Providing coverage of intermediate microeconomics within a global context, this text presents a blend of all the standard topics of traditional microeconomic theory. It also includes material on risk analysis, economics of information, game theory, market structure, efficiency and regulation, and financial microeconomics.

This fully-revised text provides robust coverage of intermediate microeconomics within a global context. Building on the success of previous editions, the text presents a judicious blend of all the standard topics of traditional microeconomic theory and the many exciting recent developments in the field. It includes new material on risk analysis, economics of information, game theory, market structure, efficiency and regulation, and financial microeconomics. In addition, the text brings more realism to the study of microeconomics by including numerous examples of how theory can be used to analyze and yield possible solutions to present-day problems.

PART ONE: INTRODUCTION TO MICROECONOMICS
1.1 Wants and Scarcity
Can Human Wants Ever Be Fully Satisfied?
Scarcity: The Pervasive Economic Problem
Example 1-1 More Health Care Means Less of Other Goods and Services
1.2 Functions of an Economic System
1.3 Microeconomic Theory and the Price System
The Circular Flow of Economic Activity
Determination and Function of Prices
Example 1-2 Drought in Kansas Sends Wheat Prices Soaring
What Role for the Government?
Example 1-3 Economic Inefficiencies Cause Collapse of Communist Regimes
1.4 The Margin: The Key Unifying Concept in Microeconomics
The Crucial Importance of the Concept of the Margin
Example 1-4 Marginal Analysis in TV Advertising
Some Clarification on the Use of the Margin
1.5 Specializing, Exchange, and the International Framework of Microeconomics
Specialization and Exchange
The International Framework of Miocroeconomics
Example 1-5 Even the IBM PC and the Boeing 777 Are Not All American!
1.6 Models, Methodology, and Value Judgments
Models and Methodology
Positive and Normative Analysis
At the Frontier Do Economists Ever Agree on Anything?
2 BASIC DEMAND AND SUPPLY ANALYSIS
2.1 Market Analysis
2.2 Market Demand
Demand Schedule and Demand Curve
Changes in Demand
2.3 Market Supply
Supply Schedule and Supply Curve
Changes in Supply
2.4 When Is a Market in Equilibrium?
2.5 Adjustment to Changes in Demand and Supply: Comparative Static Analysis
Adjustments to Changes in Demand
Adjustments to Changes in Supply
Example 2-1 Changes in Demand and Supply and Coffee Prices
2.6 Domestic Demand and Supply, Imports, and Prices
Example 2-2 The Large U.S. Automotive Trade Deficit and U.S. Auto Prices
Example 2-3 Rent Control Harms the Housing Market
Example 2-4 The Economics of U.S. Farm Support Programs
Example 2-5 Working Through the Market with an Excise Tax
Example 2-6 Fighting the Drug War by Reducing Demand and Supply
At the Frontier Nonclearing Market Theory
PART TWO: THEORY OF CONSUMER BEHAVIOR AND DEMAND
3 CONSUMER PREFERENCES AND CHOICE
3.1 Utility Analysis
Total and Marginal Utility
Cardinal or Ordinal Utility?
Example 3-1 Does Money Buy Happiness?
3.2 Consumer's Tastes: Indifference Curves
Indifference Curves--What Do They Show?
Characteristics of Indifference Curves
The Marginal Rate of Subsititution
Some Special Types of Indifference Curves
Example 3-2 How Ford Decided on the Characteristics of Its Taurus
3.3 International Convergence of Tastes
Example 3-3 Gillette Introduces the Sensor and Mach3 Razors--Two Truly Global Products
3.4 The Consumer's Income and Price Constraints: The Budget Line
Definition of the Budget Line
Changes in Income and Prices and the Budget Line
Example 3-4 Time as a Constraint
3.5 Consumer's Choice
Utility Maximization
Example 3-5 Utility Maximization and Government Warnings on Junk Food
Corner Solutions
Example 3-6 Water Rationing in the West
Marginal Utility Approach to Utility Maximization
At the Frontier The Theory of Revealed Preference
4 CONSUMER BEHAVIOR AND INDIVIDUAL DEMAND
4.1 Changes in Income and the Engel Curve
Income-Consumption Curve and Engel Curve
Example 4-1 Engel's Law After a Century
Normal and Inferior Goods
Example 4-2 Many People Are Blowing Their Pension Money Long Before Retirement
4.2 Changes in Price and the Individual Demand Curve
Example 4-3 Higher Alcohol Prices Would Sharply Reduce Youth Alcohol Use and Traffic Deaths
4.3 Substitution and Income Effects
How Are the Substitution and Income Effects Separated?
Example 4-4 The Substitution and Income Effects of a Gasoline Tax
Substitution and Income Effects for Inferior Goods
4.4 Substitution Between Domestic and Foreign Goods
Example 4-5 What Is an "American" car?
4.5 Some Applications of Indifference Curve Analysis
Is a Cash Subsidy Better Than Food Stamps?
Consumer Surplus Measures Unpaid Benefits
Benefits from Exchange
At the Frontier The Characteristics Approach to Consumer Theory
5 MARKET DEMAND AND ELASTICITIES
5.1 The Market Demand for a Commodity
Example 5.1 The Demand for Big Macs
Measuring the Price Elasticity of Demand
Price Elasticity Graphically
Price Elasticity and Total Expenditures
What Determines Price Elasticity?
Example 5.2 The Price Elasticity of Demand for Clothing Increaces with Time
5.3 Income Elasticity of Demand
Example 5.3 Transatlantic Air Travel Is a Luxury, Flour an Inferior Good
5.4 Cross Elasticity of Demand
Example 5.4 Margarine and Butter are Substitutes, Cereals and Fresh Fish Complements
5.5 Price and Income Elasticities of Imports and Exports
Example 5.5 Price and Income Elasticities of Imports and Exports in the Real World
5.6 Marginal Revenue and Elasticity
Demand, Total Revenue, and Marginal Revenue
Geometry of Marginal Revenue Determination
Marginal Revenue, Price, and Elasticity
Example 5.6 The U.S. Consumer Demand for Alcoholic Beverages
At the Frontier The Marketing Revolution with Micromarketing
6 CHOICE UNDER UNCERTAINTY
6.1 Risk and Uncertainty in Demand Choices
Example 6.1 The Risk that Coca Cola Faced in Chaning Its Secret Formula
Probability Distributions
The Standard Deviation
Example 6.2 Risk and Crime Deterrence
6.3 Utility Theory and Risk Aversion
Different Preferences Toward Risk
Maximizing Expected Utility
Example 6.3 America's Gambling Craze
6.4 Insurance and Gambling
Why Do Some Individuals Buy Insurance?
Why Do Some Individuals Gamble?
Example 6.4 Gambling and Insuring by the Same Individual--A Seeming Contradiction
6.5 Risk Aversion and Indefference Curves
Example 6.5 Spreading Risks in the Choice of a Portfolio
6.6 Reducing Risk
Gathering More Information
Diversification
Insurance
Example 6.6 Some Disasters Are Non-Diversifiable
At the Frontier Foreign Exchange Risk and Hedging
PART THREE: PRODUCTION, COSTS, AND COMPETITIVE MARKETS
7 PRODUCTION THEORY
7.1 Relating Outputs to Inputs
Organization of Production
Classification of Inputs
7.2 Production with One Variable Input
Total, Average, and Marginal Product
The Geometry of Average and Marginal Product Curves
The Law of Diminishing Returns
Example 7-1 Economics--The Dismal Science Because of Diminishing Returns
7.3 Production with Two Variable Inputs
What Do Isoquants Show?
Derivation of Total Product Curves from the Isoquant Map
7.4 The Shape of Isoquants
Characteristics of Isoquants
Economic Region of Production
Fixed-Proportions Production Functions
Example 7-2 Trading Traveling Time for Gasoline Consumption on the Nation's Highways
Example 7-3 General Motors Decides Smaller is Better
7.6 Technological Progress and International Competitiveness
Meaning and Importance of Innovations
Example 7-4 How Do Firms Get New Technology?
Innovations and the International Competitiveness of U.S. Firms
Example 7-5 How Xerox Lost, Regained, but Is now Struggling to Remain Internationally Competitive
Example 7-6 Score Card on American Industry
At the Frontier The New Computer-Aided Production Revolution and the International Competitiveness of U.S. Firms
8 COSTS OF PRODUCTION
8.1 The Nature of Production Costs
Example 8-1 The Cost of Attending College
8.2 Cost in the Short Run
Total Costs
Per-Unit Costs
Geometry of Per-Unit Cost Curves
Example 8-2 Per-Unit Cost Curves in Corn Production
8.3 Cost in the Long Run
Isocost Lines
Least-Cost Input Combination
Cost Minimization in the Long Run and in the Short Run
Example 8-3 The Least-Cost Combination of Gasoline and Driving Time
8.4 Expansion Path and Long Run Cost Curves
Expansion Path and Long-Run Total Cost Curves
Derivation of the Long-Run Average and Marginal Cost Curves
The Relationship Between Short- and Long-Run Average Cost Curves
Example 8-4 Long-Run Average Cost Curve in Electricity Generation
8.5 Shape of the Long-Run Average Cost Curve
Example 8-5 L-Shaped Long-Run Average cost Curves in Various Industries
Example 8-6 The Minimum Efficient Scale in Various U.S. Food Industries
8.6 Multiproduct Firms and Dynamic Changes in Costs
Economies of Scope
The Learning Curve
Example 8-7 The Learning Curve for the Lockheed L-1011 Aircraft and for Semiconductors
At the Frontier Minimizing Costs Internationally--The New Economies of Scale
9 PRICE AND OUTPUT UNDER PERFECT COMPETITION
9.1 Market Structure: Perfect Competition
Example 9-1