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Principles of Microeconomics

v8.0 John B. Taylor and Akila Weerapana

Acknowledgments

Completing a project like this is a team effort, and we both have been blessed with good students and colleagues who have given us advice and encouragement. 

John B. Taylor

I am grateful to many colleagues and students, whom I have consulted over the years, including Don Brown, Tim Breshanan, Marcelo Clerici-Arias, Anne Kreuger, Tom McCurdy, Paul Milgrom, Roger Noll, John Pencavel, Paul Romer, Nate Rosenberg, Mark Tendell and Frank Wolak. I must acknowledge with very special gratitude Akila’s partnership in this project. Akila first demonstrated his extraordinary teaching and writing skills even before completing his PhD at Stanford. After receiving his PhD, Akila joined the faculty at Wellesley College, where he has taught the Principles course for many semesters and further established his reputation for teaching excellence, and in 2002, received the Anna and Samuel Pinanski Teaching Award. His ability to get complex topics across to his students and his enthusiasm for bringing policy implications alive is clearly reflected in our new coauthored book.

Akila Weerapana

I am exceedingly grateful to John for giving me the opportunity to communicate my enthusiasm for teaching economics to a broader audience than the students in my classes at Wellesley. My passion for economics stems from the inspiration I received from my economics professors: Barbara Craig and Peter Montiel at the undergraduate level, and John Taylor, Frank Wolak, and Chad Jones at the graduate level. I too have benefited immensely from working with my colleagues. The faculty members in the Economics Department at Wellesley live up to the liberal arts ideal that I aspire to, combining excellent teaching with active research. Special thanks are owed to the late Chip Case, Courtney Coile and David Lindauer for the time they spent helping me understand how best to pitch topics in microeconomics that I am less familiar with teaching than they are. The real inspirations for this book, however, are the students that I have taught over the past two decades—two years at Stanford, but especially, the last seventeen years at Wellesley. Without their enthusiasm for economics, their willingness to be continually challenged, and their need to better understand an ever-changing world, none of this would be possible. My contributions to this book are shaped by countless hours spent talking economics with my students.

Together

Together, we would also like to thank William B. Stronge of Florida Atlantic University, who provided wonderful end-of-chapter problems that are conceptually challenging and require students to think more deeply about the concepts. Bill’s efforts helped us meet an incredibly demanding schedule, and we are grateful for his contributions. Numerous reviewers provided insights, suggestions, and feedback along the way—often at critical points in product and supplement development. These individuals include Mohsen Bahmani-Oskooee, University of Wisconsin, Milwaukee; Erik Craft, University of Richmond; David H. Eaton, Murray State University; Lewis Freiberg, Northeastern Illinois University; Wang Fuzhong, Beijing University of Aeronautics & Astronautics; Janet Gerson, University of Michigan; Lisa Grobar, California State University, Long Beach; Ritika Gugnani, Jaipuria Institute of Management (Noida); Gautam Hazarika, University of Texas, Brownsville; Aaron Johnson, Missouri State University; Jacob Kurien, Rockhurst University; Babu Nahata, University of Louisville; Soloman Namala, Cerritos College; Sebastien Oleas, University of Minnesota, Duluth; Greg Pratt, Mesa Community College; Virginia Reilly, Ocean County College; Brian Rosario, University of California, Davis; William B. Stronge, Florida Atlantic University; Della Lee Sue, Marist College; J. S. Uppal, State University of New York, Albany; Michele T. Villinski, DePauw University; and Laura Wolff, Southern Illinois University, Edwardsville. We are grateful to Sarah L. Stafford of the College of William and Mary and Robert J. Rossana of Wayne State University for their detailed and timely accuracy checks of the main texts and several key supplements. We are especially appreciative of the contributions of the Sixth Edition supplements authors for their creativity, dedication, and careful coordination of content; this group includes Sarah E. Culver, University of Alabama, Birmingham; David H. Eaton, Murray State University; John Kane, State University of New York, Oswego; Jim Lee, Texas A&M University, Corpus Christi; John S.Min, Northern Virginia Community College; Wm. Stewart Mounts, Jr., Mercer University; David H. Papell, University of Houston; Virginia Reilly, Ocean County College Center for Economic Education; Brian Rosario, University of California, Davis; John Solow, University of Iowa; William B. Stronge, Florida Atlantic University; Eugenio D. Suarez, Trinity University; and Laura Wolff, Southern Illinois University, Edwardsville. We would also like to thank Edward Gullason of Dowling College for reviewing many of these supplements and Matthew Berg and Julia Ong for copyediting them.

Reviewers

  1. Matthew Alford, Southeastern Louisiana University

  2. Charles Anderson, Kean University

  3. Len Anyanwu, Union County College

  4. Kenneth Ardon, Salem State College

  5. Sukhwinder Bagi, Bloomsburg University

  6. Gaurango Banerjee, University of Texas at Brownsville

  7. Kevin Beckwith, Salem State College

  8. Charles A. Bennett, Gannon University

  9. Derek Berry, Calhoun Community College

  10. Charles Bondi, Morgan State University

  11. Joyce Bremer, Oakton Community College

  12. Amy Chataginer, MS Gulf Coast Community College

  13. Paul Clement, Fashion Institute of Technology-SUNY

  14. Marcelo Clerici-Arias, Stanford University

  15. Barbara Collister-Priestley, Concordia University Ann Arbor

  16. Mitchell Dudley, The College of William & Mary

  17. Dr. J. Pat Fuller, Brevard CC

  18. Cynthia Gamez, The University of Texas at El Paso

  19. Lara Gardner, Southeastern Louisiana University

  20. Dale Garrett, Evangel University

  21. Satyajit Ghosh, University of Scranton

  22. Sarah Ghosh, University of Scranton

  23. Alan Gin, University of San Diego

  24. Judith Grenkowicz, Kirtland Community College

  25. Curry Hilton, Guilford Technical Community College

  26. James Holcomb, University of Texas at El Paso

  27. Gokhan Karahan, Delta State University

  28. Ghebre Keleta, Grambling State University

  29. Deborah Kelly, University of San Diego

  30. Tori Knight, Carson-Newman College

  31. Viju Kulkarni, Mesa College

  32. Sonja Langley, Prairie View A&M University

  33. Sang Lee, Southeastern Louisiana University

  34. Charles Link, University of Delaware

  35. Linda Loubert, Morgan State University

  36. Farzin Madjidi, Pepperdine University/GSEP

  37. Tim McCabe, Tompkins Cortland Community College

  38. Todd McFall ,Wake Forest University

  39. Daniel Morvey, Piedmont Technical College

  40. Shahriar Mostashari, Campbell University

  41. Francis Mummery, Fullerton College

  42. Pattabiraman Neelakantan, East Stroudsburg University

  43. Ogbonnaya Nwoha, Grambling State University

  44. Olugbenga Onafowora, Susquehanna University

  45. Chuck Parker, Wayne State College

  46. Van Pham, Salem State College

  47. Roxana Postolache, Capital University

  48. Rahim Quazi, Prairie View A&M University

  49. MG Quibria, Morgan State University

  50. David Rodgers, Northwestern Connecticut Community College

  51. S. Scanlon Romer, Delta College

  52. Daniel Saros, Valparaiso University

  53. Mark Scanlan, Stephen F. Austin State University

  54. Ted Scheinman, Mt. Hood Community College

  55. Virginia Shingleton, Valparaiso University

  56. Noel Smith, Palm Beach State College

  57. Donald Sparks, The Citadel

  58. Mark Steckbeck, Campbell University

  59. TaMika Steward, Tarrant County College

  60. Chin-Chyuan Tai, Averett University

  61. Robert Tansky, St. Clair Community College

  62. Jill Trask, Tarrant County College

  63. Margie Vance, North Arkansas College

  64. Lisa Verdon, College of Wooster

  65. Ann Wimmer, Iowa Lakes Community College

  66. Benaiah YongoBure, Kettering University