Microeconomics

Citation

Parkin, M. (2022). Microeconomics (14th ed., Global Edition). Pearson.

Chapter Summary

The book has twenty chapters in six parts, about 550 pages in the Global Edition paperback. The publisher pitches it at one-semester principles of microeconomics courses. Chapters open and close with a news article that the chapter's tools are used to analyse, and the recurring features named by the publisher are Economics in Action and Economics in the News boxes, Worked Problems with solutions and key figures, in-text Review Quizzes, and interviews with economists. The fourteenth edition adds COVID-19 examples in six chapters and a new section in Chapter 1 on the under-representation of women and minorities in economics.

Chapters 1–2: What is Economics?; The Economic Problem

Part 1, Introduction, defines the subject and introduces the economic way of thinking, including (new in this edition) a section on diversity in the economics profession. Chapter 2 sets out the economic problem of scarcity and choice; the publisher notes a new example on the effects of COVID-19 on the production possibilities frontier.

Chapters 3–7: Demand and Supply; Elasticity; Efficiency and Equity; Government Actions in Markets; Global Markets in Action

Part 2, How Markets Work, is the core of the course. It moves from the demand and supply model (with the hand-sanitizer market in the pandemic as a new example) to elasticity (the elasticity of supply of face masks), then asks whether market outcomes are efficient and fair. Chapter 6 applies the model to government interventions, with a new discussion of the push for a $15 minimum wage, and Chapter 7 extends it to international trade, including the World Trade Organization and the US–China trade war.

Chapters 8–9: Utility and Demand; Possibilities, Preferences, and Choices

Part 3, Households' Choices, gives two accounts of consumer choice: utility and demand in Chapter 8 (with movie streaming during the pandemic as an example), and consumption possibilities and preferences in Chapter 9, where a tax on sugary drinks is analysed.

Chapters 10–15: Organizing Production; Output and Costs; Perfect Competition; Monopoly; Monopolistic Competition; Oligopoly

Part 4, Firms and Markets, is the longest part. It moves from how firms are organised to cost curves (with Amazon's distribution-centre decisions as an example in Chapter 11) and then through the four market structures, from perfect competition (fitness equipment and services in the pandemic) to monopoly, monopolistic competition (product differentiation in streaming services) and oligopoly.

Chapters 16–17: Public Choices, Public Goods, and Healthcare; Externalities

Part 5, Market Failure and Government, treats public choice and public goods, with healthcare as a named application, and externalities, where carbon pricing to reduce emissions is a featured analysis.

Chapters 18–20: Markets for Factors of Production; Economic Inequality; Uncertainty and Information

Part 6 closes the book with the markets for factors of production, a chapter on economic inequality that now covers the increase in inequality caused by the pandemic's effects on the labour market, and a final chapter on uncertainty and information.

Key Concepts

Chapters 1–7: Introduction and How Markets Work

• The economic problem: scarcity forces choices, illustrated by the production possibilities frontier.
• Demand and supply: the model of a competitive market and its equilibrium.
• Elasticity: the responsiveness of quantity demanded or supplied to price and other variables.
• Efficiency and equity: the two standards by which market outcomes are judged.
• Government actions in markets: price ceilings and floors such as minimum wages, and their effects.

Chapters 8–15: Households and Firms

• Utility and demand: the first account of consumer choice, deriving demand from the satisfaction that goods provide.
• Possibilities and preferences: the second account, combining what a household can afford with what it prefers.
• Output and costs: how a firm's costs vary with the quantity it produces.
• Market structures: perfect competition, monopoly, monopolistic competition and oligopoly.

Chapters 16–20: Market Failure, Factor Markets and Information

• Public goods: goods that markets underprovide, a focus of Chapter 16 together with public choice.
• Externalities: costs or benefits that fall on third parties, with carbon pricing as the remedy analysed.
• Factor markets: the markets for factors of production, which determine factor incomes.
• Economic inequality: the distribution of income and wealth and its causes.
• Uncertainty and information: how risk and incomplete information affect decisions and markets.

Critical Analysis

Strengths

• Diagrams and practice built in. The publisher stresses the clarity of the diagrams, and each chapter has Worked Problems with solutions and in-text Review Quizzes, so a student can check progress section by section without separate materials.
• Complete principles coverage. Twenty chapters run from scarcity to factor markets, inequality and information, including a full part on market failure and a chapter on inequality: everything a one-semester principles course is likely to need.
• Current, applied examples. The opening and closing news articles and the Economics in the News boxes connect each chapter to a current issue. The fourteenth edition's examples (the pandemic, minimum wages, the US–China trade war, sugary-drink taxes, carbon pricing) are listed by the publisher chapter by chapter.
• Two routes to consumer theory. Separate chapters on utility and on possibilities and preferences let instructors choose an approach; the preferences-based one is the framework intermediate courses build on.

Limitations

• A principles text, not an intermediate one. The publisher pitches it at a one-semester principles course and emphasises diagrams as its main tool, so it prepares for an intermediate course rather than replacing one.
• Length. At about 550 pages and twenty chapters it is a full textbook; students who want a quick overview first may find Dixit's short book easier.
• Digital extras are separate purchases. MyLab Economics and the Pearson eText are sold separately from the print book.
• Edition dating. The new material in this edition centres on the pandemic years and the trade disputes of the early 2020s, so some of the "current" examples are already dated.

Where It Fits in the Course

Parkin's book is the main principles-level textbook for this microeconomics course. Dixit's Microeconomics: A Very Short Introduction is a short overview of how economists think and can be read in a weekend before starting Parkin; Parkin then supplies the graphs, the definitions and the practice problems. Students who have never taken economics should work through Parkin, or at least Parts 2–4, before moving to the intermediate texts.

For intermediate microeconomics, Varian and Melitz's Intermediate Microeconomics: A Modern Approach builds consumer and producer theory from optimisation with modest calculus, and Pindyck and Rubinfeld's Microeconomics develops the theory mainly through graphs with applications. Parkin's Chapter 9 on possibilities and preferences and Chapters 10–15 on costs and market structure are the direct preparation for both. The graduate texts on the list, Mas-Colell, Whinston and Green's Microeconomic Theory and Jehle and Reny's Advanced Microeconomic Theory, come after an intermediate course, not after this book.

How to Use This Book

No previous economics is required; high-school algebra and the ability to read graphs are enough.

• Core: Parts 1–4 (Chapters 1–15) are the backbone of any principles course. Chapters 3–5 and 11–13 are the most important for later study.
• Choose one consumer chapter if time is short: Chapter 9 (possibilities and preferences) is the better preparation for intermediate microeconomics, whose consumer theory is built on preferences; Chapter 8 (utility and demand) offers the alternative route.
• Selective: Parts 5–6 are often covered more briefly in a principles course; Chapters 17 (externalities) and 20 (uncertainty and information) are worth reading for the topics that intermediate courses develop.
• Practice: do the Worked Problem and the Review Quizzes in every chapter, then redraw the key figures from memory. Read the closing news article last and try to analyse it before reading the book's analysis.

For students preparing for intermediate microeconomics on their own, a four-to-six-week plan through Parts 2–4 with all Worked Problems is a solid foundation.