principles of microeconomics assignment 1

Introduction

Chapter objectives.

In this chapter, you will learn about:

• What Is Economics, and Why Is It Important?
• Microeconomics and Macroeconomics
• How Economists Use Theories and Models to Understand Economic Issues
• How Economies Can Be Organized: An Overview of Economic Systems

Bring It Home

Decisions ... decisions in the social media age.

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment. Economists call this “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

Now we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information disseminates through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Access for free at https://openstax.org/books/principles-microeconomics-2e/pages/1-introduction

• Authors: Steven A. Greenlaw, David Shapiro
• Publisher/website: OpenStax
• Book title: Principles of Microeconomics 2e
• Publication date: Sep 15, 2017
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-microeconomics-2e/pages/1-introduction
• Section URL: https://openstax.org/books/principles-microeconomics-2e/pages/1-introduction

© Jun 15, 2022 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

This is an archived course. A more recent version may be available at ocw.mit.edu .

Assignments

A total of 10 graded problem sets were assigned during the semester. Each one covered approximately one week's worth of new material. The best 9 scores out of 10 were used to calculate the term grade.

Principles of Microeconomics

(18 reviews)

Timothy Taylor, Saint Paul, Minnesota

Steven A. Greenlaw, Fredericksburg, Virginia

Eric Dodge, Hanover, Indiana

Copyright Year: 2014

ISBN 13: 9781938168246

Publisher: OpenStax

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Yi Duan, Assistant Professor, Marshall University on 12/5/23

The book covers all major topics in introductory microeconomics. It encompasses discussions on both theories and policies. read more

Comprehensiveness rating: 5 see less

The book covers all major topics in introductory microeconomics. It encompasses discussions on both theories and policies.

Content Accuracy rating: 4

The majority of the content is precise and accurate. However, there can be some subtle issues. In 7.3 “Costs in the Short Run”, the gap between ATC (average total cost) and AVC (average variable cost) is AFC (average fixed cost), and AFC is supposed to decrease as output increases since the fixed cost is distributed across a larger number of units. But 7.3 fails to highlight this point and some of the graphs fail to show this feature.

Relevance/Longevity rating: 5

The majority of the content is current, with discussions addressing the impact of recent events such as the COVID-19 pandemic.

Clarity rating: 4

Most of the content is clear and easily understandable. The “Clear It Up” sessions can be very helpful in clarifying some confusing content. However, some content can be improved. 5.1 “Price Elasticity of Demand and Price Elasticity of Supply” highlights the importance of using the absolute values for price elasticity of demand, but the following mathematical calculations simply equate negative values to positive values, which can be mathematically confusing; I suggest adding absolute value symbols in mathematical calculations to avoid this confusion.

Consistency rating: 5

The content and writing style maintain consistency throughout the entire book.

Modularity rating: 5

This book is well-organized into modular sections. The individual modules of the book collectively contribute to an enhanced overall understanding of the subject matter.

Organization/Structure/Flow rating: 5

In general, this book exhibits a well-organized structure. It adheres to the principles of microeconomics effectively.

Interface rating: 5

The design and layout are good. I would appreciate the inclusion of graphs in high resolution.

Grammatical Errors rating: 5

I did not find any grammatical errors.

Cultural Relevance rating: 5

This book introduces economic theories that apply to most of the countries in the world. In addition, Chapter 19 “International Trade” and Chapter 20 “Globalization and Protectionism” discuss economic interactions across countries.

This book is one of the best open textbooks featuring introductory microeconomics. I have seen tremendous improvement from the first edition to the current third edition.

Reviewed by Lori Lavigne, Professor, Framingham State University on 11/7/22

The book covers all of the major topics from a intro micro course. I would consider using this text in the future. read more

The book covers all of the major topics from a intro micro course. I would consider using this text in the future.

Content Accuracy rating: 5

Relevance/Longevity rating: 4

Relevant, but typically always pulling recent events for examples.

Consistency rating: 4

Consistent with other texts

Modularity rating: 4

Well organized

The text covers the topics in the order that are typically covered.

Seems easy to navigate.

Grammar looks correct

Cultural Relevance rating: 4

Reviewed by ATM Sayfuddin, Assistant Professor, Randolph College on 4/2/22

The book covers almost all major areas typically contained in an introductory microeconomics textbook. However, I expected the chapter discussing "public goods" (chapter 13) to also discuss all four categories of goods - private goods, public... read more

Comprehensiveness rating: 4 see less

The book covers almost all major areas typically contained in an introductory microeconomics textbook. However, I expected the chapter discussing "public goods" (chapter 13) to also discuss all four categories of goods - private goods, public goods, common resources, and quasi-public goods.

I the content of the book accurate.

Content is up-to-date. I liked the idea of using hyperlinks to external sources in the online version, allowing students to dig deeper into interesting ideas/scenarios in the real world.

In my experience with my students, I think most of my students find the textbook written in clear and concise language, although use of more examples would be helpful.

The text is consistent.

I see the value of introducing the concept of consumers' Budget Constraints and Production Possibility Frontier in chapter 2, but I still think those topics are better served in their own subsequent chapters - chapters 9 and 19, respectively - because the brief introduction of these topics in the 2nd chapter leaves many questions unanswered in the students' minds.

Organization/Structure/Flow rating: 4

I liked the overall flow of the book.

The interface is user-friendly.

I did not notice any grammatical errors.

The text is not culturally insensitive or offensive in any way.

I liked the book most helpful because of the length of each chapter, which students find manageable rather than burdensome.

Reviewed by Jean-Baptiste Tondji, Assistant Professor, University of Texas Rio Grande Valley on 10/31/20

Principles of Economics is impressive and extremely comprehensive. It covers interesting and current topics that are suitable and relevant for any principles of Microeconomics and Macroeconomics courses at the lower undergraduate level. read more

Principles of Economics is impressive and extremely comprehensive. It covers interesting and current topics that are suitable and relevant for any principles of Microeconomics and Macroeconomics courses at the lower undergraduate level.

The textbook is accurate, error-free, and unbiased. The contents can be used to raise issues at the national and international levels. This is important given that we navigate in the world with many social networks and connections.

Principles of Economics is up-to-date since it tackles several current economic topics such as environmental protection, poverty, inequality, healthcare, race, gender, immigration, among others. In future editions, I think topics such as protests, (social) justice, political polarization, pandemics (vaccines), and the future of the green economy might be useful for our undergraduate students. The text is written in such a way that it will not be tedious to implement such updates.

Clarity rating: 5

The text presents a clear, concise, and accessible approach for each concept. The lucidity in the writing makes the contents easily accessible to every student, including the one to which English might not be the first language.

The text is consistent in terms of both terminology and its framework. Principles of Economics is based on a solid pedagogical foundation. Each chapter builds on a case study and offers new facts and knowledge to extend the understanding of the current environment. The chapter ends with a summary of key terms, a brief summary of the contents, and assessments. The latter are arranged in a progressive path towards the learning goals. I think having some self-check questions at the end of each topic might also help. In the text, all problems and questions are relegated to the end of the chapter.

The text is easily and readily divisible into smaller reading sections that can be assigned at different points within the course.

The text covers several relevant topics that are presented in a logical, and clear fashion.

Principles of Economics is free of significant interface issues, including navigation problems, distortion of images (or charts), and any other display features that may distract or confuse the reader.

I did not find any grammatical or mechanical errors that could cloud meaning.

The textbook covers a range of issues on immigration, gender, race with facts, and no bias at the national or international focus. Examples used are relevant and are not culturally insensitive or offensive in any way.

Overall, Principles of Economics is an excellent textbook for all students in a face-to-face introduction to Microeconomics and Macroeconomics courses at the undergraduate level. The text is up-to-date, concise, clear, consistent, accurate, and it covers relevant topics with a national and international focus. The text also presents additional materials, such as the use of mathematics in economics, to complement the intuitive and applied sections. Finally, the text is well organized so that instructors can easily select appropriate contents to be covered in a full semester.

Reviewed by Jay Leung, Instructor, Bunker Hill Community College on 7/13/20

The textbook covers most of the intro-level mainstream microeconomic topics. An honors level microeconomics course would consider a textbook that was more advanced and in-depth. read more

The textbook covers most of the intro-level mainstream microeconomic topics. An honors level microeconomics course would consider a textbook that was more advanced and in-depth.

The content is accurate.

Photos and real-world examples would need to be regularly updated.

Clarity rating: 3

The text is written in an easy-to-read manner. However, the book would benefit significantly from graphic design overhaul. The graphs are too small in size and lack color. The use of color would illuminate the various cost curves. Math equations could be typeset more clearly by using a different font and improved layout. Table data could be laid out more clearly.

The textbook is consistent in its use of terminology.

The chapters can be used in the same groupings as other microeconomics textbook.

The chapters are organized in a standard way.

There are no issues with the interface.

I didn’t find any grammatical errors, but there are quite a few typos.

I didn’t find anything that was culturally offensive. Many of the examples are quite dated though. Note that the textbook is from an American perspective.

OER is a very worthy project. I root for its success. The prose of the book is very approachable; however, the graphic design including the text layout makes this textbook not ready for primetime. Although the free price tag of this book is attractive, the lack of integration between the explanations and the graphs (e.g. no use of color) detracts from the effectiveness of the textbook.

Reviewed by Damindi De Silva, Adjunct Professor, Quinsigamond Community College on 6/29/20

The text covers all areas and ideas of the subject and provides an effective index and/or glossary. The text can be used as a required text at an Introductory level Microeconomics course at College level. read more

The text covers all areas and ideas of the subject and provides an effective index and/or glossary. The text can be used as a required text at an Introductory level Microeconomics course at College level.

Most part I found the text to be accurate and error free and unbiased. But I would like to mention the following as improvements to the text. The Figure 1.2 on page 11 shows a picture of absolute poverty rather than scarce resources for me. Scarcity is a relative term and the picture on the figure shows an absolute concept. Students will surely get confused as to scarcity is something like poverty. Scarcity is limited resources to fulfill unlimited wants. Scarcity is prevalent everywhere even among the rich. So I wouldn't put that figure 1.2 as scarcity. Another improvement that I suggest is to explain absolute advantage and comparative advantage where the explanation of specialization and division of labor is mentioned. If Trade and Markets are introduced in page 14 some understanding about absolute and comparative advantage should be mentioned at that point. This can be connected to the Chapter on International Trade later on. I like how the cost curves and product curves are well explained in chapter 7. However on page 199 it would be great if another two diagrams are used after Figure 8.6 showing the shaded areas such as contribution towards covering fixed cost in the short run and the loss areas when price goes below Average Variable Cost. The Chapter on Oligopoly could be expanded with sub topics as price wars and non price competition. Since this market is a very interesting market more examples from different countries could be used. In the chapter on Monopoly a dead weight loss diagram comparing perfect competition and monopoly firms, a diagram to show Allocative inefficiency and sub topic on price discrimination would complete that chapter well.

Content is up- to-date on most part but Table 1.2 and many other tables could be updated. The text is written in such away that necessary updates will be relatively easy and straight forward to implement.

The text is written in lucid, accessible prose and provides adequate context for any jargon/technical terminology used.

The text is internally consistent in terms of framework.

The text is easily and readily divisible into smaller reading sections that can be assigned at different points within the course (i.e., enormous blocks of text without subheadings should be avoided). The text should not be overly self-referential, and should be easily reorganized and realigned with various subunits of a course without presenting much disruption to the reader.

The topics in the text are presented in a logical, clear fashion. But in Chapter 3 I would include a section on distinction between movement along and the shifts of demand and supply curves. Also an explanation on how excess demand and excess supply moves towards a market equilibrium will be a needed addition to page 50 on Chapter 3. The features such as Link it Up, Work it Out, Bring it Home, Key terms, Key concepts and summary,Review Questions, Critical Thinking questions, Problems at the end of each chapter are great features.

The text is free of significant interface issues, including navigation problems, distortion of images/charts, and any other display features that may distract or confuse the reader. The Link it up feature is great feature. Videos and articles both could be used for this feature.

the text contains no grammatical errors.

The text is not culturally insensitive. But I would not include Table 1.2 with countries like China. Based on the national income categorization China is a upper middle income country and India is a lower middle income country. Tables like table 1.2 can be culturally sensitive especially in an era where trade wars and controversies are happening with this country.

Education resources such as these texts are way of bridging the gap between the divided world. Especially texts on Economics can be used to do this bridging very well. I would use many examples from around the world in my classes of Macro and Micro Economics. When using countries as examples I would be cautious as to what the essence the students will bring home. Overall this text has done great justice in building a text of Principles of Microeconomics. I recommend it to Instructors for an introductory level course at College level.

Reviewed by David Ornstil, adjunct lecturer, University of Massachusetts Lowell on 6/17/20

This principles textbook covers all areas generally taught in a principles of microeconomics course as well as including chapters on social welfare and behavioral economics. Theories are thoughtfully presented and easy to read with many examples... read more

This principles textbook covers all areas generally taught in a principles of microeconomics course as well as including chapters on social welfare and behavioral economics. Theories are thoughtfully presented and easy to read with many examples that students will enjoy reading about.

All information appears to be accurately presented and covers many subjects that might be considered controversial but are explained in a neutral, unbiased manner

There are plenty of examples of companies and policies that are current, However, a number of the tables offered need to be updated with current statistics. Many end in 2015 or before. By early on offering the availability of the FRED website students will be able to take the tables used in the text and update the information to make it more relevant.

This textbook is extremely well written and clearly explains the topics offered. Students will find the readings easy to follow.

A great framework for presenting the material. Each chapter gives an overview of the material then proceeds to follow that outline step by step. Each chapter ends with a glossary of terms used for easy reference and questions that are thought provoking. However, I found some of the graphs difficult to follow as they are one color and not bold enough to present a clear understanding of the graphical presentation. Found that the switch back and forth between linear and non linear graphs might be somewhat confusing for the students.

This textbook will be easy to divide into sections that can be brought forward or pushed back as you organize your class structure.

I found the position of some chapters very curious. I would have talked about elasticity before government involvement and international trade much earlier when looking at consumer and producer surplus.

Interface rating: 4

As mentioned above the only complaint I have is the presentation of the graphs. They need to be bolder and more consistent in shape.

no major grammatical errors

The textbook is neutral in its presentation

This textbook can easily be adapted to cover any topic covered in a Principles of Microeconomics course

Reviewed by Colin Jareb, Graduate Student, University of Colorado Boulder on 6/11/20

The textbook covers all of the sections that are expected for a principles class. Further extensions into financial markets, income inequality, and political economy are covered well. There is a nice index with links to the appropriate pages,... read more

Comprehensiveness rating: 3 see less

The textbook covers all of the sections that are expected for a principles class. Further extensions into financial markets, income inequality, and political economy are covered well. There is a nice index with links to the appropriate pages, however there is no glossary with all of the key terms and definitions in one place; instead they are presented at the end of each chapter which could potentially make them difficult to find. A drawback of the way the material is presented is that trade is covered in the last two chapters; the concept of comparative advantage and the gains from trade are fundamental reasons that markets form and should thus be covered much earlier. Further, the authors introduce consumer, producer, and social surplus but neglect to tie these concepts to deadweight loss and market inefficiencies in subsequent chapters.

The graphs and diagrams are for the most part high-quality and accurate. There are some specific instances, for example the chapter on externalities, where the graphs presented don't flow with the material as well as they could. In the chapter on externalities the graphs do not clearly show that the social cost curve lies above the private supply curve as a result of the size of the externality. Otherwise, in the examples, clear it up, and bring it home sections material is presented well and in a non-biased manner.

The base content is up-to-date and in general the content taught in a standard principles class will not change frequently. Some of the examples and policy applications are somewhat out-of-date. For example, one example concerns Netflix charging for streaming and DVD rentals, which most college students won't really connect with as they don't consume DVDs anymore. Any economics textbook will have to deal with this dilemma and new editions and updates are straightforward; however, this book may be out of date within two or three years.

The text is well-written and easy to follow. Each chapter is structured well so that it is clear what topics are covered in which sections and the flow is sensible. The biggest issue I find is that some of the graphs and diagrams do not always align smoothly with the text that discusses the associated concepts.

Terminology and the flow of each chapter is consistent with each other. As mentioned previously there are some concepts that could easily be linked across chapters. The authors are consistent in that this content does not appear and disappear readily.

The book is modular. As noted earlier it may be very beneficial to in fact go out of order, for example, by teaching chapter 19 early in the course and linking this content to the production possibilities frontier and why markets form. Within chapters the introduction clearly lays out what is covered in each section and sections can easily be re-ordered or skipped.

Within chapters the content is well-organized, has a clear logical flow and hard-to-digest concepts are properly built and presented. As mentioned earlier, I would re-order some of the chapters if using this book to teach my class.

The textbook has several hyperlinks and qr codes that function properly. There are no noticeable distortions or errors that prevent delivery of the textbook content.

The book is well-written and does not contain noticeable grammatical or spelling errors.

Economics generally can tackle questions that are divisive and some of the topics in the book should be treated with care if presented in class. Having pointed that out, the authors are very objective in presenting these examples, applications, and concepts in a way that is unoffensive and culturally relevant.

Reviewed by Shengnan Fang, Economics Instructor, Linn-Benton Community College on 1/9/20

This textbook not only covers the major content for principles level class, but also introduces chapters related to industrial organization, labor economics, environmental economics and international trade. The index is hyperlinked, which is... read more

This textbook not only covers the major content for principles level class, but also introduces chapters related to industrial organization, labor economics, environmental economics and international trade. The index is hyperlinked, which is useful and efficient to locate the chapter accurately. Each chapter begins with a real world economic example or question in "Bring it Home" section, and it also ends with a detail explanations related to the examples or questions in "Bring it Home". This layout is efficient and helpful for students to catch up the application of the chapter content. Key terms, concepts and summary at the end of each chapter are also useful to help student better catch the main points.

The content is accurate. However, I want to point out that the graphs in Chapter 3 are little bit messy, especially on Page 53. The students might be confused to see the graph at the first time. In my opinion, it might be not necessary to put all the dots on the graph, and the numbers of arrows are more than needed. And this also shows on Page 48 and 49. You have already shown the demand schedule and supply schedule in tables, it might be much clearer to show two dots on the graph to explain how to draw the curves.

The textbook begins with a question to Facebook, which and catch students' attentions as they use it often. And this question can also make student realize that Economics is everywhere. I think the book content is up-to-date and policy relevant. For example, Chapter 12 introduces the environmental protection, and it uses the example of bottle bills, which is what we need to pay in Oregon. Therefore, it might be interesting to encourage my students' engagement to discuss it.

Overall, the text is written in lucid and accessible prose. But I still want to point out the layout of Chapter 3. It might be better to move Figure 3.2 on Page 48 to Page 47, which is easier to student to understand how to draw a demand curve based on the demand schedule. At the end of Page 51, it might be better to move the title 3.2 to next page. Too many pairs of price and quantity in graphs of Chapter 3 might be a little bit messy.

The book is consistent in terms of terminology and framework.

There are 20 chapters in this textbook. I think it might be a little bit more than my students. For example, after Chapter 3, the authors add Chapter 4 which mainly focuses the policy application of Chapter 3. And there are also some contents, such as Minimum Wage, repeating in Chapter 14. Chapter 12 and Chapter 13 introduce the negative and positive externalities, and it might be better to combine these two chapters into one chapter.

Each chapter is well organized. I like the "Introduction" at the beginning of each chapter. It highlights the questions needed to understand and gives me a guideline to go through the content.

Download the textbook online is easy and the hyperlinks and QR codes in "Link It Up" section work well.

I cannot recall any grammatical errors in the textbook.

I think there is no culturally offensive content.

As an instructor to community college students, I think the content of this textbook is up-to-date and easy to go through. However, for microeconomics, I think 20 chapters might be more for my students. For the section of "Link-It-Up", it might be better to put more video (less than 4 mins) to catch students' attention and improve their engagement.

Reviewed by Rupayan Gupta, Professor, Roger Williams University on 12/9/19

I find the book very comprehensive. Comparing with some of the leading published textbooks the coverage and depth are both comparable. Perhaps the section on Oligopoly could be expanded a bit with a few more examples. read more

I find the book very comprehensive. Comparing with some of the leading published textbooks the coverage and depth are both comparable. Perhaps the section on Oligopoly could be expanded a bit with a few more examples.

The subject matter is accurate and unbiased.

The book is relevant today and I believe it will be relevant long term.

I feel that the presentation of the material is lucid.

The subject matter is internally consistent.

Very well demarcated into modules for easy reading and understanding.

Nicely organized, though I would have had a better demarcation between monopolistic competition and oligopoly.

The book's interface is a little less attractive than some of the textbooks from traditional publishers. It is by no means bad, but students used to current levels of gloss might find the interface a bit drab. However, this has more to do with superficial presentation techniques than with real factors associated with learning. The less expense might make students more amenable to forgoing the catchiness of the product.

Grammatically correct

Not culturally offensive

It is a book that is thoughtful and comprehensive. It can compete on an equal footing with textbooks offered by traditional commercial publishers.

Reviewed by Zhongjin Li, Assistant Professor, University of Missouri - Kansas City on 12/14/18

The textbook covers most of the intro-level standard microeconomic materials and provides students a relatively full picture of the microeconomic landscape with real-world examples. I do hope it can incorporate more heterodox and historical... read more

The textbook covers most of the intro-level standard microeconomic materials and provides students a relatively full picture of the microeconomic landscape with real-world examples. I do hope it can incorporate more heterodox and historical perspectives and research, so students can be exposed to the arguments and contribution made by Institutionalists, Marxists, etc on a variety of topics in microeconomics and get the impression that many theories and issues are debatable and many terms have a historical context. I did use a real-world micro reader as a complementary text in teaching.

It's a quite standard intro-level microeconomics textbook. The mainstream interpretation in microeconomics is accurate.

I would like to see more updates in the chapter on international trade.

The text is written in lucid, accessible prose. It may be better to include more real-world examples, debates, and data, so students can feel more involved, especially on issues directly related with a college campus, such as a tobacco ban, contingent labor form, and student debt.

The text is quite consistent in terminology and the general framework.

I was not able to teach the entire book in one semester, so a few later chapters were skipped, but students had no problem to do the readings.

The topics are organized in a standard way.

My students, in general, feel the textbook quite easy to navigate.

The text contains no grammatical errors.

The text is not culturally offensive.

Given the high price of other standard non-open source textbooks, I think this textbook does a fairly good job as a substitute. I would recommend instructors to consider adopting this book while at the same time using a more non-standard book/reader (collection of short essays) as a complementary (but also required) piece of readings.

Reviewed by Pablo Hernandez, Associate Professor of Economics, Hollins University on 5/21/18

This OER text offers readers a comprehensive breadth of topics from an introductory standard microeconomics perspective. This text features a table of contents, index, end-of-chapter key terms, and a comprehensive chapter/topic list of references. read more

This OER text offers readers a comprehensive breadth of topics from an introductory standard microeconomics perspective. This text features a table of contents, index, end-of-chapter key terms, and a comprehensive chapter/topic list of references.

Content Accuracy rating: 3

Content is accurate and error-free. The book is biased toward an assessment of economic outcomes from market approaches and fairly free-market driven processes. Early in their careers, young aspiring economists ought to be exposed to an understanding of the enclosure of the commons and the overriding importance of alternative property regimes. “Because things are driven by tradition, [DOES NOT NECESSARILY MEAN] there is little economic progress or development”. (Principles of Microeconomics, p. 15. My emphasis) Conversely, self-sustenance and small-scale farming – elements under a “traditional economy”- are considered key bottom-up principles for the conservation of natural capital and a revitalization of the commons.

Relevance/Longevity rating: 3

Content is up-to-date and policy-relevant. The relevance may improve should alternative policy examples be included in areas such as international migration; forced migration due to global climate change, a juxtaposition of views surrounding controversial economic theories or themes related to microeconomics (i.e.: environmental and natural resources economics views versus ecological economic views concerning natural capital).

Prose is clear. Use of jargons and techncal terminology is limited. Although diagrams may seem a bit convoluted at first sight. Authors may removing so many quantity,price numbered pairs, particularly under chapter 3: Demand and Supply.

Book is consistent based on approach (standard microeconomics) and terminology.

Modularitty is evident from the beginning of the text, as authors offer alternate sequencing. Also, more advanced topics may be read and discussed without significant prior knowledge in microeconomics.

Topics are presented in a logical and consistent manner. Text structure is fine.

The text's interface is also fairly nimble. Navigation (online or on downloaded PDF version) is smooth.

I can't recall any grammatical errors.

Cultural Relevance rating: 3

Text may offer cultural or "traditional economy" insenstivity. Refer to above case concerning "traditional economy".

Reviewed by Aida Odobasic, Assistant Professor , University of Delaware on 2/1/18

Principles of Microeconomics textbook covers the breath of microeconomic topics from introduction to the subject, to development of the main model of demand and supply, fundamentals of the microeconomics theory, microeconomic policy issues, and... read more

Principles of Microeconomics textbook covers the breath of microeconomic topics from introduction to the subject, to development of the main model of demand and supply, fundamentals of the microeconomics theory, microeconomic policy issues, and it finishes by introducing international economics. It covers everything typically covered in the introductory microeconomics course. Index is hyperlinked, which makes it efficient. The book is well organized. Each chapter has a 'Clear It Up' sections where the most typical misconceptions are addressed. Additionally, there are review and practice problems at the end of the chapter, along with summaries, and key terms.

The examples used are relevant and current. Hyperlinks to different websites where examples came from are provided for further reading. Definitions and explanations are straightforward and accurate. The data used in numerous examples is current as of 2015.

The book uses examples and data from 2015. The examples are carefully picked. The textbook will stay current for the number of years. For example, oil price changes in the US economy will always be a topic of interest that captures students attention regardless when the particular price change discussed took place. Number of examples are about the US economy.

The text is straightforward and easy to understand. Explanations are clear. For example, the text provides one of the best explanations for the concept of perfectly elastic demand that I have ever read in a principles textbook. I put special focus on topics that students usually have troubles grasping, such as elasticity, and I am excited to introduce this textbook to my principles class this winter and see how students react to it.

I did not find any inconsistency in terms of terminology and framework.

The text is divided into 20 chapter. Each chapter is subtitled and organized by topics. Examples are provided throughout the text. The organization of topics is organized in a way I typically use when I teach the material. Depending on the class, instructor can chose to skip some of the later chapters on policy issues without disruption to the reader.

I found the text easy to read and interesting, well organized in a logical order. The effort that went into producing this text is admirable.

I downloaded the pdf version of the textbook without any issues. I used hyperlinks for internal end external materials without any problems.

I found no grammatical errors while reading the text.

I did not find text offensive. It is geared mostly to the US audience, but without favoritism or bias. Authors are from the US and they use examples from their own frame of reference, which is as expected.

I enjoyed the text and I am going to adopt it in my principles class. I would like to thank the authors and everyone involved for the time and effort they devoted to creating a high quality textbook.

Reviewed by John Brouwer, Principal, Eton College on 5/8/17

The text covers all the areas and ideas of Macroeconomics that one would expect to find at the introductory level. The subjects are clear, easy to follow, relevant with applied examples. Global examples are used through the lens of US laws and... read more

The text covers all the areas and ideas of Macroeconomics that one would expect to find at the introductory level. The subjects are clear, easy to follow, relevant with applied examples. Global examples are used through the lens of US laws and economics. No index or glossary was provided with the version that was reviewed.

Text is accurate, error-free, but does have a bias towards US law and economics. Many of the case studies are global in origin, which are excellent, however, the authors always return to the effects towards the US, or if a US case study is examined there is very little mention of the effect towards the Canadian economy.

The content is up to date and should constantly be up dated to truly connect the student to the learning objectives as they effect the global economies of today. Generally the text will not become obsolete in a short period of time yet the authors will need to either update the data within the text or provide updated links to the already numerous web sites referred to within the text.

The authors use a story telling format that is easy to read and comprehend.

The text is consistent in terminology and framework. The early chapters are well setup providing foundational information for the each of the subsequent chapters. Each chapter progressively provides the learner with more challenging concepts, language, and equations.

The text builds upon each chapter that provides effective information to the reader to continue. There are many reading sections with each followed by "Key Takeaway" statements and "Checking Your Understanding" questions. It may be difficult for those not familiar with economic concepts to not read the chapters sequentially.

Story telling format; the reader is provided with fundamental economic realities in the world using examples that are relevant to people in general. The foundational concepts are discussed before the math and graphs are introduced hence the reader has already seen the "what's in it for me" reality.

No problems were found.

Grammatical Errors rating: 4

None were found.

The text does not appear to be insensitive or offensive in any way. As the text is focused to US learners, students from other countries, such as Canada, may not feel that this is relevant to their history, or future.

The text is well laid out as is the content but the text should be entitled: Macroeconomics: Theory in Application from a US Perspective. Web links worked as did page reference links (there was a request to register to Flatworldknowledge.com which I did not do). The international examples are excellent for any student to use. Overall the text would be excellent if there was a considerable amount of Canadian content added. The reason for this is that while economic policies appear to be similar between Canada and the USA, the decision making is different.

This review originated in the BC Open Textbook Collection and is licensed under CC BY-ND.

Reviewed by Anna Antus, Adjunct Professor, North Hennepin Community College on 4/11/17

The textbook is very comprehensive. It covers all topics covered in most principle of microeconomics courses and more. It has great index of the whole textbook and glossary attached to each chapter. It provides with good order of all major areas... read more

The textbook is very comprehensive. It covers all topics covered in most principle of microeconomics courses and more. It has great index of the whole textbook and glossary attached to each chapter. It provides with good order of all major areas covered in principles of microeconomics. I like organization of the topics as they follow most of the main stream textbook order of concepts.

After reading the textbook I could not find any errors or lack of accuracy in the textbook. Great link and updated stories attached in the body of the textbook. I really like the "Link it Up" section that bring accurate and updated stories to the students attention.

The content is relevant and up-to-date. It might be that the chapters (some of them) are a little too long. I might not be to objective as I am mostly teaching hybrid accelerate courses and the longevity of each textbook chapters are sort of important to me. But I like the section "Clear it Up" and "Work it Out" as a great resource for students regardless if the class is online or face-to-face.

I think the text is written with very clear language with some technical terminology that is necessary for better and clear understanding of economics.

The text is very consistent in using the same terms and framework through all the chapters.

The text has some flexibility and modularity as it can be assigned at different points within the course. Well organize with plenty of flexibility to reorganize the order of the assigned material.

The topics are presented in a logical, clear order following most of the main economics textbook like Krugman or Mankiw.

I have downloaded the text in PDF to better navigate on my computer (as being bigger file it was slowing down my navigation on line) and using PDF file I have not noticed any interface problems. It was not having any distortion of images/charts etc.

I did not detect any grammar issues in the textbook myself.

I have not found any cultural insensitive issues or examples that would have improper cultural relevance.

Very well done textbook. I might use it in the future in my classes.

Reviewed by Joseph Schoen, Lecturer, Anoka-Ramsey Community College on 4/11/17

The textbook covers the major content areas covered in a Principle of Microeconomics course. The index and the glossary are just as good, if not better, than those found in other textbooks. On top of the topics you come to expect in any... read more

The textbook covers the major content areas covered in a Principle of Microeconomics course. The index and the glossary are just as good, if not better, than those found in other textbooks. On top of the topics you come to expect in any Microeconomics textbook, other relevant topics are also included later in the book, such as risk and insurance, issues in labor markets, and financial markets.

Even though the textbook goes into many examples and additional areas of Microeconomics, little was found in terms of errors. The textbook seems to be unbiased in its presentation, but that would be more of a concern in a Macroeconomics textbook. Typing errors are very rare, and most likely will not be noticed by most readers. Overall, the textbook was found to be accurate throughout.

The textbook does have lots of relevant examples throughout, which is one of its strong points, but with that comes the issue of ensuring that these examples are updated as time goes on, which may have implications on the books longevity. When it comes to the core issues covered, the textbook is again relevant and the longevity issue becomes much less of a concern.

The textbook is written at a level appropriate for the expected audience. Plenty of context is given for the economic terminology that is presented throughout the book. The structure of the chapters makes the textbook very approachable, and provides a good structure in explaining the complicated concepts that can arise in a microeconomics course.

The book is consistent in its chapter structures and general layout. After the first few chapters, students will know where to look in a chapter for additional resources (list of key terms, self check questions, etc.) and what to expect in these resources.

The textbook breaks the topics up in an appropriate matter that makes it easy for the instructor to "bounce" around the textbook as they see fit. The textbook also mentions how the material to be covered in a particular section may relate to other topics within the book.

Great structure overall. The text starts with the fundamental concepts that are typically covered in a Principles of Microeconomics course and builds off of them nicely as it progresses through the topics. If the instructor finds the structure doesn't necessarily follow the way they would normally address the topics, the textbooks modularity makes it easy for them to organize it in a way that works for them.

Interface rating: 1

Overall, the books interface seems to be adequate for the topic, but also its weakest area. It would have been nice for the graphs to be bolder in color and professional looking. For instance, the graphs of supply, demand, and market equilibrium are all monotone with thin lines. This becomes even more of an issue when looking at the graphical representation of profit maximization in later topics. Adding more color would go a long way.

Very few grammatical errors were found throughout the textbook.

The textbook is not culturally insensitive or offensive. Like many other economic textbooks, it does address some controversial issues to lure the reader in, but does so in a way that avoids issues of insensitivity.

Overall a good textbook. It has smooth transitions from one topic to the other and interrelates the areas covered nicely. The graphs could be improved upon though, but this does not make or break the textbook.

Reviewed by Janice Kinghorn, Senior Lecturer, Miami University on 8/21/16

The text covers all the learning objectives required for an introductory microeconomic theory course. Examples extend the content to topics such as supply and demand in financial and labor markets, and antitrust policy. Additional chapters at... read more

The text covers all the learning objectives required for an introductory microeconomic theory course. Examples extend the content to topics such as supply and demand in financial and labor markets, and antitrust policy. Additional chapters at the end of the text provide extensions into current topics such as poverty and inequality, unions, discrimination, and immigration. Chapters on public economics and financial markets are a nice addition for an instructor who wants to extend the typical micro theory content.

I did not find any material mistakes in the text. I was pleased with how more controversial topics were presented. The books gave facts and introduced methods of analysis without betraying a bias.

Examples are quite up to date. Some of the latest data in graphs were 2010 or 2012. Material in the international trade section will need to be updated by an instructor or a future edition.

The writing seems to be very clear and straightforward. Disciplinary specific terms are defined and placed in context but may need to be pointed out by an instructor.

The book is quite consistent - each chapter's layout is similar thus increasing the clarity for a student.

The book is broken down into short modules within chapters. Each chapter begins by placing it in the context of the course material and referring to other places in the text where it may be integrated. An instructor should have no difficulty using individual chapters.

The books begins with production possibility frontiers, incorporating budget lines in that content, then proceeds to supply and demand analysis. Examples from labor and financial markets reinforce supply and demand analysis before proceedings to elasticity and consumer choice. The next section of the book discusses industry structure and includes antitrust policy. The text then introduces externalities in the context of environmental protection and public goods. Finally, issues such as poverty, labor market issues, information, public economics are covered. The book ends with a section on international trade and globalization.

I reviews a print copy of the text that was professionally presented.

I did not observe any grammatical errors in the text.

Most examples in the text were from common firms or products (Amazon, the cotton industry, TSA, etc.).

Reviewed by Alexandra Nica, Lecturer, The University of Iowa on 1/7/16

The textbook overall is very comprehensive, it covers all the areas of study and concepts that are typically covered in a Principles of Microeconomics course. The amount of information included in this book is impressive and some of the chapters... read more

The textbook overall is very comprehensive, it covers all the areas of study and concepts that are typically covered in a Principles of Microeconomics course. The amount of information included in this book is impressive and some of the chapters actually have more information than a typical textbook of this level. There are also chapters that are not necessarily covered in this type of class (mostly due to time constraints), however they are well presented in general and quite a great resource for instructors and students who want to include more and relevant material in their coursework. As with any other textbook there are also a few minor shortcomings. Some of the chapters can be a little longer than anticipated, which could have a distracting side effect on students. For example the introductory chapter does a good job of going over a lot of the topics that will be covered, but it feels as if it goes into too many details right from the beginning. It also talks about a few Macroeconomics issues that won’t be part of the textbook as it goes along, so it feels more of an introductory chapter to a Principles of Economics book. Another example is the presentation of the budget constraint, which appears in the same chapter as the presentation of the production possibilities frontier (to reflect choice for consumers versus choice for society) and then appears again in the consumer choice chapter. It is a more unusual way to present this topic, as typically the budget constraint and utility go together without having to refer back to another chapter. It is by no means a big problem, just an observation. Some other less typical groupings are negative externalities and positive externalities treated in separate chapters, grouped with other concepts (environmental protectionism and public goods respectively). This particular approach could potentially be a little confusing to students, especially since the Coase Theorem is not treated in a lot of detail. All chapters in general are well constructed. There are a few other concepts/details in some of these chapters though that miss certain aspects that one would expect to see. For example the elasticity chapter does not cover the details of elasticity along a demand curve. The oligopoly chapter does not have a detailed preliminary discussion on game theory and its elements before presenting actual game setups. Also, the monopoly chapter does not go into a lot of detail on the inefficiency and deadweight loss that results from a monopoly. There is also no discussion on price discrimination and it would have been great to see more explanatory graphs in here. There is however a separate chapter on monopoly and antitrust law and cases, which is well presented, if albeit slightly long. One last observation is related to the production side (i.e. the chapters on costs and perfect competition), which seem a little disjointed, with some aspects that we would expect to see in one chapter presented in the other. Other chapters are particularly well done and the concepts are very nicely and clearly explained, some with unique approaches (e.g. the supply and demand chapter, the labor and financial market chapters, the more unique labor market related chapter concentrated on unions, immigration, discrimination, the international trade and globalization chapters, the asymmetric information and risk chapter, the poverty and inequality chapter and the public economy chapter). There are also three Appendices included with this book, which are very useful. One covers the mathematics needed to understand all the concept explanations and applications, one covers a thorough presentation on indifference curves including a step by step explanation on income and substitution effects. The third appendix covers a presentation of present value calculation methods. Answers to review questions are provided as well, which can be extremely useful to students for self-assessment and better understanding of concepts. The PDF version of the book provides a comprehensive index at the end of it. The online version of the book has a glossary at the end of each of the modules from each chapter, which comes in very handy.

From what I have seen, the content of the book is accurate and error free. There are a few rare typos, but nothing that would distract the reader from the material. It also does not seem to be biased even though it covers some controversial topics in a few chapters, however it is in a manner of stating facts, not choosing sides, which is the most important distinction. There could be the argument that many examples are related to the US economy, however they contribute to the relevancy of the topic discussed. All examples included are very well chosen and one of the strong points of the book.

The book contains many current examples/cases/information, which is a big plus especially for a Microeconomics text that contains a lot of theory and many times it does not need frequent updates because of this reason. This book however has many examples and I think that from the way the book is structured and the manner in which these cases are included in each chapter, it would not make it too hard to keep them up to date. And it would have the added benefit that it would refresh the content and make it especially interesting to current and future students

Here is where this textbook excels in almost every chapter. The material is presented very clearly and in a very approachable style. There are learning goals listed at the beginning of each chapter and at the beginning of each of the subsections of said chapter as well, which is a great way to keep everything on track and make it clear to students what they should expect to know after reading that particular part of the material. The book gives a lot of examples, uses current information and data and clarifies concepts very well in this manner. It addresses the students directly and almost has the feel of the instructor talking to the class when reading it. It contains many step-by-step explanations of concepts and graphs and clarifies even elementary notions without giving the sense of simplifying things too much. It achieves a good level of interactivity (so to speak), because it breaks the text down in several ways. Each chapter has a “Bring it Home” example or case at the beginning and at the end of the chapter. It also contains “Work it Out” sections with solved problems relevant to the concepts presented. There are “Link it Up” sections that contain a link to a real world case or example relevant to the concept studied. And also there are “Clear it Up” sections that describe well many of the concepts that tend to be challenging to students at the beginning. In the online version of the book, these sections are not titled in that manner, but start with a “NOTE”, which does not provide the same level of detail. The PDF version’s notation is preferable from this point of view, to keep student’s interest high. Also each chapter contains key concept summaries at the end of it, self-check questions, review questions and critical thinking questions. All of these add to the clarity and understanding of the concepts studied.

The text is consistent in terms of terminology and framework, the presentation as well throughout the book with only a few exceptions that I mentioned in the comprehensiveness part of this review.

The way the text is separated in the sections mentioned above (in the “Clarity” part of the review) makes it very engaging and interactive for students. This way the student has the opportunity to read the material pertaining to a specific concept, relate it to a real-world example and also try a problem that would help deepen the understanding of that concept. It also helps by not making all the material in a chapter too overwhelming to go through. In the online version of the book, the modularity aspect is even more prevalent, because each chapter is separated in modules, each module containing a glossary, references and review questions at the end of it (whereas the PDF version has all the review questions at the end of the chapter, together with key concept reviews, self-check questions and critical thinking questions).

Organization/Structure/Flow rating: 3

Some of the chapters of this book are not organized in a typical manner. I gave a few examples of this in the comprehensiveness part of the book (e.g. the externalities chapters, the monopoly chapters, some of the production side details, consumer choice details etc.). As an instructor, it would be easy to assign them in different order to students or combine the relevant information from some of the chapters. However for students who are looking to improve their economic knowledge and use the book outside of a class structure, it might prove a little more challenging to keep some of these related chapters and concepts organized.

There was only one issue that I encountered with the PDF version of the book. The links from the “Link it Up” section are not easily followed directly from the text (or copy/pasted in a browser). This is not an issue for the online version of the book.

There were only very few (very minor) errors spotted throughout the book, but nothing that would distract or keep students from using the textbook.

The textbook does not seem culturally insensitive or offensive, even if it covers some topics that could be considered controversial. However as I mentioned before, they are presented as facts in a relevant discussion surrounding the concepts covered, not as opinions, so it does not qualify as culturally offensive or insensitive. Many of the examples are focused on the US economy, however there are also international aspects and examples presented.

Overall, the textbook is a very pleasant surprise, with all relevant Microeconomics topics covered and in a comprehensive and clear manner. I especially like the approachable style and the structure that I think will keep students engaged and enthusiastic about the material, which is no small feat to accomplish from an introductory economics text.

Table of Contents

• Chapter 1: Welcome to Economics!
• Chapter 2: Choice in a World of Scarcity
• Chapter 3: Demand and Supply
• Chapter 4: Labor and Financial Markets
• Chapter 5: Elasticity
• Chapter 6: Consumer Choices
• Chapter 7: Cost and Industry Structure
• Chapter 8: Perfect Competition
• Chapter 9: Monopoly
• Chapter 10: Monopolistic Competition and Oligopoly
• Chapter 11: Monopoly and Antitrust Policy
• Chapter 12: Environmental Protection and Negative Externalities
• Chapter 13: Positive Externalities and Public Goods
• Chapter 14: Poverty and Economic Inequality
• Chapter 15: Issues in Labor Markets: Unions, Discrimination, Immigration
• Chapter 16: Information, Risk, and Insurance
• Chapter 17: Financial Markets
• Chapter 18: Public Economy
• Chapter 19: International Trade
• Chapter 20: Globalization and Protectionism

Ancillary Material

About the book.

Principles of Economics 2e  covers the scope and sequence of most introductory economics courses. The text includes many current examples, which are handled in a politically equitable way. The outcome is a balanced approach to the theory and application of economics concepts. The second edition has been thoroughly revised to increase clarity, update data and current event impacts, and incorporate the feedback from many reviewers and adopters.

Changes made in  Principles of Economics 2e  are described in the preface and the transition guide to help instructors transition to the second edition. The first edition of  Principles of Economics by OpenStax is available in web view in the ancillaries

About the Contributors

Senior Contributing Author

Timothy Taylor , Macalester College

Senior Content Expert

Steven A. Greenlaw , University of Mary Washington

Senior Contributors

Eric Dodge , Hanover College

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ECON101: Principles of Microeconomics

Course introduction.

• Time: 32 hours
• College Credit Recommended ($25 Proctor Fee) -->
• Free Certificate

When discussing the economy, we refer to the marketplace or economic system where the choices of all economic agents interact. This course explores how and why we make economic decisions and how our choices affect the economy. Each unit is a building block. By the end of this course, you will be able to grasp the major issues microeconomists face, including consumer and producer behavior, supply and demand, how different markets function, and the welfare outcomes of consumers and producers. We also examine how formal principles and concepts apply to real-world issues.

Course Syllabus

First, read the course syllabus. Then, enroll in the course by clicking "Enroll me". Click Unit 1 to read its introduction and learning outcomes. You will then see the learning materials and instructions on how to use them.

Unit 1: Introduction to Economics

This unit sets the stage for our journey into the principles of microeconomics. We begin by defining economics and its foundations, emphasizing the concepts of scarcity, choice, and opportunity cost and the need for economic models and theories. Next, we delve into the trade-offs economic agents face when confronting scarcity and applying marginal analysis in their decision-making processes. Once we have discussed the introductory economic toolbox, we finish this unit by introducing basic economic models.

Completing this unit should take you approximately 5 hours.

Unit 2: Supply and Demand

In this unit, we introduce the demand and supply model and the resulting market equilibrium for price and quantity. We will explore how markets are constantly affected by changes that affect prices and quantities. If the market is unaffected by failures or government intervention, we will see that prices and quantities tend to move toward the equilibrium benchmark.

"During the last decades, several challenges have significantly affected the egg industry, such as the increasing consumer demand for animal welfare, the need for more sustainable food production, and the growing human health and food security issues related to egg consumption." (Agnese Rondoni et al., Trends in Food Science & Technology, 2020)

When you finish this unit, you will be able to analyze how these changes affect the prices of eggs and the quantity of eggs available in the market.

Unit 3: Elasticity and its Applications

In this unit, we delve into the concept of elasticity and its practical applications for how firms make pricing decisions and how governments analyze and make policy decisions. Put simply, elasticity measures responsiveness. It helps us understand why Netflix increases their prices for their Standard and Premium tiers more frequently, compared to their entry-level Basic plan. Government analysts also rely on elasticity to determine the extent of tax increases.

We can apply elasticity to demand and supply analysis. Elasticity measures how quantity responds to changes in the price of the product, the price of related goods, income, advertising, and more. Once you grasp the concept and its basic calculations, applications of elasticity in economic analysis are nearly limitless.

Completing this unit should take you approximately 4 hours.

Unit 4: Markets and Maximizing Individual Behavior

You are now familiar with the workings of the market. You understand how changes in demand or supply affect prices and quantities for firms and consumers. In this unit, we revisit the demand and supply model to explore economic efficiency. Economic efficiency occurs if "the optimal amount of each good and service is produced and consumed."

We introduce the concepts of consumer and producer surplus to analyze how free markets increase overall welfare. Then, we apply these concepts to analyze the effects of price controls on prices, quantities, and market efficiency.

The market, on its own, does not always allocate resources efficiently. Economists talk about market failure when it falls short. We analyze how the government can alleviate these market failures.

This unit concludes with an introduction to the causes and ramifications of income inequality. While much debate exists on long-term inequality, economists can objectively measure the problem's scope and offer options to manage this economic phenomenon. Protracted poverty and inequality can cause long-term harm to an economy's development.

Unit 5: Introduction to Consumer Choice

As you know, consumers are driven by their unique preferences when they seek to maximize their satisfaction (utility) while considering their limited budgets. Despite the subjectivity of preferences, choices are also influenced by income and prices. This Unit introduces the economic theories behind consumer decision-making. We build upon the budget constraint concept from Unit 1 and demonstrate how economic theory helps predict consumption responses to price and income changes.

Completing this unit should take you approximately 3 hours.

Unit 6: The Producer

In this unit, we dive into the world of production. Our focus is on understanding the behavior of producers and the costs associated with their operations in the short and long run. In other words, we explore the relationship between the quantity of output a firm produces and the cost of producing that output. We also analyze the relationship between various cost functions and identify the production function's characteristics in different timeframes. This chapter lays the foundation for a deeper understanding of how businesses operate and make crucial production-related decisions.

Unit 7: Market Structure: Competitive and Non-Competitive Markets

In this unit, we study how firms operate and compete within different market environments defined by the degree of competition. We introduce the concept of perfect competition, an ideal model that serves as a benchmark economists use to analyze real-world market structures. The model of perfect (or pure) competition results in an efficient allocation of resources. However, unregulated markets (which are central to perfect competition) often fail to create desired outcomes in the real world. Economists refer to these situations as examples of imperfect competition.

Keeping the perfect competition model as the analytical benchmark, we transition to its polar opposite, the monopoly model. Following that, we venture into the realm of imperfect competition, encompassing two distinct models: monopolistic competition and oligopoly. Within the context of oligopoly, we introduce some concepts of game theory, such as the prisoner's dilemma model and the Nash Equilibrium.

Unit 8: The Role of the Government in a Market Economy

In this unit, we delve into how government intervention can address market failures, such as the existence of public goods, externalities, and income and wealth inequality. We analyze decision-making in the public sector, comparing public interest theory with public choice theory. Finally, we explore the Coase Theorem to determine whether private bargaining is preferable to government intervention when dealing with external effects.

Study Guide

This study guide will help you get ready for the final exam. It discusses the key topics in each unit, walks through the learning outcomes, and lists important vocabulary. It is not meant to replace the course materials!

Course Feedback Survey

Please take a few minutes to give us feedback about this course. We appreciate your feedback, whether you completed the whole course or even just a few resources. Your feedback will help us make our courses better, and we use your feedback each time we make updates to our courses.

If you come across any urgent problems, email [email protected].

Certificate Final Exam

Take this exam if you want to earn a free Course Completion Certificate.

To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt.

Once you pass this final exam, you will be awarded a free Course Completion Certificate .

Saylor Direct Credit

Take this exam if you want to earn college credit for this course . This course is eligible for college credit through Saylor Academy's Saylor Direct Credit Program .

The Saylor Direct Credit Final Exam requires a proctoring fee of $5 . To pass this course and earn a Proctor-Verified Course Certificate and official transcript , you will need to earn a grade of 70% or higher on the Saylor Direct Credit Final Exam. Your grade for this exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again a maximum of 3 times , with a 14-day waiting period between each attempt.

We are partnering with SmarterProctoring to help make the proctoring fee more affordable. We will be recording you, your screen, and the audio in your room during the exam. This is an automated proctoring service, but no decisions are automated; recordings are only viewed by our staff with the purpose of making sure it is you taking the exam and verifying any questions about exam integrity. We understand that there are challenges with learning at home - we won't invalidate your exam just because your child ran into the room!

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Once you pass this final exam, you will be awarded a Credit-Recommended Course Completion Certificate and can request an official transcript .

Saylor Direct Credit Exam

This exam is part of the Saylor Direct College Credit program. Before attempting this exam, review the Saylor Direct Credit page for complete requirements.

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• Version 4.0 | 09-2021
• Version 3.0 | 05-2017

Principles of Microeconomics

Included supplements.

Key Features

Teaching Principles of Microeconomics? Flat World gives faculty an open-license and online tools to personalize textbooks by expert authors at the word level. Finally, a textbook that precisely fits your syllabus and is fairly priced for your students.

TABLE OF CONTENTS

Supplements.

Interested in an online assessment tool for Principles of Microeconomics? We have that...it is called FLYX! Watch this demonstration here for more information on FLYX Online Learning and Assessment .

Listen to a podcast here of Libby discussing her textbook to gain perspective on her and Tim's text.

Flat World Knowledge is honored to publish a new, first edition re-launch of Tim Tregarthen’s wonderful principles of microeconomics textbook, and proud to bring Tim's incredible talents as a teacher back to life so future generations of students can continue to learn from him.

In 1996, he published the first edition of his principles of microeconomics textbook to great acclaim, and it became widely used in colleges around the country. That same year, MS made him wheelchair-bound. The disease forced his retirement from teaching at the University of Colorado at Colorado Springs in 1998. He lost the use of his arms in 2001 and has been quadriplegic ever since.

Tim never let his disease get him down. In fact, he turned back to his love of writing and teaching for inspiration. He obtained a voice-activated computer, recruited a co-author, Libby Rittenberg of Colorado College, and turned his attention to revising his principles of economics book.

Today we are excited to introduce Libby Rittenberg and Timothy Tregarthen’s Principles of Microeconomics. The authors teach economics as the study of ”choice ” by providing students with an accessible, straightforward overview of economics. This text combines the clarity and writing of Tregarthen's seminal periodical "The Margin" with great teaching insights.

Rittenberg and Tregarthen help students to understand how real individuals actually work with economics. In this new book, the authors illustrate the practicality and relevance of economics with a variety of new illustrations and insights.

The authors take a three-pronged approach to every concept: (1) the concept is covered with a ”Heads Up“ to ward off confusion, (2) a ”You Try It“ section makes sure students are staying on top of the concept and (3) a ”Case and Point“ section that uses a real-world application to harness the concept in reality. For one example of how this plays out in the text see "Chapter 3, Section 2 on Supply." here

This book is intended for a one-semester course in Microeconomics taught out the social sciences or business school.

• About the Authors
• Acknowledgments

Chapter 1: Economics: The Study of Choice

• 1.1 Start Up: Economics in the News
• 1.2 Defining Economics
• 1.3 The Field of Economics
• 1.4 The Economists’ Tool Kit
• 1.5 Review and Practice

Chapter 2: Confronting Scarcity: Choices in Production

• 2.1 Start Up: Tightening Security at the World’s Airports
• 2.2 Factors of Production
• 2.3 The Production Possibilities Curve
• 2.4 Applications of the Production Possibilities Model
• 2.5 Review and Practice

Chapter 3: Demand and Supply

• 3.1 Start Up: Crazy for Coffee
• 3.4 Demand, Supply, and Equilibrium
• 3.5 Review and Practice

Chapter 4: Applications of Demand and Supply

• 4.1 Start Up: A Composer Logs On
• 4.2 Putting Demand and Supply to Work
• 4.3 Government Intervention in Market Prices: Price Floors and Price Ceilings
• 4.4 The Market for Health-Care Services
• 4.5 Review and Practice

Chapter 5: Elasticity: A Measure of Response

• 5.1 Start Up: Raise Fares? Lower Fares? What’s a Public Transit Manager To Do?
• 5.2 The Price Elasticity of Demand
• 5.3 Responsiveness of Demand to Other Factors
• 5.4 Price Elasticity of Supply
• 5.5 Review and Practice

Chapter 6: Markets, Maximizers, and Efficiency

• 6.1 Start Up: A Drive in the Country
• 6.2 The Logic of Maximizing Behavior
• 6.3 Maximizing in the Marketplace
• 6.4 Market Failure
• 6.5 Review And Practice

Chapter 7: The Analysis of Consumer Choice

• 7.1 Start Up: A Day at the Grocery Store
• 7.2 The Concept of Utility
• 7.3 Utility Maximization and Demand
• 7.4 Indifference Curve Analysis: An Alternative Approach to Understanding Consumer Choice
• 7.5 Review and Practice

Chapter 8: Production and Cost

• 8.1 Start Up: Street Cleaning Around the World
• 8.2 Production Choices and Costs: The Short Run
• 8.3 Production Choices and Costs: The Long Run
• 8.4 Review and Practice

Chapter 9: Competitive Markets for Goods and Services

• 9.1 Start Up: Life on the Farm
• 9.2 Perfect Competition: A Model
• 9.3 Output Determination in the Short Run
• 9.4 Perfect Competition in the Long Run
• 9.5 Review and Practice

Chapter 10: Monopoly

• 10.1 Start Up: Surrounded by Monopolies
• 10.2 The Nature of Monopoly
• 10.3 The Monopoly Model
• 10.4 Assessing Monopoly
• 10.5 Review and Practice

Chapter 11: The World of Imperfect Competition

• 11.1 Start Up: eBay Needs Google, Google Needs eBay, and Neither Trusts the Other
• 11.2 Monopolistic Competition: Competition Among Many
• 11.3 Oligopoly: Competition Among the Few
• 11.4 Extensions of Imperfect Competition: Advertising and Price Discrimination
• 11.5 Review and Practice

Chapter 12: Wages and Employment in Perfect Competition

• 12.1 Start Up: College Pays
• 12.2 The Demand for Labor
• 12.3 The Supply of Labor
• 12.4 Labor Markets at Work
• 12.5 Review and Practice

Chapter 13: Interest Rates and the Markets for Capital and Natural Resources

• 13.1 Start Up: Building the “Internet in the Sky”
• 13.2 Time and Interest Rates
• 13.3 Interest Rates and Capital
• 13.4 Natural Resources and Conservation
• 13.5 Review and Practice

Chapter 14: Imperfectly Competitive Markets for Factors of Production

• 14.1 Start Up: Hockey Players Frozen Out
• 14.2 Price-Setting Buyers: The Case of Monopsony
• 14.3 Monopsony and the Minimum Wage
• 14.4 Price Setters on the Supply Side
• 14.5 Review and Practice

Chapter 15: Public Finance and Public Choice

• 15.1 Start Up: Where Your Tax Dollars Go
• 15.2 The Role of Government in a Market Economy
• 15.3 Financing Government
• 15.4 Choices in the Public Sector
• 15.5 Review and Practice

Chapter 16: Antitrust Policy and Business Regulation

• 16.1 Start Up: The Plastic War
• 16.2 Antitrust Laws and Their Interpretation
• 16.3 Antitrust and Competitiveness in a Global Economy
• 16.4 Regulation: Protecting People from the Market
• 16.5 Review and Practice

Chapter 17: International Trade

• 17.1 Start Up: Trade Winds
• 17.2 The Gains from Trade
• 17.3 Two-Way Trade
• 17.4 Restrictions on International Trade
• 17.5 Review and Practice

Chapter 18: The Economics of the Environment

• 18.1 Start Up: A Market for Carbon Emissions
• 18.2 Maximizing the Net Benefits of Pollution
• 18.3 Alternatives in Pollution Control
• 18.4 Review and Practice

Chapter 19: Inequality, Poverty, and Discrimination

• 19.1 Start Up: Poverty in the United States
• 19.2 Income Inequality
• 19.3 The Economics of Poverty
• 19.4 The Economics of Discrimination
• 19.5 Review and Practice

Chapter 20: Socialist Economies in Transition

• 20.1 Start Up: The Collapse of Socialism
• 20.2 The Theory and Practice of Socialism
• 20.3 Socialist Systems in Action
• 20.4 Economies in Transition: China and Russia
• 20.5 Review and Practice

Appendix A: Appendix A: Graphs in Economics

• A.1 How to Construct and Interpret Graphs
• A.2 Nonlinear Relationships and Graphs without Numbers
• A.3 Using Graphs and Charts to Show Values of Variables

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Libby Rittenberg Colorado College

Libby Rittenberg (PhD Rutgers University) is Professor Emerita of Economics at Colorado College. She also served as the Dean of Summer Programs as well as the college’s ombudsperson. As a professor, she frequently taught Principles of Economics, Intermediate Macroeconomic Theory, Comparative Economic Systems, and a senior seminar on the International Political Economy. Throughout her academic career, Libby was deeply involved in study abroad education and directed programs in central Europe and Turkey. She was honored to have been a Fulbright Lecturer. Her research has focused on the internationally oriented areas of economics, with numerous articles on comparative and development economics, and a particular emphasis on the Turkish economy. 

Timothy Tregarthen University of Colorado Colorado Springs

Timothy Tregarthen (PhD University of California, Davis) is Professor Emeritus of Economics at the University of Colorado-Colorado Springs. There is one word that captures the essence of Tim Tregarthen—inspiring. Tim was first diagnosed with multiple sclerosis in 1975, yet, he continued a remarkable academic career of teaching and research which includes an autobiography recounting his experiences with multiple sclerosis titled Suffering, Faith, and Wildflowers . Tim was formerly on faculty at University of Colorado-Colorado Springs. 

Browse Course Material

Course info.

• Prof. Jonathan Gruber

Departments

As taught in.

• Microeconomics

Learning Resource Types

Principles of microeconomics, 14.01 fall 2018 problem set 1.

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