“Stories are good for us, whether we hear them, read them, write them, or simply imagine them. But stories that we read are particularly good for us. In fact I believe they are essential.”

Frank Smith, Reading: FAQ

More than a decade ago, when Robin and I began writing the first edition of this textbook, we had many small ideas: particular aspects of economics that we believed weren’t covered the right way in existing textbooks. But we also had one big idea: the belief that an economics textbook could and should be built around narratives, that it should never lose sight of the fact that economics is, in the end, a set of stories about what people do.

Many of the stories economists tell take the form of models—for whatever else they are, economic models are stories about how the world works. But we believed that students’ understanding of and appreciation for models would be greatly enhanced if they were presented, as much as possible, in the context of stories about the real world, stories that both illustrate economic concepts and touch on the concerns we all face as individuals living in a world shaped by economic forces.

Those stories have been integrated into every edition, including this one. Once again, you’ll find them in the openers, in special features like Economics in Action, For Inquiring Minds, Global Comparison, and in our business cases. We have been gratified by the reception this storytelling approach has received and in this edition of Microeconomics we continue to expand the book’s appeal by including many new stories on a broad range of topics, many reflecting current events, and by updating and revising others. Specifically, there are six new opening stories, 15 new Economics in Actions, and seven new business cases. As always, a significant number of the features that aren’t completely new have been updated.

We remain extremely fortunate in our reviewers, who have put in an immense amount of work helping us to make this book even better. And we are also deeply thankful to the users who have given us feedback, telling us what works and, even more important, what doesn’t.

Despite the many changes in this new edition, we’ve tried to keep the spirit the same. This is a book about economics as the study of what people do and how they interact, a study very much informed by real-world experience.

We have been extremely gratified by the success of the first three editions of Economics, which has made it one of the best-selling economics textbooks. Yet we are aware that success can have its dangers. Given the book’s wide acceptance, it might be tempting for an author to do less in the next revision. In fact, it might be downright rational. However, we believe we have resisted that temptation in this latest edition.

Because Robin and I both feel that the teaching of economics is at its best when it engages students with real life issues and problems, we have done a major updating of examples, stories, and cases to incorporate many of the most current economics topics. In fact, no other economics textbook updates examples as extensively with each new edition as ours does. This thorough refreshing of examples was one major focus of the revision.

Next was the introduction of significant content changes aimed at improving the chapters on externalities and the welfare state. In both we rethought some content and pedagogy and updated so that the chapters examine post-recession realities and devote even more attention to policy matters. Data has been thoroughly updated in these and all chapters (Chapters like 19, on factor markets, have also undergone an overhaul to include, for example, the latest data on the U.S. labor market). And, all the while, we never ignored the importance of maintaining pedagogical continuity with past editions. Lastly, we have added a new online feature called Work It Out. We hope that these revisions serve to spark a deep appreciation for the power of economics in your students and lead to a more stimulating and rewarding teaching experience for you.

Many New Examples and Stories with an Emphasis on Currency

After touring college campuses and observing antifracking signs everywhere, we were impressed by how much students really do want to participate in the big economic issues of the day. However, we can also note how much today’s students are attached to their energy-hungry devices, from smartphones to tablets to computers to personal dorm fridges. Hence one of the aims of this edition is to both acknowledge students’ idealism as well as to help inform them about the realities of resource scarcity and the need to make choices.

To that end we have made fracking and its effects on the market for natural gas the subject of the opening story for Chapter 3, on supply and demand. However, we have been careful not to take sides in the debate over fracking—while highlighting how it has dramatically lowered the price of energy, like natural gas, we alert students to the environmental concerns it raises in Chapter 16 on externalities. There students will find a second opening story about fracking and the specter of groundwater contamination.

These are just two of the many new examples and stories we have introduced in the fourth edition with the aim of thoroughly freshening up the new edition and keeping it extremely current and relevant. We have paid particular attention to how changes in technology are transforming the economic landscape. For example, we discuss the rise of Uber to illustrate market equilibrium, the use of Smart Grid technology to show the importance of measuring cost, and how the advent of “showrooming” and shopping Apps moves the market for consumer goods closer to one of perfect competition. We have also chosen stories and examples on topics that are close to the lives of today’s students, like the Economics in Action. “The Rise and Fall of the Unpaid Intern,” in Chapter 5 on price controls and quotas. There is also the opening story in Chapter 8 on international trade that illustrates how international supply chains produce the latest iPhone.

We have also chosen topics that illustrate important policy debates, such as the introduction of the Affordable Care Act, the regulatory questions raised by the fight between Amazon and Hachette Books, and the environmental trade-offs of coal-fired versus natural-gas-fired power plants. And as always, we pay great attention to integrating an international perspective, in our Global Comparison feature, but also in the many globally oriented openers, Economics in Actions, For Inquiring Minds, and Business Cases found throughout. All global examples are highlighted with the following icon:

A complete listing of the opening stories, Economics in Actions, For Inquiring Minds, Global Comparisons, and business cases in every chapter can be found on the inside of the front cover and facing page.

A New Focus in Chapter 16, Externalities

We believe environmental concerns are one of the most pressing issues today and are a good means of sparking students’ interests in economics. As already explained, the chapters on supply and demand and externalities, have been changed to focus on the economic and environmental effects of fracking. In the Supply and Demand chapter we trace the supply shocks and demand changes that gave rise to investment in the technology of fracking. Being careful not to take sides, we trace how the supply changes from fracking have significantly altered the equilibrium of the natural gas market.

We take this new approach even further in the Externalities chapter where we’ve added a new opening story to illustrate the concept of a negative externality, using the environmental debate over contaminated groundwater from fracking. Following in that same vein, and in order to sharpen students’ appreciation of environmental trade-offs, we include a new Economics in Action, “How Much Does Your Electricity Really Cost?” that compares the social cost of different types of power generation.

Pedagogical changes to the chapter on externalities include an improved discussion of the costs and benefits of pollution and a much simplified analysis of the Coase theorem. There is also a completely revised and updated section on network externalities, along with a new business case tracing the rise of Facebook and the fall of MySpace to show network externalities in action. Coverage of emissions taxes and tradeable emissions permits has been revised, as well, to allow more teaching flexibility—it is now easy to omit the accompanying graphs if time is short or a less in-depth presentation is preferred. And the accompanying Economics in Action on cap and trade uses the very current example of China’s emergence as the largest source of greenhouse gases today to highlight the global implications of greenhouse gas emissions.

New Coverage of the Affordable Care Act and Other Updates and Improvements in Chapter 18, The Economics of the Welfare State

This chapter is a unique feature of our book that has become even more relevant since first introduced in the second edition. For one thing, the major provisions of the Affordable Care Act, aka Obamacare, went into effect at the beginning of 2014; this is the biggest expansion of the U.S. welfare state since the creation of Medicare in the 1960s. We examine the economics behind the act, and discuss the early, relatively favorable returns of its performance.

Meanwhile, the Great Recession and its aftermath have been a major test of the ability of welfare-state programs to cushion Americans from hardship; we discuss new research showing a dramatic effect from food stamps and other programs in limiting the rise in poverty.

Both of these additions are new to this edition. At the same time, though, the chapter continues to offer a comprehensive look at the U.S. welfare state and its philosophical origins, along with a close look at how programs in the United States compare to those in other countries.

As in Paul’s New York Times columns, this chapter takes a complex topic and reduces it to its essential elements, illuminating the intellectual foundations of our policy choices. It also provides a timely and engaging examination of the challenges that economists and policy makers face when applying economic concepts to daily realities. And despite the many changes and updates, our goal for the chapter is the same: to motivate students to think more deeply about economic trade-offs, social welfare, and the political process.

New Online Feature: Work It Out Tutorials

This new feature ties together our textbook and the accompanying online course materials to offer students online, interactive assistance with solving one key problem in every chapter. Available in , the new Work It Out feature includes an online tutorial that guides students through each step of the problem-solving process. There are also choice-specific feedback and video explanations, providing interactive assistance tailored to each student’s needs. Students can use the Work It Outs, along with the other offerings in , to independently test their comprehension of concepts, build their math and graphing skills, and prepare for class and exams.

Scan here for a sample Work It Out problem.

http://qrs.ly/px49xiv

Our basic approach to textbook writing is the same as it was in the first edition: