Page 9 - Microeconomics, Fourth Edition

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PREF A CE

After many years of experience teaching microeconomics at the undergraduate and MBA
levels, we have concluded that the most effective way to teach it is to present the content
with a variety of engaging applications, coupled with an ample number of practice
problems and exercises. The applications ground the theory in the real world, and the
exercises and problems sets enable students to master the tools of economic analysis and
make them their own. The applications and the problems are combined with verbal intu-
ition and graphs, so that they are reinforced and amplified. This approach enables students
to see clearly the interplay of key concepts, to thoroughly grasp these concepts through
abundant practice, and to see how they apply in actual markets and business firms.
Our reviewers and adopters of the first edition have told us that this approach
worked for them and their students. In the second edition, we built on this approach,
adding even more applications and problems and revisiting every explanation, every
graph, and every Learning-By-Doing example to make sure the text was as clear as pos-
sible. In the third edition, we continued in the spirit of the second edition, adding more
current applications and problems. In fact, we added at least five problems to each
chapter (nearly 90 new problems in all). In the fourth edition, we added still more new
problems, and we put in over 30 new current applications. In addition, we added a new
Appendix to Chapter 4 that introduces the basic concepts of time value of money, such
as present and future value. Finally, every chapter now begins with a set of concrete,
actionable learning goals based on Bloom’s Taxonomy of Educational Objectives.

• The Solution Is in the Problems. Our emphasis on practice exercises and numer-
ous, varied problems sets this book apart from others. Based on our experience, students
need drill in order to internalize microeconomic theory. They need to work through many
problems that are tangible, problems that have specific equations and numbers in them.
Anyone who has mastered a skill or a sport, whether it be piano, ballet, or golf,
understands that a fundamental part of the learning process involves repetitive drills that
seemingly bear no relation to how one would actually execute the skill under “real” con-
ditions. We feel that drill problems in microeconomics serve the same purpose. A student
may never have to do a numerical comparative statics analysis after completing the micro-
economics course. However,
having seen concretely, through
the use of numbers and equa- S LEARNING-BY-DOING EXERCISE 2.6
D
tions, how a shift in demand or
E
Elasticities along Special Demand Curves
supply affects the equilibrium, a Problem Q, P ( b)(PQ) . Since b 10 and Q 400 10P,
student will have a deeper ap- (a) Suppose a constant elasticity demand curve is given when P 30,
preciation for comparative stat- by the formula Q 200P 1 2 . What is the price elasticity 30
of demand? Q,P 10 a 400 10(30) b 3
ics analysis and will be better
(b) Suppose a linear demand curve is given by the and when P 10,
prepared to interpret events in formula Q 400 10P . What is the price elasticity of
real markets. demand at P 30? At P 10? Q,P 10 a 10 b 0.33
400 10(10)
Learning-By-Doing Solution Note that demand is elastic at P 30, but it is inelastic at
Exercises, embedded in the text (a) Since this is a constant elasticity demand curve, the P 10 (in other words, P 30 is in the elastic region of
of each chapter, guide the stu- price elasticity of demand is equal to 1 2 everywhere the demand curve, while P 10 is in the inelastic region).
along the demand curve.
dent through specific numerical
(b) For this linear demand curve, we can find the price Similar Problems: 2.5, 2.6, 2.12
problems. We use three to ten elasticity of demand by using equation (2.4):
Learning-By-Doing exercises
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