Principles of Microeconomics 2e

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About Principles of Microeconomics 2e
Principles of Microeconomics 2e (2nd edition) covers the scope and sequence of most introductory microeconomics 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.

Coverage and scope
To develop the first edition of Principles of Microeconomics, we acquired the rights to Timothy Taylor’s Principles of Economics and solicited ideas from economics instructors at all levels of higher education, from community colleges to PhD-granting universities. For the second edition, we received even more expansive and actionable feedback from hundreds of adopters who had used the book for several academic terms. These knowledgeable instructors informed the pedagogical courses, learning objective development and fulfillment, and the chapter arrangements. Faculty who taught from the material provided critical and detailed commentary.

The result is a book that covers the breadth of economics topics and also provides the necessary depth to ensure the course is manageable for instructors and students alike. We strove to balance theory and application, as well as the amount of calculation and mathematical examples.
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 10, 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 11 through 18, 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 19 and 20, introduces the international dimensions of economics, including international trade and protectionism.

Alternate sequencing
Principles of Microeconomics 2e was conceived and written to fit a particular topical sequence, but it can be used flexibly to accommodate other course structures. One such potential structure, which fits reasonably well with the textbook content, is provided. Please consider, however, that the chapters were not written to be completely independent, and that the proposed alternate sequence should be carefully considered for student preparation and textual consistency.
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 19 International Trade
Chapter 7 Cost and Industry Structure
Chapter 12 Environmental Protection and Negative Externalities
Chapter 13 Positive Externalities and Public Goods
Chapter 8 Perfect Competition
Chapter 9 Monopoly
Chapter 10 Monopolistic Competition and Oligopoly
Chapter 11 Monopoly and Antitrust Policy
Chapter 14 Labor Markets and Income
Chapter 15 Poverty and Economic Inequality
Chapter 16 Information, Risk, and Insurance
Chapter 17 Financial Markets
Chapter 18 Public Economy
Chapter 20 Globalization and Protectionism
Appendix A The Use of Mathematics in Principles of Economics
Appendix B Indifference Curves
Appendix C Present Discounted Value

Changes to the second 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).