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Economic Theory

framework can be useful in many different contexts. Each piece of
economic theory is first introduced and explained in the context of a
specific application. Most are reused in other chapters, so students see
them in action on multiple occasions. As students progress through the

book, they accumulate a set of techniques and ideas.
The present book emphasizes the economics that most economists

agree upon, minimizing debates and schools of thought. Most key
economic ideas can be understood using basic tools of markets, accounting
identities, and budget sets. These are simpler for students to understand,
are less controversial within the profession, and do not require allegiance

to a particular school of thought.
This textbook introduces students to accessible versions of dynamic
decision-making, choice under uncertainty, and market power from the

beginning. Students are aware that they live in an uncertain world, and
their choices are made in a forward-looking manner. Students are also
aware that firms typically set prices and that most firms sell products that
are differentiated from those of their competitors. Students end up thinking

that economic theory is unrealistic and unrelated to the real world.
The underlying idea of the authors is to provide a student general
understanding of economics as a subject more clearly and analytically.

The authors believe that the study of economics can illuminate much
about the world and that the lessons learned, if properly applied, can make
the world a better place.

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