Microeconomics (9th Edition) Microeconomics Series

Author: EdwinMansfield
Publisher:
Publication Date: 1999-04-01
Features: Excerpts from the Preface
This textbook is now in its ninth edition, but it still has the same purpose as the previous edition: to explain microeconomic theory as clearly and interestingly as possible, and to illustrate its wide-ranging real-world applications. However, due to the progress of the theory itself and changes in its applications and teaching methods, we have made substantial revisions to each chapter. In this new edition, we have added two chapters—one discussing the role of competition in promoting economic efficiency (and the role of government intervention), and another explaining how asymmetric information affects the behavior of buyers and sellers in markets. Below, we briefly describe these two chapters and other additions and changes:
1. Immediately following the discussion of perfect competition, we have added a chapter on the role of government intervention (Chapter 10). In this chapter, we examine how perfect competition promotes economic efficiency and the effects of government intervention. For students, it is crucial to understand how competitive markets respond to such intervention and to be able to (at least roughly) estimate the gains and losses of consumers and producers resulting from it. The analytical tools (and several real-world case studies) provided in this chapter help students develop this ability.
2. The other new chapter is Chapter 18, on asymmetric information. In this chapter, we discuss how asymmetric information affects the behavior of buyers and sellers in markets. Our findings can explain various phenomena in modern economies—from the disproportionate number of lemons in used car markets to the widespread unemployment in labor markets. Additionally, our results show why market failure can occur in a perfectly competitive economy when asymmetric information exists.
3. This edition includes a new cross-chapter case study: "FCC and the Global Largest Auction." This case study examines the Federal Communications Commission (FCC) auction for broadband personal communication service licenses in May 1995 and the auction for narrowband personal communication services in 1994. The FCC auction is a milestone in the application of microeconomic theory.
4. To accommodate the added content, we have condensed the discussion of input prices and quantities and placed it in Chapter 14. In the previous edition, this material occupied two chapters, but it is now condensed into one.
5. We have introduced many new topics. For example, in Chapter 12, we have added the Stackelberg model and the Bertrand model; in Chapter 13, we introduce the concept of game trees and discuss the concept of maximin strategies.
6. We have added numerous new examples. In particular, the following examples are new:
(1) Coffee shops invading Manhattan;
(2) Cotton prices: the highest level since the Civil War;
(3) Are CEOs of large companies really worth $26 million a year?
(4) Gasoline price ceilings;
(5) Milk price supports;
(6) Should gasoline taxes be raised?
(7) Playing slot machines at Foxwoods;
(8) The tire retail market;
(9) Neil Simon to Broadway;
(10) Asymmetric information in the fixed-line market;
(11) "Lemons" in pickup trucks and baseball players;
(12) Dillard’s, McDonald’s, and the importance of reputation.
7. The end-of-chapter problems have been increased, and many of the existing problems have been revised to make the discussion more up-to-date. From Chapter 1 to Chapter 19, changes have been made to figures, tables, text, and notes, and every sentence has been reread with a critical eye.