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Principles of Microeconomics, 12th edition

Published by Pearson (January 7, 2016) © 2017

  • Karl E. Case Wellesley College
  • Ray C. Fair Yale University
  • Sharon E. Oster Yale University
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About the Book

Spotlights Recent Research

  • NEW! Chapter 3 uses behavioral economics to ask whether having unusually sunny weather increases consumer purchases of convertible cars.
  • NEW! Chapter 6 looks at data from Indian reservations to trace out the incidence of excise taxes.
  • NEW! Chapter 7 describes how Uber drivers differ from regular cab drivers.
  • NEW! Chapter 15 describes a recent paper that asks how much value does an increased variety in shoe selection produce for consumers?
  • NEW! Chapter 21 looks at work that uses children’s height in India to examine hunger and gender inequality.
  • NEW! Chapter 22 (brand new) contains three boxes that examine the Moving to Opportunity program, birth weight and infant mortality, and the effects of minimum wage.

Shows the Power and Breadth of Economic Models

  • NEW! Chapter 8 uses the example of a Taylor Swift concert to explain fixed versus variable costs.
  • NEW! Chapter 9 explores economies of scale with the example of Google’s advantages in the search market.
  • NEW! Chapter 13 describes “net neutrality” and uses it to explore the structure of the telecommunications market.
  • NEW! Chapter 16 looks at how firms use carbon prices to motivate managers to be more conscious in their investment decisions about the environment.


Clear Microeconomics Organization and Coverage

  • Introduction of a competitive market model first, followed by noncompetitive market structures gives students a clear understanding of basic economic theory and how market opportunities operate.
    • Begins with discussion of output markets (goods and services) and input markets (land, labor, and capital), and the connections between them, before turning to monopolies and oligopolies.
    • Includes discussion of how a simple, perfectly competitive market system produces and distributes goods and services (Chapters 6 through 11).
    • Chapter 12 links simple, perfectly competitive markets with a discussion of market imperfections and the role of government.
    • Three non-competitive market structures—monopoly, monopolistic competition, and oligopoly are covered in Chapters 13 through 15.
    • UPDATED! Chapter 16 has been reworked to include more comprehensive and up-to-date analysis of environmental issues. It now focuses on externalities, public goods, common resources, and social choice.
    • NEW! Chapter 17 covers uncertainty and asymmetric information.
    • UPDATED! Chapters 18 and 19 discuss inequality and income distribution as well as taxation and government finance.

A History of Excellence in Economic Content and Application

  • News Analysis features real news articles from The Wall Street Journal, The New York Times, The Economist, and others, strategically integrated into the text. The authors have also added homework problems for News Analysis articles at the end of the chapter.
  • Incorporation of international examples and applications includes discussion of:
    • The many countries that contributed to creating the iPod (Chapter 1).
    • How UPS is using technology to speed worldwide delivery (Chapter 7).
    • How high speed trains in Europe benefit travelers, the environment, and the economies of communities served (Chapter 10).
    • The world’s distribution of income and how technology affects distribution (Chapter 33).
    • The world economy (Chapters 35 and 36).
  • A three-tiered explanation of key concepts (Stories-Graphs-Equations) is presented. Each concept is presented in the context of a simple intuitive story often followed by a table or graph, and in some cases, an equation that presents the concept with a mathematical formula.
  • UPDATED! End-of-chapter material delivers questions designed to help individuals learn course concepts and help instructors assess student performance.


Also Available with MyEconLab®

This title is also available with MyEconLab—an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.

  • Concept Checks at the end of each section act as “speed bumps” that encourage students to stop and check their understanding of fundamental terms and concepts before moving on to the next section. Consisting of a few multiple-choice, true/false, or fill-in-the-blank questions, they help students assess their progress on a section-by-section basis, so they can better prepare for homework, quizzes, and exams.
  • Animated graphs in MyEconLab accompany many of the key graphs and figures in the text, helping students better understand how to analyze and work with graphs. More dynamic than graphs on a printed page, they help students understand shifts in curves, movements along curves, and changes in equilibrium values.
  • Learning Catalytics™. Generate class discussion, guide your lecture, and promote peer-to-peer learning with real-time analytics. MyEconLab with eText now provides Learning Catalytics–an interactive student response tool that uses students’ smartphones, tablets, or laptops to engage them in more sophisticated tasks and thinking. Instructors, you can:
    • Pose a variety of questions that help your students develop critical thinking skills
    • Monitor responses to find out where students are struggling
    • Use real-time data to adjust your instructional strategy and try other ways of engaging your students during class
    • Manage student interactions by automatically grouping students for discussion, teamwork, and peer-to-peer learning
  • Digital Interactives are designed to change how students learn core economic concepts. Organized in progressive levels, each focusing on a core learning outcome, Digital Interactives immerse students in a fundamental economic principle, helping them to learn actively. Digital Interactives are designed for use in traditional, online, and hybrid courses, and many incorporate real-time data, as well as data display and analysis tools. Digital Interactive modules include Opportunity Cost, Comparative Advantage, Unemployment, Consumer Price Index and Inflation, Monetary Policy, Supply and Demand, and Gross Domestic Product. Each of these is available as a lecture tool for classroom presentation and are assignable with assessment questions for grading.
  • Dynamic Study Modules help students study effectively on their own by continuously assessing their activity and performance in real time. Here's how it works: students complete a set of questions with a unique answer format that also asks them to indicate their confidence level. Questions repeat until the student can answer them all correctly and confidently. Once completed, Dynamic Study Modules explain the concept using materials from the text. These are available as graded assignments prior to class, and accessible on smartphones, tablets, and computers.
  • NEW! Math Review Exercises. MyEconLab now offers a rich array of assignable and auto-graded exercises covering fundamental math concepts geared specifically to principles of and intermediate economics students. Aimed at increasing student confidence and success, our new math skills review Chapter R is accessible from the assignment manager and contains over 150 graphing, algebra, and calculus exercises for homework, quiz, and test use. Offering economics students warm-up math assignments, math remediation, or math exercises as part of any content assignment has never been easier!
  • UPDATED! Graphs Have Been Updated with Real-Time Data from FRED (Federal Reserve Economic Data)—a comprehensive, up-to-date data set maintained by the Federal Reserve Bank of St. Louis. Students can display a pop-up graph that shows new data plotted in the graph, to better understand how to work with data and understand how including new data affects graphs.
  • UPDATED! Interactive Problems and Exercises Have Been Updated with Real-Time Data from FRED. The end-of-chapter problems in select chapters include Real-Time Data Exercises that use the latest data from FRED to help students become familiar with this key data source, learn how to locate data, and develop skills in interpreting data.
  • Current News Exercises. Every week, current Microeconomic and Macroeconomic news stories, with accompanying exercises, are posted to MyEconLab. Assignable and auto-graded, these multi-part exercises ask students to recognize and apply economic concepts to real-world events.
  • A Chapter-by-Chapter News Archive features an online library of all Weekly News Updates, organized by chapter and accessible via MyEconLab.
  • An Enhanced eText keeps students engaged in learning on their own time, while helping them achieve greater conceptual understanding of course material. The worked examples bring learning to life, and algorithmic practice allows students to apply the very concepts they are reading about. Combining resources that illuminate content with accessible self-assessment, MyEconLab with Enhanced eText provides students with a complete digital learning experience—all in one place.
  • Experiments are a fun and engaging way to promote active learning and mastery of important economic concepts. Pearson’s Experiments program is flexible and easy for instructors and students to use. Single-player experiments allow your students to play against virtual players from anywhere at any time so long as they have an Internet connection. Multiplayer experiments allow you to assign and manage a real-time experiment with your class. Pre- and post-questions for each experiment are available for assignment in MyEconLab.
  • Question Help. MyEconLab's homework and practice questions are correlated to the textbook; they generate algorithmically to give students unlimited opportunity for practice and mastery, and offer helpful feedback when students enter incorrect answers. Questions include guided solutions and other multimedia assets for extra help at point-of-use.
  • Figure Animations. Key textbook figures are accompanied by a step-by-step animation, with audio, to help students learn the intuition behind reading and interpreting graphs. These animations may be used for review, or as an instructional aid in the classroom.
    • For each major figure, a graph drawing exercise accompanies the step-by-step animation. The student builds and interprets the key diagrams and develops understanding by working a multiple choice question about the figure. Each graph drawing exercise is auto-graded and feeds into MyEconLab’s Adaptive Study Plan.
  • Reporting Dashboard. View, analyze, and report learning outcomes clearly and easily, and get the information you need to keep your students on track throughout the course, with the new Reporting Dashboard. Available via the Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.
  • UPDATED! HTML5 Player Enhancements. In addition to matching the Flash player’s support of Accessibility requirements, the HTML5 player has a new “Show Work” feature to allow students to enter text either from a keyboard or stylus and to draw freehand on different backgrounds, such as a coordinate graph, with multiple fonts and colors. Students can also continue to upload images such as phone-photos of handwritten work. Printing enhancements include:
    • a more pen-and-paper-friendly layout of exercises
    • the ability for instructors to choose whether to print the header; to include an honor statement; and to print with answers inline, after each question, or on a separate sheet
About the Book

Spotlights Recent Research

  • Chapter 3 uses behavioral economics to ask whether having unusually sunny weather increases consumer purchases of convertible cars.
  • Chapter 6 looks at data from Indian reservations to trace out the incidence of excise taxes.
  • Chapter 7 describes how Uber drivers differ from regular cab drivers.
  • Chapter 15 describes a recent paper that asks how much value does an increased variety in shoe selection produce for consumers?
  • Chapter 21 looks at work that uses children’s height in India to examine hunger and gender inequality.
  • Chapter 22 (brand new) contains three boxes that examine the Moving to Opportunity program, birth weight and infant mortality, and the effects of minimum wage.

Shows the Power and Breadth of Economic Models

  • Chapter 8 uses the example of a Taylor Swift concert to explain fixed versus variable costs.
  • Chapter 9 explores economies of scale with the example of Google’s advantages in the search market.
  • Chapter 13 describes “net neutrality” and uses it to explore the structure of the telecommunications market.
  • Chapter 16 looks at how firms use carbon prices to motivate managers to be more conscious in their investment decisions about the environment.

Clear Microeconomics Organization and Coverage

  • Introduction of a competitive market model first, followed by noncompetitive market structures gives students a clear understanding of basic economic theory and how market opportunities operate.
    • UPDATED! Chapter 16 has been reworked to include more comprehensive and up-to-date analysis of environmental issues. It now focuses on externalities, public goods, common resources, and social choice.
    • Chapter 17 covers uncertainty and asymmetric information.
    • UPDATED! Chapters 18 and 19 discuss inequality and income distribution as well as taxation and government finance.

A History of Excellence in Economic Content and Application

  • UPDATED! End-of-chapter material delivers questions designed to help individuals learn course concepts and help instructors assess student performance.

Also Available with MyEconLab®

This title is also available with MyEconLab–an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.
  • Math Review Exercises. MyEconLab now offers a rich array of assignable and auto-graded exercises covering fundamental math concepts geared specifically to principles of and intermediate economics students. Aimed at increasing student confidence and success, our new math skills review Chapter R is accessible from the assignment manager and contains over 150 graphing, algebra, and calculus exercises for homework, quiz, and test use. Offering economics students warm-up math assignments, math remediation, or math exercises as part of any content assignment has never been easier!
  • UPDATED! Graphs Have Been Updated with Real-Time Data from FRED (Federal Reserve Economic Data)–a comprehensive, up-to-date data set maintained by the Federal Reserve Bank of St. Louis. Students can display a pop-up graph that shows new data plotted in the graph, to better understand how to work with data and understand how including new data affects graphs.
  • UPDATED! Interactive Problems and Exercises Have Been Updated with Real-Time Data from FRED. The end-of-chapter problems in select chapters include Real-Time Data Exercises that use the latest data from FRED to help students become familiar with this key data source, learn how to locate data, and develop skills in interpreting data.
  • UPDATED! HTML5 Player Enhancements. In addition to matching the Flash player’s support of Accessibility requirements, the HTML5 player has a new “Show Work” feature to allow students to enter text either from a keyboard or stylus and to draw freehand on different backgrounds, such as a coordinate graph, with multiple fonts and colors. Students can also continue to upload images such as phone-photos of handwritten work. Printing enhancements include:
    • a more pen-and-paper-friendly layout of exercises
    • the ability for instructors to choose whether to print the header; to include an honor statement; and to print with answers inline, after each question, or on a separate sheet

Part I: Introduction To Economics

1. The Scope and Method of Economics

2. The Economic Problem: Scarcity and Choice

3. Demand, Supply, and Market Equilibrium

4. Demand and Supply Applications

5. Elasticity

 

Part II: The Market System

6. Household Behavior and Consumer Choice

7. The Production Process: The Behavior of Profit-Maximizing Firms

8. Short-Run Costs and Output Decisions

9. Long-Run Costs and Output Decisions

10. Input Demand: The Labor and Land Markets

11. Input Demand: The Capital Market and the Investment Decision

12. General Equilibrium and the Efficiency of Perfect Competition

 

Part III: Market Imperfections and the Role of Government

13. Monopoly and Antitrust Policy

14. Oligopoly

15. Monopolistic Competition

16. Externalities, Public Goods, and Common Resources

17. Uncertainty and Asymmetric Information

18. Income Distribution and Poverty

19. Public Finance: The Economics of Taxation

 

Part IV: The World Economy

20. International Trade, Comparative Advantage, and Protectionism

21. Economic Growth in Developing Economies

 

Part V: Methodology

22. Critical Thinking about Research

 

 

 

Karl E. Case is Professor of Economics Emeritus at Wellesley College where he has taught for 34 years and served several tours of duty as Department Chair. He is a Senior Fellow at the Joint Center for Housing Studies at Harvard University and a founding partner in the real estate research firm of Fiserv Case Shiller Weiss, which produces the S&P Case-Shiller Index of home prices. He serves as a member of the Index Advisory Committee of Standard and Poor’s, and along with Ray Fair he serves on the Academic Advisory Board of the Federal Reserve Bank of Boston.

Before coming to Wellesley, he served as Head Tutor in Economics (director of undergraduate studies) at Harvard, where he won the Allyn Young Teaching Prize. He was Associate Editor of the Journal of Economic Perspectives and the Journal of Economic Education, and he was a member of the AEA’s Committee on Economic Education.

Professor Case received his B.A. from Miami University in 1968; spent three years on active duty in the Army, and received his Ph.D. in Economics from Harvard University in 1976.

Professor Case’s research has been in the areas of real estate, housing, and public finance. He is author or coauthor of five books, including Principles of Economics, Economics and Tax Policy, and Property Taxation: The Need for Reform, and he has published numerous articles in professional journals.

For the last 25 years, his research has focused on real estate markets and prices. He has authored numerous professional articles, many of which attempt to isolate the causes and consequences of boom and bust cycles and their relationship to regional and national economic performance.

Ray C. Fair is Professor of Economics at Yale University. He is a member of the Cowles Foundation at Yale and a Fellow of the Econometric Society. He received a B.A. in Economics from Fresno State College in 1964 and a Ph.D. in Economics from MIT in 1968. He taught at Princeton University from 1968 to 1974 and has been at Yale since 1974.

Professor Fair’s research has primarily been in the areas of macroeconomics and econometrics, with particular emphasis on macroeconometric model building. He also has done work in the areas of finance, voting behavior, and aging in sports. His publications include Specification, Estimation, and Analysis of Macroeconometric Models (Harvard Press, 1984); Testing Macroeconometric Models (Harvard Press, 1994); Estimating How the Macroeconomy Works (Harvard Press, 2004), and Predicting Presidential Elections and Other Things (Stanford University Press, 2012).

Professor Fair has taught introductory and intermediate macroeconomics at Yale. He has also taught graduate courses in macroeconomic theory and macroeconometrics.

Professor Fair’s U.S. and multicountry models are available for use on the Internet free of charge. The address is http://fairmodel.econ.yale.edu. Many teachers have found that having students work with the U.S. model on the Internet is a useful complement to an introductory macroeconomics course.

Sharon M. Oster is the Frederic Wolfe Professor of Economics and Management and former Dean of the Yale School of Management. Professor Oster joined Case and Fair as a coauthor in the ninth edition of this book. Professor Oster has a B.A. in Economics from Hofstra University and a Ph.D. in Economics from Harvard University.

Professor Oster’s research is in the area of industrial organization. She has worked on problems of diffusion of innovation in a number of different industries, on the effect of regulations on business, and on competitive strategy. She has published a number of articles in these areas and is the author of several books, including Modern Competitive Analysis and The Strategic Management of Nonprofits.

Prior to joining the School of Management at Yale, Professor Oster taught for a number of years in Yale’s Department of Economics. In the department, Professor Oster taught introductory and intermediate microeconomics to undergraduates as well as several graduate courses in industrial organization. Since 1982, Professor Oster has taught primarily in the Management School, where she teaches the core microeconomics class for MBA students and a course in the area of competitive strategy. Professor Oster also consults widely for businesses and nonprofit organizations and has served on the boards of several publicly traded companies and nonprofit organizations.

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