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We have also included a section of advanced material on the losses from random allocation that may be skipped in larger classes or if time constrains. We have greatly simplified the presentation on cost curves and removed most of production theory, so do take the time to cover monopoly and the chapter on price discrimination. Students love the material on price discrimination because once they understand the concepts, they see the applications all around them. Chapter 16, “Competing for Monopoly: T he Economics of Network Goods,” is a very appealing chapter for students, and we recommend it for its applications, but if you don’t have time, it can be skipped.

Students are very familiar with examples such as Facebook and they want to know how the principles of economics apply to these contemporary goods. We even challenge students by showing how the principles of network externalities apply to cultural goods and even to the songs they listen to! A modern text needs to place economics in context. We have a whole chapter on normative judgments (Chapter 21). It covers the assumptions behind costbenefit analysis, the idea of a Pareto improvement, and the ethical judgments that have been used to praise or condemn economic reasoning.

Modern Principles is the only principles book with a balanced treatment of real business cycle theory and New Keynesian macroeconomics. Financial panics and asset bubbles are covered—a topic of great interest in today’s environment! There are separate and comprehensive chapters on financial intermediation and on the stock market. We also cover the financial crisis that began in 2007. We look closely at unemployment, its nature and causes, including the unusually long duration of unemployment experienced in the United States after the financial crisis.

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