Tyler Cowen, Alex Tabarrok
The following is how the authors of the best-selling textbook Modern Principles of Economics, Third Edition (PDF), Tabarrok and Cowen characterize their work: Learn to make sense of your world. Consider the case of the Invisible Hand. This is both the motto of Modern Principles and the guiding principle behind our pedagogical approach. Vernon Smith, who was awarded the Nobel Prize in economics, said it best when he said, “At the center of economics is a scientific riddle; a scientific wonder as fundamental, deep, and inspiring as that of the expanding universe or the forces that bind matter.” How does order come about when there is freedom of choice?
We hope that the riddle itself, as well as how economists have begun to solve it, will serve as a source of motivation for college students. As a result, we demonstrate how different markets are interconnected and how they react in unexpected ways to shifts in resources and desires.
Consider, for instance, how the market reacts when there is a decrease in the amount of oil available. When the price of oil rises, customers have a financial incentive to reduce their consumption, while producers have a financial incentive to locate additional reserves. However, a rise in the price of oil also pushes Brazilian sugar cane growers to shift more of their production away from sugar and toward ethanol, which leads to an increase in the price of sugar. When there is an increase in the price of sugar, there is a corresponding decrease in the quantity of candy that is purchased. Therefore, one way that the market reacts to a decrease in the supply of oil is by encouraging customers to consume less candy. This is how the market responds. Through studies such as this one, we show students how to see the invisible hand, and in doing so, we help them grasp the world in which they live.
In a similar vein, we give a very simple and one-of-a-kind demonstration of the remarkable invisible hand thesis, which states that without any sort of centralized guidance, competitive markets distribute production across enterprises in a manner that reduces overall costs.
Students need to have an understanding of when their self-interest advances the social interest and when it does not in order for them to comprehend the world they live in. Therefore, the Contemporary Principles of Economics The third edition provides in-depth assessments of public goods and externalities, as well as ethical considerations relating to market earnings and trade. Furthermore, we always address economic theory in the context of real-world concerns such as the depletion of ocean fisheries, the effects of climate change, and the scarcity of human organs that are suitable for transplantation.