# Principles of Microeconomics/Preface

Principles of Microeconomics is designed for a one-semester microeconomics introductory course. It is traditional in coverage, including introductory economics content, microeconomics, and international economics. At the same time, the book includes a number of innovative and interactive features designed to enhance student learning. Instructors can also customize the book, adapting it to the approach that works best in their classroom.
Welcome to Principles of Microeconomics, an OpenStax resource. This textbook has been created with several goals in mind: accessibility, customization, and student engagement—all while encouraging students toward high levels of academic scholarship. Instructors and students alike will find that this textbook offers a strong foundation in microeconomics in an accessible format.

## About OpenStax

OpenStax is a non-profit organization committed to improving student access to quality learning materials. Our free textbooks go through a rigorous editorial publishing process. Our texts are developed and peer-reviewed by educators to ensure they are readable, accurate, and meet the scope and sequence requirements of today’s college courses. Unlike traditional textbooks, OpenStax resources live online and are owned by the community of educators using them. Through our partnerships with companies and foundations committed to reducing costs for students, OpenStax is working to improve access to higher education for all. OpenStax is an initiative of Rice University and is made possible through the generous support of several philanthropic foundations.

## About OpenStax’s Resources

OpenStax resources provide quality academic instruction. Three key features set our materials apart from others: they can be customized by instructors for each class, they are a "living" resource that grows online through contributions from science educators, and they are available free or for minimal cost.

## Customization

OpenStax learning resources are designed to be customized for each course. Our textbooks provide a solid foundation on which instructors can build, and our resources are conceived and written with flexibility in mind. Instructors can select the sections most relevant to their curricula and create a textbook that speaks directly to the needs of their classes and student body. Teachers are encouraged to expand on existing examples by adding unique context via geographically localized applications and topical connections.
Principles of Microeconomics can be easily customized using our online platform (http://cnx.org/content/col11627/). Simply select the content most relevant to your current semester and create a textbook that speaks directly to the needs of your class. Principles of Microeconomics is organized as a collection of sections that can be rearranged, modified, and enhanced through localized examples or to incorporate a specific theme of your course. This customization feature will ensure that your textbook truly reflects the goals of your course.

## Curation

To broaden access and encourage community curation, Principles of Microeconomics is “open source” licensed under a Creative Commons Attribution (CC-BY) license. The economics community is invited to submit examples, emerging research, and other feedback to enhance and strengthen the material and keep it current and relevant for today’s students. Submit your suggestions to info@openstaxcollege.org.

## Cost

Our textbooks are available for free online, and in low-cost print and e-book editions.

## About Principles of Microeconomics

Principles of Microeconomics has been developed to meet the scope and sequence of most introductory microeconomics courses. At the same time, the book includes a number of innovative features designed to enhance student learning. Instructors can also customize the book, adapting it to the approach that works best in their classroom.

## Coverage and Scope

To develop Principles of Microeconomics, we acquired the rights to Timothy Taylor’s second edition of Principles of Economics and solicited ideas from economics instructors at all levels of higher education, from community colleges to Ph.D.-granting universities. They told us about their courses, students, challenges, resources, and how a textbook can best meet the needs of both instructors and students.
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. And to make it more applied, we have incorporated many current topics. We hope students will be interested to know just how far-reaching the recent recession was (and still is), for example, and why there is so much controversy even among economists over the Affordable Care Act (Obamacare). The Keystone Pipeline, Occupy Wall Street, and minimum wage debates are just a few of the other important topics covered.
The pedagogical choices, chapter arrangements, and learning objective fulfillment were developed and vetted with feedback from educators dedicated to the project. They thoroughly read the material and offered critical and detailed commentary. The outcome is a balanced approach to microeconomics, particularly to the theory and application of economics concepts. New 2015 data are incorporated for topics that range from average U.S. household consumption in Chapter 2 to the total value of all home equity in Chapter 17. Current events are treated in a politically-balanced way as well.
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, as well as public economy.
* International Economics, Chapters 19 and 20, the final part of the text, introduces the international dimensions of economics, including international trade and protectionism.

### Chapters

* 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
* Appendix A The Use of Mathematics in Principles of Economics
* Appendix B Indifference Curves
* Appendix C Present Discounted Value

### Alternate Sequencing

Principles of Economics 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 will fit 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 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 20 Globalization and Protectionism
* Appendix A The Use of Mathematics in Principles of Economics
* Appendix B Indifference Curves
* Appendix C Present Discounted Value

## Pedagogical Foundation

Throughout the OpenStax version of Principles of Microeconomics, you will find new features that engage the students in economic inquiry by taking selected topics a step further. Our features include:
* Bring It Home: This added feature is a brief case study, specific to each chapter, which connects the chapter’s main topic to the real word. It is broken up into two parts: the first at the beginning of the chapter (in the Intro module) and the second at chapter’s end, when students have learned what’s necessary to understand the case and “bring home” the chapter’s core concepts.
* Work It Out: This added feature asks students to work through a generally analytical or computational problem, and guides them step-by-step to find out how its solution is derived.
* Clear It Up: This boxed feature, which includes pre-existing features from Taylor’s text, addresses common student misconceptions about the content. Clear It Ups are usually deeper explanations of something in the main body of the text. Each CIU starts with a question. The rest of the feature explains the answer.
* Link It Up: This added feature is a very brief introduction to a website that is pertinent to students’ understanding and enjoyment of the topic at hand.

## Questions for Each Level of Learning

The OpenStax version of Principles of Microeconomics further expands on Taylor’s original end of chapter materials by offering four types of end-of-module questions for students.
* Self-Checks: Are analytical self-assessment questions that appear at the end of each module. They “click–to-reveal” an answer in the web view so students can check their understanding before moving on to the next module. Self-Check questions are not simple look-up questions. They push the student to think a bit beyond what is said in the text. Self-Check questions are designed for formative (rather than summative) assessment. The questions and answers are explained so that students feel like they are being walked through the problem.
* Review Questions: Have been retained from Taylor’s version, and are simple recall questions from the chapter and are in open-response format (not multiple choice or true/false). The answers can be looked up in the text.
* Critical Thinking Questions: Are new higher-level, conceptual questions that ask students to demonstrate their understanding by applying what they have learned in different contexts. They ask for outside-the-box thinking, for reasoning about the concepts. They push the student to places they wouldn’t have thought of going themselves.
* Problems: Are exercises that give students additional practice working with the analytic and computational concepts in the module.

## Updated Art

Principles of Microeconomics includes an updated art program to better inform today’s student, providing the latest data on covered topics.

## Senior Contributing Author

Timothy Taylor, Macalester College Timothy Taylor has been writing and teaching about economics for 30 years, and is the Managing Editor of the Journal of Economic Perspectives, a post he’s held since 1986. He has been a lecturer for The Teaching Company, the University of Minnesota, and the Hubert H. Humphrey Institute of Public Affairs, where students voted him Teacher of the Year in 1997. His writings include numerous pieces for journals such as the Milken Institute Review and The Public Interest, and he has been an editor on many projects, most notably for the Brookings Institution and the World Bank, where he was Chief Outside Editor for the World Development Report 1999/2000, Entering the 21st Century: The Changing Development Landscape. He also blogs four to five times per week at http://conversableeconomist.blogspot.com. Timothy Taylor lives near Minneapolis with his wife Kimberley and their three children.

## Senior Content Expert

Steven A. Greenlaw, University of Mary Washington Steven Greenlaw has been teaching principles of economics for more than 30 years. In 1999, he received the Grellet C. Simpson Award for Excellence in Undergraduate Teaching at the University of Mary Washington. He is the author of Doing Economics: A Guide to Doing and Understanding Economic Research, as well as a variety of articles on economics pedagogy and instructional technology, published in the Journal of Economic Education, the International Review of Economic Education, and other outlets. He wrote the module on Quantitative Writing for Starting Point: Teaching and Learning Economics, the web portal on best practices in teaching economics. Steven Greenlaw lives in Alexandria, Virginia with his wife Kathy and their three children.

## Senior Contributors

| Eric Dodge | Hanover College |
| Cynthia Gamez | University of Texas at El Paso |
| Andres Jauregui | Columbus State University |
| Diane Keenan | Cerritos College |
| Dan MacDonald | California State University San Bernardino |
| Amyaz Moledina | The College of Wooster |
| Craig Richardson | Winston-Salem State University |
| David Shapiro | Pennsylvania State University |
| Ralph Sonenshine | American University |

## Reviewers

| Bryan Aguiar | Northwest Arkansas Community College |
| Basil Al Hashimi | Mesa Community College |
| Emil Berendt | Mount St. Mary's University |
| Zena Buser | Adams State University |
| Douglas Campbell | The University of Memphis |
| Sanjukta Chaudhuri | University of Wisconsin - Eau Claire |
| Xueyu Cheng | Alabama State University |
| Robert Cunningham | Alma College |
| Rosa Lea Danielson | College of DuPage |
| Steven Deloach | Elon University |
| Debbie Evercloud | University of Colorado Denver |
| Sal Figueras | Hudson County Community College |
| Reza Ghorashi | Richard Stockton College of New Jersey |
| Robert Gillette | University of Kentucky |
| George Jones | University of Wisconsin-Rock County |
| Charles Kroncke | College of Mount St. Joseph |
| Teresa Laughlin | Palomar Community College |
| Carlos Liard-Muriente | Central Connecticut State University |
| Heather Luea | Kansas State University |
| William Mosher | Nashua Community College |
| Michael Netta | Hudson County Community College |
| Nick Noble | Miami University |
| Joe Nowakowski | Muskingum University |
| Shawn Osell | University of Wisconsin, Superior |
| Mark Owens | Middle Tennessee State University |
| Sonia Pereira | Barnard College |
| Brian Peterson | Central College |
| Jennifer Platania | Elon University |
| Robert Rycroft | University of Mary Washington |
| Adrienne Sachse | Florida State College at Jacksonville |
| Hans Schumann | Texas AM |
| Gina Shamshak | Goucher College |
| Chris Warburton | John Jay College of Criminal Justice, CUNY |
| Mark Witte | Northwestern |
| Chiou-nan Yeh | Alabama State University |

## Ancillaries

OpenStax projects offer an array of ancillaries for students and instructors. Please visit http://openstaxcollege.org and view the learning resources for this title.