CONCLUSION

This chapter has examined the frontier of microeconomics. You may have noticed that we have sketched out ideas rather than fully developing them. This is no accident. One reason is that you might study these topics in more detail in advanced courses. Another reason is that these topics remain active areas of research and, therefore, are still being fleshed out To see how these topics fit into the broader picture, recall’ the Ten Principles of Economics from Chapter 1. One principle states that markets are usually a good way to organize normal activity. Another principle states that governments can sometimes Improve market outcomes. As study economics, you can more fully appreciate the truth of these principles as well as the caveats that go with them. The study of asymmetric information should make you more wary of market outcomes. The study of political economy should make you more wary of government solutions. And the study of behavioral economics should make you wary of any institution that relies on human decision making, including both the market and the government If there is a unifying theme to these topics, it is that life is messy. Information is imperfect government is imperfect, and people are imperfect. Of course, you knew this long before you started studying economics, but economists to understand these imperfections as precisely as they can if they are to explain, and perhaps even improve, the world around them.

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