Theory is useless unless it leads to applications. But real-world problems remain a buzzing, blooming confusion absent a systematic theory to put them in intellectual order. Earlier editions of this book pioneered an approach, not totally new but given unusual emphasis by us, that weaves together economic theory and real-world applications. Most current intermediate microtheory texts have come to follow our lead and also now try to enrich the theoretical exposition with selected applications. Our enthusiasm for and experience in discovering, describing, and analyzing how microtheory works out in the real world nevertheless lend a special strength to Price Theory and Applications.

To this end the many brief “Examples” that direct attention to specific applications remain, as in previous editions, a hallmark of Price Theory and Applications. This edition contains more than a hundred such examples. These discussions generally describe recent research published in scholarly books and articles and so also give students a better idea of the scientific work that professional economists actually do. (The media typically picture economists as a band of squabbling soothsayers – some saying business will be good, others always predicting doom. Students may be surprised to find that there are any scientifically validated results in economics.) In addition, at appropriate places the text provides “Applications” representing a wide range of topics, among them rationing in wartime (Chapter 5), import quotas (Chapter 7), alleged monopolistic suppression of inventions (Chapter 9), minimum wage laws (Chapter 12), the effects of Social Security on saving (Chapter 15), fair division of disputed property (Chapter 16), and whether you should pay ransom to a kidnapper (Chapter 17).