Micro Changes from 2E

The 3^rd edition has an expanded and reorganized set of chapters to support a literacy-targeted (LT) approach to teaching principles, as well as more traditional approaches. There are now 15 chapters instead of 12, allowing more choice in what to cover. With a digital text, it is easy to arrange the chapters in the order you prefer to teach them. The table highlights two approaches for teaching microeconomic principles.

Literacy-Targeted (LT) Approach

As the table shows, when teaching micro with an LT approach, we omit Chapter 7, Getting the Most Bang per Buck: Utility behind Demand, Chapter 10, What’s Perfect about Perfect Competition? Productivity, Costs, and Efficiency, and Chapter 15, Are Sweatshops All Bad? Globalization, Trade, and Protectionism. That leaves 12 chapters to cover.

You can omit Chapter 7 (Utility behind Demand) because Chapter 2 (Making Smart Choices: The Law of Demand) covers the basics of consumer choice — choose when marginal benefits are greater than marginal opportunity costs — and emphasizes the importance of willingness and ability to pay in determining demand. Chapter 2 also covers the roles of preferences, related products, income and expectations in determining demand. Chapter 7 reprises most of the same topics, but in the language of the utility-maximizing model. Chapter 7 also introduces a new section on behavioural economics that can be covered with Chapter 2.

You can omit Chapter 10 on perfect competition because Chapters 8 and 9 cover the main results of the perfect competition model.

Chapter 8 (Finding Producers’ Bottom Line: Profits and Costs behind Supply) distinguishes normal and economic profits, and shows how economic profits are competed away when entry is possible, leading to a long-run efficient outcome. It also describes how short-run diminishing marginal productivity increases marginal costs and shapes the ATC curve, and describes differences among economies of scale, constant returns to scale, and diseconomies of scale.

Chapter 9 (Pricing Power: Market Structure and Pricing) begins by describing the characteristics of market structure — pricing power, product substitutes, number of sellers, barriers to entry, elasticity of demand — using the extremes of monopoly and perfect competition. Businesses in all market structures share the profit-maximizing rule of equating marginal revenue and marginal cost. Characteristics of perfect competition include price taking, many sellers producing identical products, no barriers to entry, and perfectly elastic demand. Chapter 9 also describes what marginal revenue and marginal cost curves look like for price takers and price makers. All this is done without any use of cost curves beyond marginal cost curves. Chapter 10 (What’s Perfect about Perfect Competition? Productivity, Costs, and Efficiency) covers most of the same topics, but in the format of the profit-maximizing model with U-shaped average cost curves.

Traditional Approaches

As the table shows, the order of microeconomic chapters resembles most existing textbooks. A traditional approach would mostly follow the chapters in order, although the externality chapter (Chapter 13) can easily be moved up to follow Chapter 4, Coordinating Smart Choices: Demand and Supply.

Topics like monopolistic competition, oligopoly, price discrimination — those are included in Chapters 9, Pricing Power: Market Structure and Pricing, and 11, Pricing for Profits in Imperfect Competition: Marginal Revenue and Marginal Cost. We use “imperfect competition” to consolidate those topics by treating market structure as a continuum from monopoly to perfect competition.

Expanded Teaching Choices

The expanded table of contents in this 3^rd edition now supports many approaches to teaching microeconomic principles — literacy-targeted, traditional, as well as combinations of approaches. As teachers, we all have individual preferences, and choice is a good thing! Regardless of your approach, you will have made a smart choice to have your students engage with, and learn from, Microeconomics for Life.

For more details, request an Instructor Copy and look at the Micro Preface for Instructors.

Choosing 12 Chapters for LT or Traditional Approaches