Western Economics (Microeconomics Part) Third Edition

Author: Gao Hongye
Publisher:
Publish Date: 2004-09-01
Features: This book is a college-level textbook on "Western Economics" organized and compiled by the Ministry of Education of China. It was written by a team of five teaching staff: Professor Gao Hongye and Professor Wu Hanhong from Renmin University of China, Professor Liu Wenxin from Peking University, Professor Feng Jinhua (formerly from Wuhan University), and Professor Yin Bocheng from Fudan University, with Professor Gao Hongye serving as the chief editor. The first and second editions were published successively in 1996 and 2001. The preface to the second edition states: "As recognized by Western scholars, Western economics is a discipline with evolving content. Over time, Western economics will introduce new material and shift focus, and textbooks must reflect these changes. Therefore, this book will inevitably require revisions and additions in the future." For instance, the second edition has been in circulation for four years. In light of this, the compilation of the third edition has become necessary. Additionally, experience gained from using the book and improvements in its chapter arrangement have also made the compilation of the new edition essential.
Of course, the main objective of the third edition remains unchanged: to introduce the theoretical framework of mainstream Western economics with brief commentary, aiming to achieve the goal of "making foreign theories serve China" while avoiding potential adverse effects. The major revisions and additions in the third edition can be categorized into three parts: microeconomics, macroeconomics, and general topics.
Regarding the microeconomics section, the changes can be summarized as follows:
(1) The original chapters on "General Equilibrium" and "Welfare Economics" were merged into one chapter. The primary reason for this merger was the removal of the lengthy section on "The Development and Current Status of General Equilibrium Theory," as feedback from instructors indicated that this section was not essential for beginners and was often difficult to explain clearly, leading to its frequent omission in lectures.
(2) The section on "The Theoretical Foundations of Market Socialism," which currently has limited theoretical significance in the West, was removed.
(3) Complex and minor issues were deleted, including: the case study on "Risk Aversion and Insurance," the relationship between short-term and long-term cost curves, and the concept of "Expansion Path and Long-Term Cost Curves."
(4) The content on information economics and public goods was expanded, and a new section on "Efficiency and Equity," currently a focus of welfare economics, was added to better reflect the latest developments in microeconomics.
Regarding the macroeconomics section, the changes include the following six points:
(1) The original section on dynamic aggregate demand and aggregate supply curves was removed, as the discussion on these curves has far exceeded the scope of introductory materials. Even without them, the existing static aggregate demand and supply models can still provide a rough explanation of inflation or recession.
(2) In the third edition, unemployment was incorporated into the chapter on "Inflation" from the second edition, as they represent two short-term issues that macroeconomics seeks to address. At the end of this chapter, we introduce the Phillips curve to combine the two issues, making the chapter arrangement more logical.
(3) The section on taxes levied according to tax rates and their multipliers was removed, as it is difficult to explain concisely and is often omitted in Western introductory textbooks.
(4) The sections on dynamic aggregate demand and supply models and the "Optimal Growth Path" were removed, as they exceed the scope of introductory materials and are typically covered in intermediate-level textbooks in the West.
(5) At the beginning of the macroeconomics section, in the new edition's Chapter 12, we added a section titled "An Overview of Macroeconomics and the Chapter Arrangement of This Book" to provide a clear outline for the entire macroeconomics section. Based on this outline, we completely revised Chapters 18–23 of the second edition (now Chapters 17–22 of the third edition). The reason for this revision stems from the development and evolution of Western macroeconomic theory. Historically, macroeconomic theory primarily focused on aggregate demand; however, with changing times, research on aggregate supply has also gained importance. While many disagreements over the aggregate supply curve remain, some past ambiguities have been clarified, resulting in a more coherent theoretical framework for the aggregate supply curve. Most Western macroeconomics textbooks now adopt this clearer framework. As a textbook introducing Western theories, this book naturally should reflect this new development. For this reason, the updated framework has also led to a more organized and logical chapter arrangement in the macroeconomics section.
(6) The third edition expands the introduction to financial instruments. With the development of China's financial market, financial instruments have become more diverse. In addition to the original stocks and bonds, derivative financial instruments have been gradually introduced. To provide readers with more knowledge in this area, the third edition appropriately increases the coverage of financial instruments.
Regarding the general section, the changes can be summarized as follows:
(1) To save space, the "References for This Chapter" at the end of each chapter and the appendix "Main References" at the end of the book were removed, replaced by a more practical "Bilingual Reference List."
(2) The concluding section of each chapter is divided into two parts. The first part summarizes the key points of the chapter, while the second part offers commentary on the chapter's content. This approach should benefit readers' learning.
(3) Western scholars' latest research findings are added to the commentary section of each chapter's concluding remarks.
(4) The graphs in the book are now in red and blue, making the visual representation clearer.
In addition to the points listed above, all textual errors, notations, and printing mistakes have been appropriately corrected.
Furthermore, we will soon publish a companion manual titled "Study and Teaching Guide" to accompany this book. This guide will include the more challenging sections from the previous editions and a wealth of supplementary materials, making the third edition more flexible in content.
Overall, we strive to ensure that the third edition more accurately reflects the nature of mainstream Western economics and is more conducive to teaching and learning.