About the Book

Revised Applications, Eamples, and Challenges Ensure that the Tet Remains Relevant and Up-to-Date

• REVISED! 7 end-of section applications illustrate the versatility of microeconomic theory. 8% are new or have been revised for this edition and focus on diverse topics such as the derivation of an isoquant for semiconductors using actual data, the amount by which recipients value Christmas presents relative to the cost to gift givers, why oil companies that use fracking are more likely to shut down, and whether buying flight insurance makes sense.
• REVISED! 7 end of chapter eercises, of which 7% are new or have been revised for this edition.
• UPDATED! Real-World Eamples, which use real people, real companies, and real data to illustrate basic microeconomic theory, provide students with a practical perspective that showcases the versatility of modern microeconomics. Eamples include monopoly theory as it is applied to a patented pharmaceutical, Boto; oligopoly theories used to analyze the rivalry between Coke and Pepsi, and between United Airlines and American Airlines on the ChicagoLos Angeles route; AppleWs monopoly pricing of iPads; and multimarket price discrimination through the use of data on how Warner Brothers sets prices for Harry Potter and the Deathly Hallows Part DVD across countries.
• REVISED! Challenges and Solved Problems, of which 8% are new or have been revised for this edition.
  • Solved Problems provide students with a step-IbyI-step model for working out qualitative and quantitative problems using algebra and calculus. Students get the opportunity to practice the method modeled in a series of related eercises at the end of the chapter.
  • Challenges combine an Application and a Solved Problem. Each chapter (besides Chapter ) begins with a Challenge, which discusses a realI-world issue, and concludes with one or more questions based on that discussion. At the end of the chapter, a Challenge Solution answers these questions.

Chapter-by-Chapter Changes Reflect Revisions, New Thinking in Microeconomics, and User Feedback

• Chapter 3 contains a new section on finding an interior solution using a short cut. The utility constant elasticity of substitution (CES) function is now the same as in the production chapter.
• Chapter uses the estimated utility function from Chapter 3 to derive a demand curve.
• Chapter 5 underwent a substantial revision, particularly the sections on equivalent variation and compensating variation, as well as the effects of taes on labor supply.
• Chapters and 7 have new estimated eamples. Chapter 7 has a revised section on opportunity cost, a new section on short methods to minimize cost or maimize output, and a new discussion of the relationship between economies of scale and returns to scale.
• Chapter 8, on the competitive firm, is substantially rewritten, particularly the sections on perfect competition, profit maimization (especially shutdown conditions), the free entry and eit condition, and long-run market supply when input prices vary with output.
• Chapter 9 on the competitive market has a new introduction, uses a new estimated oil market model, and has an updated discussion of agricultural programs. Some of the major revisions include the sections on regulation, monopsony, and networks. It also includes new material on the dominant firm-competitive fringe model.
• Chapter 3Ws section on dynamic games is rewritten, and the section on auctions contains new material.
• Chapter Ws section on cartels has been revised and updated.
• The first half of Chapter 8, on asymmetric information, has been reorganized and