Price Theory: An Intermediate Text

From Preface: "This book is based on a different idea of how economics...should be taught - the idea that since answers are hard to remember and easy to look up, one should instead concentrate on learning ways of thinking. The book has two central purposes. The first is to introduce you to...'the economic way of thinking.' Economists - even economists with widely differing political views - have in common an approach to understanding human behavior that seems natural to them and very odd indeed to most non-economists. This book is designed to introduce you to that way of thinking, in the hope that many of you will find it interesting and at least some may find it irresistible. The second central purpose of the book is to teach you the analytical core or economics as it now exists. One of the features of economics that distinguishes it from most of other social sciences is that it has such a core - a set of well worked out and closely related ideas that underlie almost everything done in the field. That core is price theory - the analysis of why things costs what they do and of how prices function to coordinate economic activity. This book is organized into 6 sections: Section 1 is a general introduction to what economics is and why it is worth learning. Section 2 shows how the prices at which goods and services are sold and the quantities produced and consumed are determined in a simple economy. It is the most important part of the book. Section 3 - Adds the most important complications omitted in the previous section, including firms, monopoly, change, and uncertainty. Section 4 - Introduces the idea of economic efficiency and shows how it can be used to evaluate the outcome of different economic arrangements. Section 5 - Presents a number of real-world applications of the ideas of the previous sections, some of them conventional, most not. The final chapter discusses what economics is good for and what economists do.

This is an excellent introduction into the mindset required for thinking the way an economist should. Intuition is encouraged ahead of diagrams and mathematical explanations and as such it helps the reader to learn the material and more importantly teaches them how to think. No other book relating to economic theory that I know of does this as well as Friedmans does. Persist with this book at least until part 4. After the first three sections you should be able to solve any problem requiring microeconomic analysis.