Principles of Microeconomics 3e covers the scope and sequence of most one semester introductory microeconomics courses. The third edition takes a balanced approach to the theory and application of microeconomics concepts. The text uses conversational language and ample illustrations to explore economic theories, and provides a wide array of examples using both fictional and real-world applications. The third edition has been carefully and thoroughly updated to reflect recent developments, as well as to provide a deeper background in diverse contributors and their impacts on economic thought and analysis. For example, the third edition highlights the research and views of a broader group of economists.
Principles of Microeconomics Course Description
This course covers how individuals and firms make decisions and how they interact. Topics include the study of consumer theory, theories of price determination, production, market structure, trade, externalities, and public goods.
Coverage and scope
The book is organized into five main parts:
- What is Economics? The first two chapters introduce students to the study of economics with a focus on making choices in a world of scarce resources.
- Supply and Demand, Chapters 3 and 4, introduces and explains the first analytical model in economics—supply, demand, and equilibrium—before showing applications in the markets for labor and finance.
- The Fundamentals of Microeconomic Theory, Chapters 5 through 9, begins the microeconomics portion of the text, presenting the theories of consumer behavior, production and costs, and the different models of market structure, including some simple game theory.
- Microeconomic Policy Issues, Chapters 10 through 17, covers the range of topics in applied micro, framed around the concepts of public goods and positive and negative externalities. Students explore competition and antitrust policies, environmental problems, poverty, income inequality, and other labor market issues. The text also covers information, risk and financial markets, and public economy.
- International Economics, Chapters 18 and 219, introduces the international dimensions of economics, including international trade and protectionism.
Pedagogical foundation
Throughout Principles of Microeconomics 2e, you will find features that engage the students in economic inquiry and support their learning. Our features include:
- Bring It Home. This feature presents a brief case study, specific to each chapter, which connects the chapter’s main topic to the real world. It is broken up into two parts: the first at the beginning of the chapter (in the Intro module) and the second at the chapter’s end, when students have learned what’s necessary to understand the case and “bring home” the chapter’s core concepts.
- Work It Out. This feature asks students to work through a generally analytical or computational problem, and guides them step-by-step to find out how its solution is derived.
- Clear It Up. This feature addresses common student misconceptions about the content. Clear It Ups are usually deeper explanations of something in the main body of the text. Each CIU starts with a question. The rest of the feature explains the answer.
- Link It Up. This feature offers a very brief introduction to a website that is pertinent to students’ understanding and enjoyment of the topic at hand.
Questions for each level of learning
Principles of Microeconomics 2e offers four types of end-of-module questions for students.
- Self-Checks. These analytical self-assessment questions appear at the end of each module. They push the student to think beyond what is said in the text. Self-Check questions are designed for formative (rather than summative) assessment. The questions and answers are explained so that students feel like they are being walked through the problem.
- Review Questions. These are simple recall questions from the chapter and are in open-response format (not multiple choice or true/false). The answers can be looked up in the text.
- Critical Thinking Questions. These higher-level, conceptual questions ask students to demonstrate their understanding by applying what they have learned in different contexts. They ask for outside-the-box thinking, for reasoning about the concepts. They push the student to places they wouldn’t have thought of going themselves.
- Problems. These exercises give students additional practice working with the analytic and computational concepts in the module.
Changes to the Pressbooks edition
OpenStax only undertakes revisions when significant modifications to a text are necessary. In the case of Principles of Microeconomics, we received a wealth of constructive feedback. Many of the book’s users felt that consequential movement in economic data, coupled with the impacts of national and global events, warranted a full revision. We also took advantage of the opportunity to improve the writing and sequencing of the text, as well as many of the calculation examples. The major changes are summarized below.
- Augmented explanations in chapters one through four provide a more comprehensive and informative foundation for the book.
- A clearer explanation, using a numerical example, has been given for finding the utility maximizing combination of goods and services a consumer should choose.
- The labor markets chapter and the poverty and economic inequality chapter have been resequenced.
- Substantial revisions to the AD/AS model in chapters 24-26 present the core concepts of macroeconomics in a clearer, more dynamic manner.
- Case studies and examples have been revised and, in some cases, replaced to provide more relevant and useful information for students.
- Economic data, tables, and graphs, as well as discussion and analysis around that data, have been thoroughly updated.
Wherever possible, data from the Federal Reserve Economic Database (FRED) was included and referenced. In most of these uses, links to the direct source of the FRED data are provided, and students are encouraged to explore the information and the overall FRED resources more thoroughly.
Additional updates and revisions appear throughout the book. They reflect changes to economic realities and policies regarding international trade, taxation, insurance, and other topics. For issues that may change in the months or years following the textbook’s publication, the authors often provided a more open-ended explanation, but we will update the text annually to address further changes.
The revision of Principles of Microeconomics was undertaken by Steven Greenlaw (University of Mary Washington) and David Shapiro (Pennsylvania State University), with significant input by lead reviewer Daniel MacDonald (California State University, San Bernardino).
Additional resources
$$Q=f[NR,L,K,t,E]$$
$Q=f[L,K−]orQ=f[L]$
