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The exciting new eighth edition of PRICE THEORY AND APPLICATIONS delivers a text that will both challenge and intrigue students as it equips them with the tools and skills to apply economic principles to the world around them. Inductive, hands on, and highly interactive, the book is intellectually rigorous yet student-friendly, with countless applications and resources to help readers fully understand concepts. Using the same humorous, easy-to-read approach as his popular The Armchair Economist, Steven Landsburg offers thorough coverage of traditional topics of intermediate price theory as well as emerging issues, such as the economics of information. Social welfare is a unifying concept throughout.
- The new edition contains a greatly expanded version of indifference curves and budget lines, compares head taxes, income taxes, payroll taxes, and consumption taxes.
- An expanded and substantially rewritten treatment of income and substitution effects, giving even more emphasis than before to the mutual reinforcement between the economics and the geometry.
- The section on long-run supply curves and long-run competitive equilibrium is completely rewritten to put more emphasis on the intuition and how that intuition is reflected in the geometry.
- A new section on the crash of 2008-2009 emphasizes the possible role of adverse selection in the collapse of the financial markets.
- The material on externalities has been reorganized, putting more emphasis on practical policy issues.
- A new section addresses carbon abatement policies, comparing the effectiveness and desirability of Pigovian taxes, cap-and-trade systems, and direct mandates such as fuel-emission standards.
- The cutting-edge seventh edition thoroughly develops the standard topics of intermediate price theory as well as such innovative topics as the economics of information, alternative normative criteria, efficient asset markets, contestable markets, antitrust law, human capital, and the demand for public goods. It also uses the timely topic of social welfare as a unifying concept throughout.
- The microeconomic relationship to macroeconomics is illustrated throughout the text. Several purely “micro” topics are illustrated with “macro” applications, such as information, intemporal decision making, labor markets in general equilibrium, and rational expectations. The chapter on interest rates contains a purely microeconomic analysis of the effects of federal deficits.
- Extensive sections are devoted to topics excluded from many standard intermediate textbooks, such as alternative normative criteria, efficient asset markets, contestable markets, antitrust law, mechanisms for eliciting private information regarding demand for public goods, human capital, increasing returns in economic growth, the Capital Asset Pricing Model, and the pricing of stock options.
- This text contains an extended analysis of market failures, property rights, and rules of law (Chapter 13), including a detailed development of market failure using a series of extended examples as well as actual court cases. It also covers various legal theories from the point of view of economic efficiency.
- Price Theory includes an excellent assortment of both fictional and real-world examples. Many examples and exercises are based on fictional organizations. This encourages students to focus on the economic principle, application, and problem involved rather than the mechanics of a particular company. For instructors who prefer real-life situations, the seventh edition also includes 20 new real-world business examples, giving students an up-close view of microeconomics in the context of actual organizations.
2. Prices, Costs, and the Gains from Trade.
3. The Behavior of Consumers.
Appendix: Cardinal Utility.
4. Consumers in the Marketplace.
5. The Behavior of Firms.
6. Production and Costs.
8. Welfare Economics and the Gains from Trade.
Appendix: Normative Criteria.
9. Knowledge and Information.
11. Market Power, Collusion, and Oligopoly.
12. The Theory of Games.
13. External Costs and Benefits.
14. Common Property and Public Goods.
15. The Demand for Factors of Production.
16. The Market for Labor.
17. Allocating Goods Over Time.
18. Risk and Uncertainty.
19. What Is Economics?
Appendix A: Calculus Supplement.
Appendix B: Answers to Exercises.
Appendix C: Answers to Problem Sets.