ali, found

something extraordinary in his aspect, looked very attentively upon him,
and as he came near him, and saw him in a traveller’s habit, he stood still,
asked him who he was, and from whence he came. Sir, said Nourreddin Ali,
I am an Egyptian, born at Cairo, and have left my country because of the
unkindness of a near relation, and am resolved to travel through the world,
and rather to die than to return home again. The grand vizier, who was a
reverend old gentleman, after hearing these words, said to him, Son,
beware; do not pursue your design; there is nothing but misery in the world;
you are not sensible of the hardships you must endure: come, follow me; I
may perhaps make you forget the thing that has forced you to leave your
own country.

Nourreddin Ali followed the grand vizier who soon perceived his good
qualities, and fell so much in love with him, that one day he said to him in
private, My son, I am, as you see, so far gone in years, that there is no
likelihood I shall live much longer. Heaven has bestowed only one daughter
upon me, who is as beautiful as you are handsome, and now fit for
marriage. Several people of the greatest quality at this court have desired
her for their sons, but I could not grant their request. I have a love for you,
and think you so worthy to be received into my family, that, preferring you
before all those that have sought her, I am ready to accept you for my son-
in-law. If you like the proposal, I will acquaint the sultan my master that I
have adopted you by this marriage, and I will pray him to grant you the
reversion of my dignity of grand vizier in the kingdom of Balsora. In the
mean time nothing being more requisite for me than ease in my old age, I
will not only put you in possession of my estate, but leave the
administration of public affairs to your management.
 When the grand vizier had made an end of this kind and generous
proposal, Nourreddin Ali fell at his feet, and expressing himself in terms
that demonstrated his joy and gratitude, told the vizier that he was at his
command in every thing. Upon this the vizier sent for his chief domestics,
ordered them to furnish the great hall of his palace, and prepare a great
feast: he afterwards sent to invite the nobility of the court and city to honour
him with their company; and when they were all met, (Nourreddin Ali
having now told him who he was,) he said to those lords, for he thought it
proper to speak thus on purpose to satisfy such of them to whom he had
refused his alliance, —I am now, my lords, to discover a thing to you which
hitherto I have kept secret. I have a brother, who is grand vizier to the sultan
of Egypt, as I am to the sultan of this kingdom. This brother has but one
son, whom he would not marry in the court of Egypt, but sent him hither to
marry my daughter, that both our branches may be re-united. His son,
whom I knew to be my nephew as soon as I saw him, is the young
gentleman I here present to you, and is to be my son-in-law. I hope you will
do me the honour to be present at this wedding, which I am resolved to
celebrate this day. The noblemen, who could not take it ill that he preferred
his nephew before all the great matches that had been proposed to him, said
that he had very good reason for what he did, were willing to be witnesses
to the ceremony, and wished that God might prolong his days to enjoy the
satisfaction of the happy match.

The lords met at the vizier of Balsora’s house, having testified their
satisfaction at the marriage of his daughter with Nourreddin Ali, sat down to
dinner, which lasted a long while; and the latter course was sweetmeats, of
which every one, according to custom, took what they thought fit. The
notaries came in with the marriage contract, the chief lords signed it, and
when the company departed, the grand vizier ordered his servants to
prepare a bath, and had every thing in readiness for Nourreddin Ali to bathe.
He had fine new linen, and every thing else provided for him in the most
curious manner. When he had washed and dried himself, he was going to
put on his former apparel, but had an extraordinary rich suit brought him.
Being dressed and perfumed with the most odoriferous essences, he went to
see the grand vizier, his father-in-law, who was exceedingly well pleased
with his genteel mien; and having made him sit down, My son, said he, you
have declared unto me who you are, and the quality you had at the court of
Egypt. You have also told me of a difference betwixt you and your brother,
which occasioned you to leave your country. I desire you to make me your
entire confidant, and to acquaint me with the cause of your quarrel; for now
you have no reason either to doubt me, or to conceal any thing from me.

Nourreddin Ali gave him an account of every circumstance of the quarrel;

at which the vizier burst out into a fit of laughter, and said, This is one of
the oddest things that I ever have heard: is it possible, my son, that your
quarrel should rise so high about an imaginary marriage? I am sorry you fell
out with your elder brother upon such a frivolous matter; but I find he is in
the wrong to be angry at what you only spoke in jest, and I ought to thank
Heaven for that difference which has procured me such a son-in-law. But,
said the old gentleman, it is late, and time for you to retire; go to your bride,
my son, she expects you; to-morrow I will present you to the sultan, and
hope he will receive you in such a manner as shall satisfy us both.

Nourreddin Ali took leave of his father-in-law, and went to his spouse’s
apartment. It is remarkable, continued Giafar, that Schemseddin
Mohammed happened also to marry at Cairo the very same day that this
marriage was solemnized at Balsora, the particulars of which are as fellow:

After Nourreddin Ali left Cairo, with an intention never to return,

Schemseddin Mohammed, his elder brother, who was gone a hunting with
the sultan of Egypt, did not come back in a month; for the sultan loved that
game extremely, and therefore continued the sport all that while.
Schemseddin at his return ran to Nourreddin Ali’s apartment, but was much
surprised when he understood, that under pretence of taking a journey of
two or three days, he went away on a mule the same day that the sultan
went a hunting, and had never appeared since. It vexed him so much the
more, because he did not doubt but the hard words he had given him were
the cause of his going away. He sent a messenger in search of him, who
went to Damascus, and as far as Aleppo, but Nourreddin was then at
Balsora. When the courier returned, and brought word that he heard no
news of him, Schemseddin Mohammed intended to make further inquiry
after him in other parts, and in the mean time had a fancy to marry, and
matched with the daughter of one of the greatest lords in Cairo, upon the
same day his brother married the daughter of the grand vizier of Balsora.
 But this is not all, said Giafar: at the end of nine months Schemseddin
Mohammed’s wife was brought to bed of a daughter at Cairo, and on the
same day Nourreddin’s wife brought forth a son at Balsora, who was called
Bedreddin Hassan.

The grand vizier of Balsora testified his joy by great gifts and public
entertainments for the birth of his grandson: and to show his son-in-law the
great esteem he had for him, he went to the palace, and most humbly
besought the sultan to grant Nourreddin Ali his office, that he might have
the comfort before his death to see his son-in-law made grand vizier in his
stead.

The sultan, who had taken a great liking to Nourreddin, when his father
presented him after his marriage, and had ever since heard every body
speak well of him, readily granted his father-in-law’s request, and caused
Nourreddin immediately to put on the robe of grand vizier.

The next day, when the father saw his son-in-law preside in council, as he
himself had done, and perform all the offices of grand vizier, his joy was
complete. Nourreddin Ali behaved himself so well in every thing, that one
would have thought he had been all his lifetime employed in such affairs.
He continued afterwards to assist in council every time when the infirmities
of age would not permit his father-in-law to appear.

The old gentleman died about four years after, with great satisfaction to
see a branch of his family that promised so fair to support the grandeur of it.

Nourreddin Ali performed his last duty to him with all possible love and
gratitude. And as soon as his son Bedreddin Hassan had attained to the age
of seven years, he provided him a most excellent tutor, who taught him such
things as became his birth. The child had a ready wit, and a genius capable
of receiving all the good instructions that could be given.

After Bedreddin Hassan had been two years under the tuition of his
master, who taught him perfectly to read, he learnt the Koran by heart. His
father, Nourreddin Ali, put him afterwards to other tutors, by whom his
mind was cultivated to such a degree, that when he was twelve years of age
he had no more occasion for them; and then, as his physiognomy promised
wonders, he was admired by all that looked upon him.

Hitherto, Nourreddin Ali had kept him to his study, and had not yet
brought him in public; but now he carried him to the palace, on purpose to
have the honour of kissing the sultan’s hand, who received him very
graciously. The people that saw him in the streets were charmed with his
gentle mien, and gave him a thousand blessings.

His father proposing to make him capable of supplying his place, spared
no cost for that end, and brought him up to business of the greatest moment,
on purpose to qualify him betimes. In short, he omitted nothing to advance
a son he loved so well. But as he began to enjoy the fruits of his labour, he
was all of a sudden taken with a violent fit of sickness; and finding himself
past recovery, disposed himself to die a good mussulman.

In that last and precious moment he forgot not his son Bedreddin, but
called for him, and said, My son, you see this world is transitory; there is
nothing durable but in that which I shall speedily go to. You must therefore
from henceforth begin to fit yourself for this charge, as I have done; you
must prepare for it without murmuring, and so as to have no trouble of
conscience for not acting the part of a real honest man. As for your religion,
you are sufficiently instructed in it by what you have learnt from your tutors
and your own study; and as to what belongs to an honest man, I shall give
you some instructions, which I hope you will make good use of. As it is a
necessary thing to know one’s self, and that you cannot come to that
knowledge without you first understand who I am, I shall now tell it you.

I am, said he, a native of Egypt; my father, your grandfather, was first
minister to the sultan of that kingdom. I myself had the honour to be vizier
to that same sultan, and so has my brother, your uncle, who I suppose is yet
alive; his name is Schemseddin Mohammed. I was obliged to leave him,
and come into this country, where I have raised myself to the high dignity I
now enjoy. But you will understand all these matters more fully by a
manuscript that I shall give you.

At the same time Nourreddin Ali pulled out his pocket-book, which he
had written with his own hand, and carried always about him, and giving it
to Bedreddin Hassan, Take it, said he, and read it at your leisure; you will
find, among other things, the day of my marriage, and that of your birth;
these are such circumstances as perhaps you may hereafter have occasion to
know, therefore you must keep it very carefully.

Bedreddin Hassan being most afflicted to see his father in that condition,
and sensibly touched with this discourse, could not but weep when he
received the pocket-book, and promised at the same time never to part with
it.

That very moment Nourreddin Ali fainted, so that it was thought he

would have expired; but he came to himself again, and uttered these words:

My son, said he, the first instruction I give you is, not to make yourself
familiar with all sorts of people. The way to live happy is to keep your mind
to yourself, and not to tell your thoughts easily.

Secondly, Not to do violence to any body whatever; for in that case you
will draw every body’s hatred upon you. You ought to consider the world as
a creditor, to whom you owe moderation, compassion, and forbearance.

Thirdly, Not to say a word when you are reproached: for, as the proverb
says, He that keeps silence is out of danger. And in this case particularly
you ought to practise it. You also know what one of our poets says upon this
subject, That silence is the ornament and safeguard of life; That our speech
ought not to be like a storm of rain that spoils all. Never did any man yet
repent of having spoken too little, whereas many have been sorry that they
spoke so much.

Fourthly, To drink no wine, for that is the source of all vices.

Fifthly, To be frugal in your way of living: if you do not squander your

estate away, it will maintain you in time of necessity. I do not mean you
should be either too liberal or too niggardly; for though you have never so
little, if you husband it well, and lay it out on proper occasions, you shall
have many friends; but if, on the contrary, you have great riches, and make
but a bad use of them, all the world will forsake you, and leave you to
yourself.
 In short, Nourreddin Ali continued till the last moment of his breath to
give good advice to his son; and when he was dead, he was magnificently
interred with all the honours due to his quality. Bedreddin Hassan, of
Balsora, for so he was called, because born in that town, was so
overwhelmed with grief for the death of his father, that instead of a month’s
time to mourn, according to custom, he kept himself close shut up in tears
and solitude about two months, without seeing any body, or so much as
going abroad to pay his duty to the sultan of Balsora; who, being displeased
at his neglect, looked upon it as a slight put on his court and person,
suffered his passion to prevail, and in his fury, called for the new grand
vizier, (for he had created a new one as soon as Nourreddin Ali died,)
commanded him to go to the house of the deceased, and seize upon it, with
all his other houses, lands, and effects, without leaving any thing for
Bedreddin Hassan, and to bring him prisoner along with him.

The new grand vizier, accompanied with a great many messengers

belonging to the palace, justices, and other officers, went immediately to
execute his commission. But one of Bedreddin Hassan’s slaves happening
accidentally to come into the crowd, no sooner understood the vizier’s
errand, but he ran before in all haste to give his master warning. He found
him sitting in the porch of his house, as melancholy as if his father had been
but newly dead. He fell down at his feet out of breath, and after he had
kissed the hem of his garment, cried out, My lord, save yourself
immediately. Bedreddin Hassan, lifting up his head, What is the matter?
what news dost thou bring? —My lord, said he, there is no time to be lost;
the sultan is horribly incensed against you, and he has sent people to take all
you have, and also to seize your person.

The words of this faithful and affectionate slave put Bedreddin Hassan
into great confusion. May not I have so much time, said he, as to take some
money and jewels along with me? —No, sir, replied the slave; the grand
vizier will be here this moment: begone immediately; save yourself.
Bedreddin Hassan rose up from his sofa in all haste, put his feet in his
sandals, and after he had covered his head with the tail of his gown, that his
face might not be known, he fled, without knowing what way to go, to
avoid the impending danger.
 The first thought that came into his head was to get out of the next gate
with all speed. He ran without stopping till he came to the public burying-
ground, and since it was growing dark, he resolved to pass that night on his
father’s tomb. It was a large edifice, in form of a dome, which Noureddin
Ali built when he was alive. Bedreddin met a very rich Jew by the way, who
was a banker and merchant, and was returning from a place where his
affairs had called him to the city.

Isaac, the Jew, after he had paid his respects to Bedreddin Hassan, by
kissing his hand, said, My lord, dare I be so bold as to ask whither you are
going at this time of night all alone, and so much troubled? Has any thing
disquieted you? —Yes, said Bedreddin; a while ago I was asleep, and my
father appeared to me in a dream, looking very fiercely upon me, as if he
were extraordinarily angry. I started out of my sleep very much frightened,
and came out immediately to go and pray upon his tomb.

My lord, said the Jew (who did not know the true reason why Bedreddin
left the town,) your father of happy memory, and my good lord, had store of
merchandize in several vessels, which are yet at sea, and belong to you; I
beg the favour of you to grant me the first refusal of them before any other
merchant I am able to pay down ready money for all the goods that are in
your ships: and to begin, if you will give me those that happen to come in
the first ship that arrives in safety, I will pay you down in part of payment a
thousand sequins. And drawing out a bag from under his gown, he showed
it him, sealed up with one seal.

Bedreddin Hassan being banished from home, and dispossessed of all that
he had in the world, looked upon this proposal of the Jew as a favour from
heaven, and therefore accepted it with a great deal of joy. My lord, said the
Jew, then you sell unto me, for a thousand sequins, the lading of the first of
your ships that shall arrive in port. —Yes, answered Bedreddin, I sell it you
for a thousand sequins; it is done. Upon this the Jew delivered him the bag
of a thousand sequins, and offered to count them, but Bedreddin Hassan
saved him the trouble, and said he would trust his word. Since it is so, my
lord, said he, be pleased to favour me with a small note in writing of the
bargain we have made. And having said this, he pulled the inkhorn from his
girdle, and taking a small reed out of it neatly cut for writing, he presented
it to him, with a piece of paper he took out of his letter-case; and whilst he
held the inkhorn, Bedreddin Hassan wrote these words:

“This writing is to testify, that Bedreddin Hassan of Balsora has sold to

Isaac the Jew, for the sum of one thousand sequins, received in hand, the
lading of the first of his ships that shall arrive in this port.

“Bedreddin Hassan of Balsora.”

This note he delivered to the Jew, who put it in his letter-case, and then
took his leave of him.

While Isaac pursued his journey to the city, Bedreddin Hassan made the
best of his way to his father Nourreddin Ali’s tomb. When he came to it, he
bowed his face to the ground, and, with his eyes full of tears, deplored his
miserable condition. Alas! said he, unfortunate Bedreddin, what will
become of thee? Whither canst thou fly for refuge against the unjust prince
that persecutes thee? Was it not enough to be afflicted for the death of so
dear a father? Must fortune needs add new misfortunes to just complaints?
He continued a long time in this posture, but at last rose up again, and
leaning his head upon his father’s sepulchre, his sorrows returned more
violently than before; so that he sighed and mourned, till, overcome with
heaviness, he stretched himself all along upon the floor, and fell asleep.

He had not slept long, when a genie, who had retired to that cemetery
during the day, and was intending, according to his custom, to range about
the world at night, espying this young man in Nourreddin Ali’s tomb, he
entered, and finding Bedreddin lying on his back, was surprised at his
beauty. When the genie had attentively considered Bedreddin Hassan, he
said to himself, To judge of this creature by his good mien, he would seem
to be an angel of the terrestrial paradise, whom God has sent to put the
world in a flame with his beauty. At last after he had satisfied himself with
looking upon him, he took a flight into the air, where meeting by chance
with a fairy, they saluted one another; after which, he said to her, Pray
descend with me into the cemetery, where I stay, and I will show you a
prodigious beauty, which is worthy your admiration as well as mine. The
fairy consented, and both descended; in an instant they came into the tomb.
Look ye, said the genie to the fairy, showing her Bedreddin Hassan, did you
ever see a young man of a better shape, and more beautiful than this?

The fairy having attentively observed Bedreddin, returned to the genie: I

must confess, said she, that he is a very handsome man; but I just now came
from seeing an object at Cairo, more admirable than this, and if you will
hear me, I will tell you a strange story concerning her. You will very much
oblige me in so doing, answered the genie. You must know then, said the
fairy, (for I will tell it you at length), that the sultan of Egypt has a vizier
called Schemseddin Mohammed, who has a daughter of about twenty years
of age, the most beautiful and complete person that ever was known. The
sultan having heard of this young lady’s beauty, sent the other day for her
father, and told him, I understand you have a daughter to marry; I have a
mind to marry her: will not you consent to it? The vizier, who did not
expect this proposal, was troubled at it; and instead of accepting it joyfully,
which another in his place would certainly have done, he answered the
sultan, May it please your majesty, I am not worthy of the honour you
confer upon me, and I most humbly beseech you to pardon me, if I do not
agree to your request. You know I had a brother called Nourreddin Ali, who
had the honour, as well as myself, to be one of your viziers: we had some
difference together, which was the cause of his leaving me on a sudden, and
since that time I have had no account of him till within these four days, that
I heard he died at Balsora, being grand vizier to the sultan of that kingdom.
 He has left a son behind him, and there having been an agreement
between us to match our children together, if ever we had any, I am
persuaded he intended that match when he died, and being desirous to fulfil
the promise on my part, I conjure your majesty to grant me leave. You have
in your court many other lords who have daughters as well as I, on whom
you may please to bestow that honour.

The sultan of Egypt, provoked at this bold denial of Schemseddin

Mohammed, said to him in a passion, which he could not restrain, Is this the
way you requite my proposal to stoop so low as to desire your alliance? I
know how to revenge your daring to prefer another to me, and I swear that
your daughter shall be married to the most contemptible and ugly of all my
slaves; and having spoken those words, he angrily bid the vizier begone,
who went home to his house full of confusion, and extraordinarily sad.

This very day, the sultan sent for one of his grooms who is hump-backed,
big-bellied, crook-legged, and as ugly as a hobgoblin; and after having
commanded Schemseddin Mohammed to consent to marry his daughter to
this ghastly slave, he caused the contract to be made and signed by
witnesses in his own presence. The preparations for this fantastical wedding
are all ready, and this very moment all the slaves belonging to the lords of
the court of Egypt are waiting at the door of a bath, each with a flambeau in
his hand, for the crook-backed groom, who is bathing himself, to go along
with them to his bride, who is already dressed to receive him; and when I
departed from Cairo, the ladies met for that purpose were going to conduct
her in her nuptial attire to the hall, where she is to receive her hump-backed
bridegroom, and is this minute now expecting him. I have seen her, and do
assure you, that no person can look upon her without admiration.
 When the fairy left off speaking, the genie said to her, Whatever you think
or say, I cannot be persuaded that the girl’s beauty exceeds that of this
young man. I will not dispute it with you, answered the fairy; for I must
confess he deserves to be married to that charming creature which they
design for hump-back. And I think it were a deed worthy of us to obstruct
the sultan of Egypt’s injustice, and to put this young gentleman in the room
of the slave. —You are in the right, answered the genie; I am extremely
obliged to you for so good a thought, let us deceive him. I consent to your
revenge upon the sultan of Egypt; let us comfort a distressed father, and
make his daughter as happy as she thinks herself miserable. I will no my
utmost endeavour to make this project succeed, and I am persuaded you
will not be backward. I will be at the pains to carry him to Cairo before he
awake, and afterwards leave it to your care to carry him elsewhere, when
we have accomplished our design.

The fairy and the genie having thus concerted what they had to do, the
genie lifted up Bedreddin Hassan gently, and with an inconceivable
swiftness carried him through the air, and set him down at the door of a
public house, next to the bath, whence hump-back was to come with the
train of slaves that waited for him. Bedreddin Hassan awaked that very
moment, and was mightily surprised to find himself in the middle of a city
he knew not. He was going to cry out, and to ask where he was; but the
genie touched him gently on the shoulder, and forbid him to speak a word.
Then he put a torch in his hand, and bid him go and mix with the crowd at
the door of the bath —follow them till you come into a hall, where they are
going to celebrate a marriage. The bridegroom is a hump-backed fellow,
and by that you will easily know him. Put yourself at the right hand as you
go in, and then immediately open the purse of sequins you have in your
bosom, and distribute them among the musicians and dancers as they go
along; and when you are got into the hall, give money also to the female
slaves you see about the bride, when they come near you; but every time
you put your hand in your purse, be sure to take out a whole handful, and
do not spare them. Observe to do every thing exactly as I have told you,
with great presence of mind; be not afraid of any person or thing, and leave
the rest to a superior power, who will order matters as he thinks fit.
 Young Bedreddin being well instructed in all that he was to do, advanced
towards the door of the bath; the first thing he did was to light his torch as
that of a slave; and then mixing among them as if he belonged to some
nobleman of Cairo, he marched along as they did, and followed hump-back,
who came out of the bath, and mounted a horse out of the sultan’s own
stable.

Bedreddin Hassan coming near to the musicians, and men and women
dancers, who went just before the bridegroom, pulled out time after time
whole handfuls of sequins, which he distributed among them; and as he thus
gave his money with an unparalleled grace and engaging mien, all who
received it cast their eyes upon him; and after they had a full view of his
face, they found him so handsome and comely, that they could not look off
again.

At last they came to Schemseddin Mohammed’s gate, who was Bedreddin

Hassan’s uncle, and little thought his nephew was so near. The doorkeepers,
to prevent any disorder, kept back all the slaves that carried torches, and
would not let them come in. Bedreddin was likewise refused; but the
musicians, who had free entrance, stood still, and protested they would not
go in, if they hindered him from going along with them. He is not one of the
slaves, said they: look upon him, and you will soon be satisfied as to that.
He is certainly a young stranger who is curious to see the ceremonies
observed at weddings in this city; and saying thus, they put him in the midst
of them, and carried him in, whether the porters would or no; they took his
torch out of his hand, and gave it to the first they met: having brought him
into the hall, they placed him at the right hand of the hump-backed
bridegroom, who sat near the vizier’s daughter on a throne most richly
adorned.

She appeared very lovely in all her dresses, but in her face there was
nothing to be seen but vexation and mortal grief. The cause of this was easy
to be guessed at, when she had by her side a bridegroom so very deformed;
and so unworthy of her love. The throne of that ill matched couple was in
the midst of a sofa. The ladies of the emirs, viziers, and those of the sultan’s
bedchamber, and several other ladies of the court and city, were placed on
each side, a little lower, every one according to their quality, and all of them
so finely and richly dressed, that it was one of the pleasantest sights that
could be seen, each of them holding a large wax taper in their hand.

When they saw Bedreddin Hassan come into the room, they all fixed their
eyes upon him, and admiring his shape, his behaviour, and the beauty of his
face, they could not forbear looking upon him. When he was set down,
every one left their seats and came near to him to have a full view of his
face, and almost all of them, as they turned to their seats, found themselves
moved with tender passion.

The disparity between Bedreddin Hassan and the hump-backed groom,

who made such a horrible figure, occasioned a great murmuring among the
company, insomuch that the ladies cried out, We must give our bride to this
handsome young gentleman, and not to this ugly hump-back. Nor did they
rest here, but uttered imprecations against the sultan, who, abusing his
absolute power, would unite ugliness and beauty together. They did also
upbraid the bridegroom, so as they put him quite out of countenance, to the
great satisfaction of the spectators, whose shouts for some time put a stop to
the concert of music in the hall. At last, the musicians began again, and the
women who had dressed the bride came all about her.

At the sound of the instruments, the bride changed her dress seven
different times, and each time that she did so, she rose up from her seat,
followed by her bride-woman, and passed by hump-back, without giving
him one look, and went towards Bedreddin Hassan, before whom she
presented herself in her new attire. On this occasion, Bedreddin, according
to the instructions given him by the genie, failed not to put his hands in his
purse, and pulled out handfuls of sequins, which he distributed among the
women that followed the bride. Nor did he forget the players and dancers,
but also threw money to them. It was pleasant to see how they pushed one
another to gather it up. They showed themselves very thankful, and made
him signs that the young bride should be for him, and not for the hump-
back fellow. The women that attended her, told her the same thing, and did
not value whether the groom heard them or not; for they put a thousand
tricks upon him, which very much pleased the spectators.

When the ceremony of changing habits was passed, the music ceased and
went away, but made a sign to Bedreddin Hassan to stay behind. The ladies
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