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Updating Soon - November 2024
Cover of Principles of Economics v5.0
Publishing: 
November 2024
ISBN (Digital): 
979-8-88794-199-8

Principles of Economics

Version 5.0
By Alan Grant, Libby Rittenberg, and Timothy Tregarthen

Included Supplements

Homework and supplements available December 6, 2024.

Key Features

  • Over 110 embedded links to streaming videos enrich hybrid and online courses. They capture students’ interest, counter the perception of economics as the “dismal science,” and reveal the deeper meanings of economic principles in memorable ways
  • The integrating theme for the microeconomics chapters is the marginal decision rule, a simple approach to choices that optimize the value of some objective. Instead of a hodgepodge of rules for different market conditions, the authors provide a commonly accepted foundational rule that can be applied within any market setting
  • The integrating theme for the macroeconomics chapters is the model of aggregate demand and aggregate supply. This model encourages learners to consider both short-run and long-run concepts to address a variety of policy issues and debates more efficiently
  • Relies heavily on real-world data. The macroeconomics chapters, in particular, draw heavily on data from the FRED database, and contains over 45 time series graphs
  • The book’s data-driven approach isn’t limited to the ordinary (GDP, unemployment, inflation, etc.). It also illustrates the interesting and distinctive, including the unusual efforts of 1700s English homebuilders to avoid the window tax (Section 4.4); the optimal amount of exercise (Section 8.2); and the remarkable correlation between consumer confidence and spending on durable goods over a 60-year time horizon (Figure 20.3)
  • Every chapter begins with a brief Start Up scenario, a timely, real-world attention-getter that often puts students into a decision-making role. Examples include: is going to college a good investment? (Chapter 12); why is it so hard to find an inexpensive pair of eyeglasses? (Chapter 11); and what’s the best strategy for becoming a millionaire? (Chapter 23)
  • Seamlessly incorporates the lessons learned so far from the COVID-19 pandemic, the related recession, and the inflationary recovery
  • Supportive learning features include:
    • Start Up features vividly demonstrate the link between theory and reality and are revisited throughout the chapter
    • Learning Objectives at the start of each main section preview the material to come and prepare students to learn
    • Heads Up! notes warn of common errors and explain how to avoid making them 
    • Key Takeaways at the end of each main section reflect the corresponding Learning Objectives and summarize key ideas in bullet-point fashion. Key Takeaways enable the learner to pause and consolidate the information just read into a "chunk." This process enables the reader to better understand and retain the section’s content and its key concepts
    • Key Terms and a marginal glossary help students understand and become comfortable with important vocabulary and phrases
    • Pop! Goes the Econ features provide links to contemporary examples that connect with students. Engaging examples include “Ron Swanson Weighs in on Specialization and Exchange” (Section 2.4), “Market Failure in A Beautiful Mind” (Section 6.4), “Bart Simpson Starts a Bank Run,” (Section 22.3), and “Crowding Out in The Shawshank Redemption” (Section 25.4). Each Pop! Goes the Econ video is linked to one or more end-of-chapter problems
    • Try It! problems are organized by main section. These problems encourage active learning and help students confirm they understand the material just covered. Each Try It! problem is linked to a similar end-of-chapter exercise
    • Case in Point scenarios are applications illustrating the influence of economic forces on real issues and real people such as “A Deadly Elasticity” (Section 5.3) or “Jerome Powell and the Triple Mandate” (Section 24.2). Each Case in Point application is linked to an end-of-chapter problem
    • Summary pulls together the information presented in the chapter to enhance recall and facilitate test preparation 
    • End-of-Chapter Concept Problems and Numerical Problems help students check understanding, promote discussion, and prompt learners to analyze and think critically about material just presented
  • Customizable

Principles of Economics is suitable for introductory economics courses usually called Principles of Economics, Economics Principles, Introductory Economics, or similar titles taught primarily at the undergraduate level at two- and four-year colleges and universities. It may also be appropriate for courses taught at the MBA level. This full-length volume encompasses both microeconomics and macroeconomics and would typically be used in a full-year sequence. Separate volumes titled Principles of Microeconomics and Principles of Macroeconomics are available for semester- or quarter-long courses.


The book’s two core premises structure the narrative and enliven its many supportive learning features:

  1. Economics is a unified discipline and not a bewildering array of seemingly unrelated topics. As a result, the book is built around key integrating themes of the marginal decision rule (microeconomics) and the model of aggregate demand and aggregate supply (macroeconomics). 
  2. Basic economic principles are relevant to daily life and should be explained in everyday contexts. In this way, learners more readily perceive and understand the deeper meaning of core economic ideas. Engaging in-text applications and plentiful embedded video links are drawn from sports, politics, campus life, popular culture, and other familiar settings to illustrate the connections between theoretical principles and common experiences. 

Examples of the forward-looking perspective of Version 5.0 include new research on the impact of AI on labor markets, the effects of graduating college during an economic downturn, managing the overuse of water resources, and controversies surrounding the effectiveness of monetary and fiscal policy. This version also provides an up-to-date evaluation of the COVID-19 recession, including its impact on economic inequality, data-driven descriptions of the extraordinary policy response, and lingering aftereffects of such policies. As in previous versions, there is an appropriate balance between current issues and historical context.

New in This Version

  • Enhanced discussion of the COVID-19 pandemic, including extensive coverage of  recovery-induced inflation and the Fed’s subsequent tightening
  • Seventeen new “Case in Point” features highlight news items, academic research, and economic curiosities to help students connect theory with the real world:
    • “Economics Scores Big in Professional Soccer” (Section 1.3)
    • “Tumbleroot Brewery Gets Out of the Booze Business” (Section 3.3)
    • “Vegas Refuses to Gamble on Water” (Section 5.2)
    • “A Deadly Elasticity” (Section 5.3)
    • “Not Enough Rat Poison in Your Drinking Water” (Section 6.2)
    • “Life in the Fast Lane” (Section 7.2)
    • “Economies of Scale: Ruining Beer Since 1941” (Section 8.3)
    • “Opera Hits Soaring High Notes, Thanks to Copyright” (Section 10.2)
    • “Drought Relief: Two-Way Trade in Virtual Water” (Section 14.3)
    • “A COVID-19 Inequality” (Section 16.2)
    • “People Lie. Their Data Doesn't” (Section 16.4)
    • “Will AI Increase Unemployment?” (Section 19.4)
    • “Full Adjustment in Record Time” (Section 20.4)
    • “Fed's Inflation Policy Drives SVB Under” (Section 22.3)
    • “Jerome Powell and the Triple Mandate” (Section 24.2)
    • “Can an Equation Beat the Fed at Monetary Policy?” (Section 24.4)
    • “Driving Blind” (Section 29.4)
  • Dozens of new Pop! Goes the Econ embedded links to streaming videos. To enhance learning, each Pop! Goes the Econ video is now linked to an accompanying end-of-section problem
  • Timely and full discussion of the Fed’s monetary policy regime in the ample reserves era in “The Federal Reserve System” (Section 22.4)
  • Thorough revision of each chapter’s end-of-chapter problems, including problems linked to each Try It! problem, each Case in Point application and each Pop! Goes the Econ video
  • A new section “The Gains from Trade” (Section 14.2) discusses the sources of comparative advantage
  • Hundreds of new graphing problems in FlatWorld Homework

In Progress

All instructor supplements will be available by December 6, 2024.

Homework system for this title will be live by December 6, 2024.

  • About the Authors
  • Acknowledgments
  • Dedication
  • Preface
  • Chapter 1: Economics: The Study of Choice

  • 1.1 Start Up: Economics in the News
  • 1.2 Defining Economics
  • 1.3 The Field of Economics
  • 1.4 The Economist’s Tool Kit
  • 1.5 Review and Practice
  • Chapter 2: Confronting Scarcity: Choices in Production

  • 2.1 Start Up: An Attempt to Produce Safer Air Travel
  • 2.2 Factors of Production
  • 2.3 The Production Possibilities Curve
  • 2.4 Applications of the Production Possibilities Model
  • 2.5 Review and Practice
  • Chapter 3: Demand and Supply

  • 3.1 Start Up: Crazy for Coffee
  • 3.2 Demand
  • 3.3 Supply
  • 3.4 Demand, Supply, and Equilibrium
  • 3.5 Review and Practice
  • Chapter 4: Applications of Demand and Supply

  • 4.1 Start Up: Better. Faster. Cheaper.
  • 4.2 Putting Demand and Supply to Work
  • 4.3 Government Intervention in Markets: Price Floors and Price Ceilings
  • 4.4 Government Intervention in Markets: Taxes
  • 4.5 Review and Practice
  • Chapter 5: Elasticity: A Measure of Response

  • 5.1 Start Up: Raise Fares? Lower Fares? What’s a Public Transit Manager to Do?
  • 5.2 The Price Elasticity of Demand
  • 5.3 Responsiveness of Demand to Other Factors
  • 5.4 Price Elasticity of Supply and Putting It All Together
  • 5.5 Review and Practice
  • Chapter 6: Markets, Maximizers, and Efficiency

  • 6.1 Start Up: A Drive in the Country
  • 6.2 The Logic of Maximizing Behavior
  • 6.3 Maximizing in the Marketplace
  • 6.4 Market Failure
  • 6.5 Review and Practice
  • Chapter 7: The Analysis of Consumer Choice

  • 7.1 Start Up: A Day at the Grocery Store
  • 7.2 The Concept of Utility
  • 7.3 Utility Maximization and Demand
  • 7.4 Review and Practice
  • Chapter 8: Production and Cost

  • 8.1 Start Up: Street Cleaning Around the World
  • 8.2 Production Choices and Costs: The Short Run
  • 8.3 Production Choices and Costs: The Long Run
  • 8.4 Review and Practice
  • Chapter 9: Competitive Markets for Goods and Services

  • 9.1 Start Up: Always on the Margin; Always on the Edge
  • 9.2 Perfect Competition: A Model
  • 9.3 Profit Maximization in the Short Run
  • 9.4 Perfect Competition in the Long Run
  • 9.5 Review and Practice
  • Chapter 10: Monopoly

  • 10.1 Start Up: Surrounded by Monopolies
  • 10.2 The Nature of Monopoly
  • 10.3 The Monopoly Model
  • 10.4 Assessing Monopoly
  • 10.5 Review and Practice
  • Chapter 11: The World of Imperfect Competition

  • 11.1 Start Up: Looking at the World Through Cash-Colored Glasses
  • 11.2 Monopolistic Competition: Competition Among the Many
  • 11.3 Oligopoly: Competition Among the Few
  • 11.4 Extensions of Imperfect Competition: Advertising and Price Discrimination
  • 11.5 Review and Practice
  • Chapter 12: Factor Markets

  • 12.1 Start Up: College Pays
  • 12.2 Labor Markets: Demand and Supply
  • 12.3 Labor Markets in Perfect Competition
  • 12.4 Imperfectly Competitive Labor Markets: Monopoly and Monopsony
  • 12.5 Review and Practice
  • Chapter 13: Public Finance and Public Choice

  • 13.1 Start Up: Your Tax Dollars at Work
  • 13.2 The Role of Government in a Market Economy
  • 13.3 Financing Government
  • 13.4 Choices in the Public Sector
  • 13.5 Review and Practice
  • Chapter 14: International Trade

  • 14.1 Start Up: Support Your Local Poet
  • 14.2 The Gains from Trade
  • 14.3 Partial Equilibrium and Two-Way Trade
  • 14.4 Restrictions on International Trade
  • 14.5 Review and Practice
  • Chapter 15: The Economics of the Environment and Natural Resources

  • 15.1 Start Up: Environmental Headwinds
  • 15.2 Maximizing the Net Benefits of Pollution
  • 15.3 Alternatives in Pollution Control
  • 15.4 Natural Resources and Conservation
  • 15.5 Review and Practice
  • Chapter 16: Inequality, Poverty, and Discrimination

  • 16.1 Start Up: Occupy Wall Street; Change the World?
  • 16.2 Income Inequality
  • 16.3 The Economics of Poverty
  • 16.4 The Economics of Discrimination
  • 16.5 Review and Practice
  • Chapter 17: Introduction to the Macroeconomy: Measuring the Economy’s Output

  • 17.1 Start Up: Your Uncertain Future
  • 17.2 Measuring Total Output: GDP and Its Components
  • 17.3 Real GDP, Economic Growth, and Business Cycles
  • 17.4 GDP and Economic Well-Being
  • 17.5 Review and Practice
  • Chapter 18: The Price Level and Inflation

  • 18.1 Start Up: College Is More Expensive Than Ever . . . Or Is It?
  • 18.2 Measuring Prices and Inflation
  • 18.3 The Causes of Inflation
  • 18.4 The Consequences of Inflation
  • 18.5 Review and Practice
  • Chapter 19: Unemployment

  • 19.1 Start Up: This One Was Different . . . But Was That Better or Worse?
  • 19.2 Measuring Unemployment
  • 19.3 The Nature of Unemployment
  • 19.4 Policy Implications of Unemployment
  • 19.5 Review and Practice
  • Chapter 20: Aggregate Demand and Aggregate Supply

  • 20.1 Start Up: The Great Warning
  • 20.2 Aggregate Demand
  • 20.3 Aggregate Demand and Aggregate Supply: The Long Run and the Short Run
  • 20.4 Recessionary and Inflationary Gaps and Long-Run Macroeconomic Equilibrium
  • 20.5 Review and Practice
  • Chapter 21: Economic Growth

  • 21.1 Start Up: How Important Is Economic Growth?
  • 21.2 The Significance of Economic Growth
  • 21.3 Growth and the Long-Run Aggregate Supply Curve
  • 21.4 A Recipe for Economic Growth
  • 21.5 Review and Practice
  • Chapter 22: The Nature and Creation of Money

  • 22.1 Start Up: Holy Mackerel—This Fish Story Is True!
  • 22.2 What Is Money?
  • 22.3 The Banking System and Money Creation
  • 22.4 The Federal Reserve System
  • 22.5 Review and Practice
  • Chapter 23: Financial Markets and the Economy

  • 23.1 Start Up: Who Wants to Be a Millionaire?
  • 23.2 The Functions of Financial Instruments
  • 23.3 The Bond and Foreign Exchange Markets
  • 23.4 Demand, Supply, and Equilibrium in the Money Market
  • 23.5 Review and Practice
  • Chapter 24: Monetary Policy and the Fed

  • 24.1 Start Up: The Fed Goes to War
  • 24.2 Monetary Policy in the United States
  • 24.3 Problems and Controversies of Monetary Policy
  • 24.4 The Trade-Off Between Inflation and Unemployment
  • 24.5 Review and Practice
  • Chapter 25: Government and Fiscal Policy

  • 25.1 Start Up: A Massive Stimulus
  • 25.2 Government and the Economy
  • 25.3 The Use of Fiscal Policy to Stabilize the Economy
  • 25.4 Fiscal Policy in Practice
  • 25.5 Review and Practice
  • Chapter 26: Consumption and the Aggregate Expenditures Model

  • 26.1 Start Up: Consumption Spending Plummets as the COVID-19 Recession Begins
  • 26.2 Determining the Level of Consumption
  • 26.3 The Aggregate Expenditures Model
  • 26.4 Aggregate Expenditures and Aggregate Demand
  • 26.5 Review and Practice
  • Chapter 27: Investment and Economic Activity

  • 27.1 Start Up: Jittery Firms Slash Investment as Great Recession Unfolds
  • 27.2 The Role and Nature of Investment
  • 27.3 Determinants of Investment
  • 27.4 Investment and the Economy
  • 27.5 Review and Practice
  • Chapter 28: Net Exports and International Finance

  • 28.1 Start Up: Currency Crises Shake the World
  • 28.2 The International Sector: An Introduction
  • 28.3 International Finance
  • 28.4 Exchange Rate Systems
  • 28.5 Review and Practice
  • Chapter 29: A Brief History of Macroeconomic Thought and Policy

  • 29.1 Start Up: Three Revolutions in Macroeconomic Thought
  • 29.2 The Great Depression and Keynesian Economics
  • 29.3 Keynesian Economics in the 1960s and 1970s
  • 29.4 Macroeconomics for the Twenty-First Century
  • 29.5 Review and Practice
  • Appendix A: Graphs in Economics

  • A.1 Graphs in Economics
  • A.2 Nonlinear Relationships and Graphs Without Numbers
  • A.3 Using Graphs and Charts to Show Values of Variables
  • A.4 Review and Practice
  • Appendix B: The Solow Model of Economic Growth

  • B.1 Capital Accumulation and Economic Growth
  • B.2 Review and Practice
  • Appendix C: Indifference Curve Analysis of Consumer Choice

  • C.1 Indifference Curve Analysis: An Alternative Approach to Understanding Consumer Choice
  • C.2 Review and Practice
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    Alan Grant Baker University

    Alan Grant (PhD Kansas State University) is the Barbara and Charles A. Duboc University Professor at Baker University. A past president of the Omicron Delta Epsilon international honor society for economics, Grant has been nationally recognized for teaching excellence. His research has been published in numerous professional journals and has been highlighted in The Wall Street Journal, Businessweek, The Economist, NPR’s Planet Money, and The New York Times. Alan is the author or co-author of two FlatWorld titles: Economic Analysis of Social Issues and, with Libby Rittenberg and Timothy Tregarthen, Principles of Economics, including its two-volume version Principles of Macroeconomics and Principles of Microeconomics. Alan is also the co-author of the mass-market economics book, Seinfeld and Economics: Lessons on Everything from the Show about Nothing. He is currently writing a second mass-market economics book, Game Theory of Thrones.

    Libby Rittenberg Colorado College

    Libby Rittenberg (PhD Rutgers University) is Professor Emerita of Economics at Colorado College. She also served as the Dean of Summer Programs as well as the college’s ombudsperson. As a professor, she frequently taught Principles of Economics, Intermediate Macroeconomic Theory, Comparative Economic Systems, and a senior seminar on the International Political Economy. Throughout her academic career, Libby was deeply involved in study abroad education and directed programs in central Europe and Turkey. She was honored to have been a Fulbright Lecturer. Her research has focused on the internationally oriented areas of economics, with numerous articles on comparative and development economics, and a particular emphasis on the Turkish economy. 

    Timothy Tregarthen University of Colorado Colorado Springs

    Timothy Tregarthen (PhD University of California, Davis) is Professor Emeritus of Economics at the University of Colorado-Colorado Springs. There is one word that captures the essence of Tim Tregarthen—inspiring. Tim was first diagnosed with multiple sclerosis in 1975, yet, he continued a remarkable academic career of teaching and research which includes an autobiography recounting his experiences with multiple sclerosis titled Suffering, Faith, and Wildflowers. Tim was formerly on faculty at University of Colorado-Colorado Springs. 

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