An authoritative textbook based on the legendary economics course taught at the University of Chicago now fully updated and expanded. Price theory is a powerful analytical tool kit for measuring, explaining, and predicting market outcomes. This expanded second edition of Chicago Price Theory offers a unique approach to the subject, emphasising hands-on, practical applications that can help students adeptly integrate economic theory with real-world forces. A key distinction is its focus on market equilibrium and gains from trade. Unlike many microeconomics texts, this book emphasises how, through markets, households and businesses adapt to conditions like price controls and externalities. It modernises the Marshallian idea of forward-falling supply, especially for analysing human capital, and makes use of the cost function and Hicks-Marshall laws to analyse a variety of economic phenomena. Rooted in Chicago’s price theory tradition, this textbook enables students to understand human behaviour through the lens of price theory, showing how a small set of well-mastered tools makes it possible to analyse a remarkably wide range of economic questions.
