Sonia Jaffe

An authoritative textbook based on the legendary economics course taught at the University of Chicago—now fully updated and expandedPrice 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, emphasizing 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 emphasizes how, through markets, households and businesses adapt to conditions like price controls and externalities. It modernizes the Marshallian idea of forward-falling supply, especially for analyzing human capital, and makes use of the cost function and Hicks-Marshall laws to analyze a variety of economic phenomena. Rooted in Chicago’s price theory tradition, this textbook enables students to understand human behavior through the lens of price theory, showing how a small set of well-mastered tools makes it possible to analyze a remarkably wide range of economic questions. Now features a full chapter closely integrating economic reasoning with the treatment-control paradigmCovers topics such as occupational choice, the evolution of inequality, the value of a statistical life, prohibition, and competitionComes with lesson plans for minicourses in industrial organization, health, macro, labor, public finance, and urban economicsAccompanied by video lectures taught by Kevin M. Murphy, Gary Becker, Casey B. Mulligan, and Robert MintonUses the economics of “nudges” to understand business contracts and the organization of civil societyIncludes analysis of business-to-business transactionsDiscusses the future implications of artificial intelligence

An authoritative textbook based on the legendary economics course taught at the University of ChicagoPrice theory is a powerful analytical toolkit for measuring, explaining, and predicting human behavior in the marketplace. This incisive textbook provides an essential introduction to the subject, offering a diverse array of practical methods that empower students to learn by doing. Based on Economics 301, the legendary PhD course taught at the University of Chicago, the book emphasizes the importance of applying price theory in order to master its concepts. Chicago Price Theory features immersive chapter-length examples such as addictive goods, urban-property pricing, the consequences of prohibition, the value of a statistical life, and occupational choice. It looks at human behavior in the aggregate of an industry, region, or demographic group, but also provides models of individuals when they offer insights about the aggregate. The book explains the surprising answers that price theory can provide to practical questions about taxation, education, the housing market, government subsidies, and much more. Emphasizes the application of price theory, enabling students to learn by doingFeatures chapter-length examples such as addictive goods, urban-property pricing, the consequences of prohibition, and the value of a statistical lifeSupported by video lectures taught by Kevin M. Murphy and Gary BeckerThe video course enables students to learn the theory at home and practice the applications in the classroom