Third Edition   ©2015

Modern Principles of Economics

Tyler Cowen , Alex Tabarrok

  • ISBN-10: 1-4292-7839-0; ISBN-13: 978-1-4292-7839-3; Format: Cloth Text, 960 pages

New Chapter 24, Asymmetric Information: Moral Hazard and Adverse Selection
This new chapter covers principal–agent problems and how producers may attempt to take advantage of consumers—for instance, when the producer knows more about the quality of the good than does the consumer. The key concepts of moral hazard and adverse selection are stressed and illustrated with examples, including automobile mechanics, used car salespeople, doctors, health insurance, and online Internet reviews.
Enhanced coverage of Game Theory
Chapter 15, Oligopoly and Game Theory
now has more on cheating games, the prisoner’s dilemma, and cartel stability, plus new discussions of price matching games and consumer loyalty programs, such as frequent flyer miles and buyer clubs. Why do “lowest-price” guarantees lead to higher prices?
Early Introduction of Consumer Surplus and Producer Surplus
Cowen and Tabarrok introduce these modern tools for analyzing the efficiency of markets in the supply and demand chapter (Ch. 3), much earlier than typical introductory textbooks.
Improved Presentation of the Solow Model
This edition offers a clearer path from catching-up growth to cutting-edge growth, highlighting the key importance of new ideas in fostering growth (Growth, Capital Accumulation and the Economics of Ideas, Econ: Ch. 28; Macro: Ch. 8).
Refined Coverage of Aggregate Demand/Aggregate Supply
Instructors now can cover Business Fluctuations: Aggregate Demand and Supply (Econ: Ch. 32; Macro: Ch. 13), without covering the Solow model at all.
New coverage of
  • Economic growth and geography (The Wealth of Nations and Economic Growth, Econ: Ch. 27; Macro: Ch. 7) 
  • The experience of the U.S. economy coming out of the Great Recession (Unemployment and Labor Force Participation, Econ: Ch. 30; Macro: Ch. 11 and Fiscal Policy, Econ: Ch. 37; Macro: Ch. 18)
  • Quantitative easing (The Federal Reserve System and Open Market Operations, Econ: Ch. 34; Macro: Ch. 15)
  • A nominal GDP rule (Monetary Policy, Econ: Ch. 35; Macro: Ch. 16)

LaunchPad helps instructors by making it easier for students to come to class better prepared and more likely to be engaged with the material—and by making it easier to build and administer the course online:
  • LaunchPad Units organize digital content (e-book, study tools, assessments) by chapter. Instructors can assign these expertly curated, pre-built units as is or customize them with additional LaunchPad resources or their own material. A complete course is just minutes away
  • LearningCurve adaptive quizzing responds to each individual’s correct and incorrect answers, providing instant feedback, tailor-made quizzes, and a unique learning path for each student. 
  • LaunchPad’s Gradebook offers clear window on performance of each student or the class as a whole, for any assignments or the entire term.  
New online feature! Work It Out
Available in LaunchPad, Work It Out puts one problem from each chapter in an interactive tutorial setting.  Video instruction guides students toward the solution of the problem step by step.
New Videos
The authors have created on-line videos for most chapters in the book. These videos are short (3-7 minutes), lively, and to the point. The video links are included in the book along with QR codes for mobile access. Accessible versions of the videos also exist in LaunchPad and incorpo¬rate thoughtful questions to assess student understanding.