Principles of Economics
Principles of Economics

Principles of Economics

Lead Author(s): Stephen Buckles

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Question bank is available with every chapter for easy quiz and test creation.

Comparison of Principles of Economics Textbooks

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Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

Pricing

Average price of textbook across most common format

Up to 40-60% more affordable

Lifetime access on any device

$130

Hardcover print text only

$175

Hardcover print text only

$140

Hardcover print text only

Always up-to-date content, constantly revised by community of professors

Content meets standard for Introduction to Anatomy & Physiology course, and is updated with the latest content

In-Book Interactivity

Includes embedded multi-media files and integrated software to enhance visual presentation of concepts directly in textbook

Only available with supplementary resources at additional cost

Only available with supplementary resources at additional cost

Only available with supplementary resources at additional cost

Customizable

Ability to revise, adjust and adapt content to meet needs of course and instructor

All-in-one Platform

Access to additional questions, test banks, and slides available within one platform

Pricing

Average price of textbook across most common format

Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Up to 40-60% more affordable

Lifetime access on any device

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

$130

Hardcover print text only

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

$175

Hardcover print text only

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

$140

Hardcover print text only

Always up-to-date content, constantly revised by community of professors

Constantly revised and updated by a community of professors with the latest content

Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

In-book Interactivity

Includes embedded multi-media files and integrated software to enhance visual presentation of concepts directly in textbook

Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

Customizable

Ability to revise, adjust and adapt content to meet needs of course and instructor

Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

All-in-one Platform

Access to additional questions, test banks, and slides available within one platform

Top Hat

Stephen Buckles, Principles of Economics, Only One Edition needed

Cengage

N. Gregory Mankiw, Principles of Economics, 8th Edition

Pearson

Case, Fair, Oster, Principles of Economics, 12th Edition

McGraw-Hill

McConnell, Brue, Flynn, Principles of Microeconomics, 7th Edition

About this textbook

Lead Authors

Stephen Buckles, Ph.DVanderbilt University

Stephen Buckles is a Senior Lecturer at Vanderbilt University, where he also received his Ph.D. in Economics. Buckles has been the recipient of numerous awards, including Madison Sarratt Prize for Excellence in Undergraduate Teaching (Vanderbilt, 2008), Kenneth G. Elzinga Distinguished Teaching Award (Southern Economic Association, 2006), and the Dean’s Award for Excellence in Teaching (Vanderbilt, 2007). His course pack, which this text is based on, has been used by thousands of students and engages the concepts of active learning.

PJ Glandon, PhDKenyon College

PJ Glandon joined Kenyon College as an Associate Professor of Economics after completing his Ph.D. at Vanderbilt University.

Contributing Authors

Benjamin ComptonUniversity of Tennessee

Caleb StroupDavidson College

Chris CotterOberlin College

Cynthia BenelliUniversity of California

Daniel ZuchengoDenver University

Dave BrownPennsylvania State University

John SwintonGeorgia College

Michael MathesProvidence College

Li FengTexas State University

Mariane WanamakerUniversity of Tennessee

Rita MadarassySanta Clara University

Ralph SonenshineAmerican University

Zara LiaqatUniversity of Waterloo

Susan CarterUnited States Military Academy

Julie HeathUniversity of Cincinatti

Explore this textbook

Read the fully unlocked textbook below, and if you’re interested in learning more, get in touch to see how you can use this textbook in your course today.

Introduction to Economics - Expanded Table of Contents

Introductory Chapters:

1. Introduction to Economics

Why This Book?
Why Economics?
A Structure
The Beginning of Economic Analysis
Limited Resources and Very Large and Growing Wants Lead to Scarcity
Choose What to Produce, How to Produce It, and For Whom to Produce
The Result of Scarcity - Opportunity Cost
Why is Rational Decision-Making Important?
How are Scarcity, Specialization, and Trade Related?
Is There an Economic Role for Government in Economies Dominated by Markets?

2. An Economic Model

A Production Possibilities Frontier
Diminishing Marginal Returns
Increasing Marginal Costs
Economic Efficiency
Technical and Allocative Efficiency
Economic Efficiency and Production Possibilities Frontiers

3. The US and World Economy

What is Gross Domestic Product?
What Kind of Production is Included in GDP?
What is Unemployment? How Do We Measure It?
What is Inflation? How Do We Measure It?
Why Should We Be Concerned About Unemployment and Inflation?

4. Demand, Supply, and Markets

Demand: An Analysis of Buyers
What Factors Determine Buyer Behavior?
How Do You Construct Demand Schedules and Curves?
Supply: An Analysis of Sellers and Producers
What Determines Production?
How Do You Construct Supply Schedules and Curves?
Supply and Demand Together in a Market
Changes in Market Prices
How Does a Shortage Cause Prices to Increase?
What is an Equilibrium in a Market?
How Do We Analyze Supply and Demand?
How Can You Remember the Distinctions Between Demand and Quantity Demanded?
What Conclusions Can We Make About Demand, Supply and Markets?

5. Using Supply and Demand

Price Elasticity of Demand
What Determines the Elasticity of Demand?
Will Total Revenue for a Business Rise or Fall When Its Prices Change?
What Does It Mean to Say That Demand is Perfectly Elastic or Perfectly Inelastic?
Other Elasticities
Factors Influencing Price Elasticity of Supply
Factors Influencing Income Elasticity of Demand
Price Ceilings and Floors
What is Good and What is Bad About Price Ceilings?
Taxes and Subsidies
A Subsidy of a Specific Good

Introduction to Microeconomics:

6. Behind Demand

Consumer Satisfaction
What is Utility?
Why Does Marginal Utility Diminish as We Consume More of a Good?
How Do We Know If Consumers are Maximizing Satisfaction?
A Downward-Sloping Demand Curve
Income and Substitution Effects
Consumer Surplus
The Paradox of Value

7. Behind Supply

Inputs and Outputs
Marginal Product
Average Product
The Relationship Between Marginal Product and Average Product
Costs and Outputs
Fixed Costs
Variable Costs
Total Costs
Marginal Costs
Diminishing Marginal Returns Causes an Increasing Marginal Cost
Average Cost
Average and Marginal Cost Together
Using Cost and Product Analysis

8. Inputs, Production, and Costs in the Long-run 

Efficient Combinations of Labor and Capital
Diminishing Marginal Returns
A Rule for Choosing the Least-Cost Combination of Inputs
Output and Costs in the Long Run
Graphing Long-Run Average Costs
Shapes of Long-Run Average Cost Curves
Shapes of Long-Run Marginal Cost Curves
Shifts in Cost Curves

9. Competitive Markets

Types of Markets
Demand in a Competitive Market
Demand Facing a Competitive Firm
The Decision About How Much to Produce
A New Concept - Marginal Revenue
A Shutdown Decision
Supply in a Competitive Market
The Firm's Supply
The Firm Supply to the Market Supply
A Short-Run Equilibrium
An Economist's Look at Profits
Equilibrium in a Competitive Market
In the Long Run
The Long-Run Price
Economic Efficiency

10. Monopoly

Monopoly
Reasons for Monopolies' Survival
Market Demand and Marginal Revenue
Profit Maximization for a Monopolist
Economic Profit for a Monopolist
Competitive Markets and Monopoly - How Do They Differ?
Economic Efficiency
When is a Monopoly Natural?
Creation of Legal Monopolies
Price Discrimination

11. Between Perfect Competition and Monopoly 

Monopolistic Competition
Short-Run Equilibrium in a Monopolistically Competitive Industry
Long-Run Equilibrium in a Monopolistically Competitive Industry
Oligopoly
Maximizing Profits
Cheating on the Agreement to Act Like a Monopoly
A Payoff Matrix
The Four Markets Model

12. Regulation of Firms with Market Power

Antitrust Law
The Sherman Antitrust Act of 1890
Price Fixing
Merger Rules
Other Issues
Regulating Natural Monopolies
Natural Monopoly
Policy Options

13. The Economic Role of Government

External Costs and External Benefits
Adjusting to External Benefits and External Costs
How Should Pollution Be Reduced?
Reducing Pollution
Private Goods, Public Goods, and Common Resources
Public Goods
The Tragedy of the Commons
Mohair and Other Farm Subsidies 
Regulations on Safety and Quality
Government Failures
Difficulty in Gathering and Interpreting Data
Conflicting Goals
Incentives are Sometimes All Wrong
Incentives are Sometimes Weak

14. Markets for Labor

Changes in Income
Definitions of Wages
Possible Explanations for Low and High Wages
Demand for Labor
Market Demand
Supply of Labor
Supply and Demand
Compensating Differentials
Discrimination
Labor Unions
Winner-Take-All Labor Markets

15. Taxes - Efficiency and Fairness

Government Spending
Government Revenues
Types of Taxes
Why a Tax on Income?
Comparing Taxes
Evaluating Fairness
Benefit and Ability-to-Pay Principles
Horizontal Equity and Vertical Equity
The Effects of Taxes on Efficiency
A Focus on Marginal Rates
Applications of Efficiency vs Fairness

16. Why International Trade? 

Why Trade?
Specialization
Absolute Advantage
Comparative Advantage
International Trade
Objections to Free Trade
Tariffs
Quotas
Are There Legitimate Reasons to Protect Ourselves Against International Competition?
Benefits and Costs of Protecting U.S. Business

17. Capital and Financial Markets

Physical and Financial Capital
Markets for Physical Capital
Demand for Capital
Supply of Capital
Financial Capital
Markets for Financial Capital
Stocks
Risk vs Rate of Return
A Variety of Types of Risk
Interest Rates
Bonds
Diversification for an Individual Saving Plan
Efficiency in Financial Markets
Present Value of Future Income and Payments
International Currency Markets
International Demand for Dollars
International Supply of Dollars
Supply and Demand in the Currency Market
Determinants of Exchange Rate
Purchasing Power Parity
Other Financial Markets

18. Economics After Microeconomics

Scarcity
Opportunity Cost
The Importance of Thinking on the Margin
Efficiency is About Doing the Best We Can With Limited Resources
Incentives Matter
Voluntary Trade Benefits Both Parties Involved
Markets and Competition Push an Economy Toward Efficiency
Externalities Reduce the Efficiency of Market Outcomes
There Is a Tradeoff Between Efficiency and Equity

Introduction to Macroeconomics:

19. Gross Domestic Product, Unemployment, and Inflation

Gross Domestic Product - Its Meaning and Components
Gross Domestic Product Defined
Components of GDP
Spending Equals Production
Income
Are There Better Measures of Standards of Living?
Unemployment
The Costs of Unemployment
The Causes of Unemployment
Full Employment
Inflation
The Consumer Price Index
Cautions

20. Economic Growth

Economic Growth Defined
The Meaning of One and a Half Percent
What Causes Growth?
Opportunity Costs
A Slowdown in Economic Growth
The Causes of Slower Productivity Growth

21. Spending

Gross Spending Product
Components of GDP
Consumption
Investment
Net Exports
Government
A Graphical Model
An Equilibrium. Spending - Output = Income
The Spending Multiplier

22. Aggregate Demand, Aggregate Supply, and a New Equilibrium

Aggregate Demand
Movements Along an Aggregate Demand Curve
Shifts in Aggregate Demand
A Multiplied Effect on Total Spending
Aggregate Supply
The Shape of the Aggregate Supply Curve
Shifts in Aggregate Supply
A New Equilibrium
Investment - A Unique Effect on Aggregate Demand and Aggregate Supply

23. Full Employment and a New Long-run Equilibrium 

Full Employment
Inflation-Unemployment Tradeoff
Changes in Supply
Natural Adjustments
Inflationary Conditions
Recessions
Journalists’ and Economists’ Views of Growth
Determinants of the Full-Employment Rate of Unemployment

24. Money

The Alternatives to Money
Other Monies
Then What is Money?
Why We Use Dollars
The Money Supply
Definitions of the Money Supply
Banking and the Creation of Money
The First Step
How Banks "Make" Money
An Upper Limit
A Cash Withdrawal
The Federal Reserve System
Markets for Money
Supply of Money
Interest Rates
Bond Prices and Interest Rates
The Time Value of Money

25. Monetary Policy 

The Federal Reserve System
Federal Reserve Tools
Open Market Operations
Other Tools for Monetary Policy
Monetary Policy in Action
Monetary Policy in Recessions
Monetary Policy During Inflation
Monetary Policy in a Supply Shock
Why Use Policy?
Challenges of Monetary Policy
Timing
Defining the Money Supply
The Use of Targets
The 2007-2009 Recession
New Monetary Policy Tools
The Monetarists

26. Fiscal Policy

Fiscal Policy Tools
Changes in Spending
Changes in Taxes
Changes in Transfer Payments
Recessions and Inflationary Conditions
Temporary Tax Changes
Supply Shocks
The Bush Tax Changes
Fiscal Policy in 2009
Problems in Implementing Fiscal Policy
Automatic Stabilizers
Budget Deficits and Debt
What is Wrong with Deficits and Debt? Myths and Reality
Definitions of Deficits and Debt
A Simplified Model
Summary of Monetary and Fiscal Policy Effectiveness Discussions

27. Why International Trade?

Why Trade?
Specialization
Absolute Advantage
Comparative Advantage
International Trade
Objections to Free Trade
Tariffs
Quotas
Are There Legitimate Reasons to Protect Ourselves Against International Competition?
Benefits and Costs of Protecting U.S. Business

28. Trade Deficits

International Transaction Accounting
Balance of Trade
Balance on the Current Account
Balance on the Financial Account
Costs of Trade Deficits
The Relationship Between Real GDP and Net Exports

29. International Currency

International Market for Currencies
International Demand for Dollars
International Supply of Dollars
Supply and Demand in the Currency Market
Determinants of Exchange Rates
Financial Conditions
Economic Conditions
Purchasing Power Parity
A Complication
A Strong Dollar
Real Exchange Rates
Causation
Monetary and Fiscal Policy in an Open Economy
Current Account Financial Account Balances
Savings = Investment
Fixed Exchange Rates

30. What We Have Learned and What We Have Not Learned

Ideas for the Future
Important Questions Yet to Be Answered
Case Studies

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