Table of Content

I. Introduction to Economics 1. The Principles and Practice of Economics 2. Economic Methods and Economic Questions 3. Optimization: Choosing the Best Economic Outcome 4. Demand, Supply, and Equilibrium II. Foundations of Microeconomics 5. Consumers and Incentives 6. Sellers and Incentives 7. Perfect Competition and the Invisible Hand 8. Trade 9. Externalities and Public Goods 10. The Government in the Economy: Taxation and Regulation 11. Markets for Factors of Production III. Market Structure 12. Monopoly 13. Game Theory and Strategic Play 14. Monopolistic Competition and Oligopoly IV. Extending the Microeconomic Toolbox 15. Trade-offs Involving Time and Risk 16. Auctions and Bargaining 17. The Economics of Information 18. Social Economics

Salient Features

Three key principles – optimization, equilibrium, and empiricism – lie at the heart of the authors' approach. Chapters 1–4 introduce these key themes, and lay the groundwork for understanding the economic way of thinking about the world. 1. Optimization. The first principle – that people try to choose the best available option – is optimization. Economists believe that optimization explains most choices people make, including minor decisions like deciding whether to eat a cheeseburger, and major decisions like deciding whom to date or marry. When people fail to optimize perfectly, economic reasoning can be used to analyze the mistake and to suggest a better course of action. 2. Equilibrium. Economic systems tend toward equilibrium, wherein each economic actor feels that he or she cannot do any better by picking another course of action. This principle highlights the connections among economic actors and their choices. In a state of equilibrium, consumers and purveyors of goods and services are simultaneously optimizing, and their behaviors are consequently intertwined. 3. Empiricism. While the first two key principles are conceptual, the third is methodological. Economists use data to test economic theories, learn about the world, and speak to policymakers. The emphasis on matching theories with real-world data to answer specific questions helps to show students the evidence behind the theory, making economics concrete, interesting, and fun. Showcase empirical questions with engaging features • Evidence-Based Economics (EBE) features show how economists use data to answer the question posed in the opening paragraph of each chapter. The EBEs use actual data from field experiments, lab experiments, naturally occurring data, or government data, while highlighting major concepts in the chapter. These features let students get a real look at economics as it plays out in the world around them. Examples: • Is Facebook free? • Is College worth it? • Will free trade cause you to lose your job? • Is there value in putting yourself into someone else's shoes? • What is the optimal size for government? • Letting the Data Speak features reinforces the theme of evidence behind the theory. These short, targeted explorations analyze an economic question by using real data as the foundation of the discussion. Among the many issues explored: • Should McDonald's be interested in elasticities? • Fair trade products • Do wages really go down if the labor supply increases? • Why do some firms advertise and others don't? • Choice and Consequence features emphasize optimization – one of the key themes in the book – by focusing on making the best decision. These features ask students to make an economic decision, or evaluate the consequences of past real decisions. The authors then explain how an economist might analyze the same decision. Examples of choices investigated: • Do people really optimize? • The unintended consequences of fixing market prices • Should LeBron James paint his own house? • Does revenge have an evolutionary logic?