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The book provides an introduction to the methods of quantum statistical mechanics used in quantum optics and their application to the quantum theories of the single-mode laser and optical bistability. The generalized representations of Drummond and Gardiner are discussed together with the more standard methods for deriving Fokker--Planck equations. Particular attention is given to the theory of optical bistability formulated in terms of the positive P-representation, and the theory of small bistable systems. This is a textbook at an advanced graduate level. It is intended as a bridge between an introductory discussion of the master equation method and problems of current research.