Preface
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PART I
INTRODUCTION TO THE PRICE SYSTEM

Chapter 1: Economics: The World Around You

Preview.

  1. The Definition of Economics
    1. Scarcity.
    2. Choices.
    3. Rational Self-Interest.
  2. The Economic Approach
    1. Positive and Normative Analysis.
    2. Scientific Method.
    3. Common Mistakes.
    4. Microeconomics and Macroeconomics.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Free Air?"

Economically Speaking "Pumped Up Over Cheap Gas"

Appendix: Working With Graphs

  1. Reading Graphs
    1. Relationships Between Variables.
    2. Independent and Dependent Variables.
    3. Direct and Inverse Relationships.
  2. Constructing a Graph
    1. The Axes.
    2. Constructing a Graph from a Table.
    3. Interpreting Points on a Graph.
    4. Shifts of Curves.
  3. Slopes
    1. Positive and Negative Slopes.
    2. Equations.

Summary
Key Terms
Exercises

Chapter 2: Choice, Opportunity, Costs, and Specialization

Preview

  1. Opportunity Costs
    1. The Opportunity Cost of Going to College.
    2. Tradeoffs and Decisions at the Margin.
    3. The Production Possibilities Curve.
  2. Specialization and Trade
    1. Marginal Opportunity Cost.
    2. Specialize Where Opportunity Costs Are Lowest.
    3. Comparative Advantage.
    4. Specialization and Trade Occur Everywhere.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economically Speaking "Full Monty"

Chapter 3: Markets, Demand and Supply, and the Price System

Preview

  1. Markets
    1. Market and Definition.
    2. Barter and Money Exchanges.
    3. Relative Price.
  2. Demand
    1. The Law of Demand.
    2. The Demand Schedule.
    3. The Demand Curve.
    4. From Individual Demand Curves to a Market Curve.
    5. Changes in Demand and Changes in Quantity Demanded.
    6. International Effects.
  3. Supply
    1. The Law of Supply.
    2. The Supply Schedule and Supply Curve.
    3. From Individual Supply Curves to the Market Supply.
    4. Changes in Supply and Changes in Quantity Supplied.
    5. International Effects.
  4. Equilibrium: Putting Demand and Supply Together
    1. Determination of Equilibrium.
    2. Changes in the Equilibrium price: Demand Shifts.
    3. Changes in the Equilibrium Price: Supply Shifts.
    4. Equilibrium in Reality.

Summary Key Terms Exercises Internet Exercise

Active Learning Exercise

Economic Insight "The Foreign Exchange Market"

Economically Speaking "Feeling the Pain of San Francisco Landlords"

Chapter 4: The Market System and the Private Sector

Preview

  1. The Market System
    1. Customer Sovereignty.
    2. Profit and the Allocation of Resources.
    3. The Flow of Resources.
    4. The Determination of Income.
  2. Households
    1. Number of Households and Household Income.
    2. Household Spending.
  3. Business Firms
    1. Forms of Business Organization.
    2. Business and Statistics.
    3. Firms Around the World.
    4. Entrepreneurial Ability.
    5. Business Spending.
  4. The International Sector
    1. Types of Countries
    2. International Sector Spending.
  5. Linking the Sectors
    1. Household and Firms.
    2. Households, Firms, and the International Sector.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Adam Smith"

Economic Insight "The Successful Entrepreneur (Sometimes It’s Better to Be Lucky Than Good)"

Economically Speaking "Public Pressure on Tabloids Rises"

Chapter 5: The Public Sector

Preview

  1. The Circular Flow
  2. The Role of Government in the Market System
    1. Government as the Guardian of Efficiency.
    2. Information and the Price System.
    3. Externalities.
    4. Public Goods.
    5. Monopoly.
    6. Business Cycles.
    7. The Public Choice Theory of Government.
  3. Overview of the United States Government
    1. Microeconomic Policy.
    2. Macroeconomic Policy.
    3. Government Spending.
  4. Government in Other Economies
    1. Overview of Major Market Economies

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Government Creates a Market for Fishing Rights"

Economically Speaking "The Cutting Edge; Breading the Speed Barrier; With the Regular Internet Congested, Research Scientists are Busy Building Special Routes for Their Own Private Data Flow"

PART II
PRODUCT MARKET BASICS

Chapter 6 : Elasticity: Demand and Supply

Preview

  1. The Price Elasticity of Demand,
    1. The Definition of Price Elasticity.
    2. Demand Curve Shapes and Elasticity.
    3. The Price Elasticity of Demand Is Defined in Percentage Terms.
    4. Average or Arc Elasticity.
  2. The Use of Price Elasticity of Demand
    1. Total Revenue and Price Elasticity of Demand.
    2. Price Discrimination.
  3. Determination of the Price Elasticity of Demand
    1. The Existence of Substitutes.
    2. The Importance of the Product in the Consumer’s Total Budget.
    3. The Time Period Under Consideration.
  4. Other Demand Elasticities
    1. The Cross-Price Elasticity of Demand.
    2. The Income Elasticity of Demand
  5. Supply Elasticities
    1. The Price Elasticity of Supply.
    2. The Long and Short Runs.
    3. Price Elasticities of Demand and Supply

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Price, Revenue, and Profit"

Economically Speaking "Equal-Pricing Bill Passed"

Chapter 7 : Consumer Choice

Preview

  1. Decisions
    1. Utility.
    2. 1.b Diminishing Marginal Utility.
    3. Diminishing Marginal Utility and Time.
    4. Consumers Are Not Identical.
    5. An Illustration: "All You Can Eat,"
  2. Utility and Choice
    1. Consumer Choice.
    2. Consumer Equilibrium.
  3. The Demand Curve Again
    1. The Downward Slope of the Demand Curve.
    2. Consumer Surplus.
    3. Disneyland and Consumer Surplus.
    4. Shifts of Determination of Market Demand.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Does Money Buy Happiness?"

Economically Speaking "Deplore the Stadium Tax? Don’t Buy Cars"

Appendix to Chapter 7 : Indifference Analysis

  1. Indifference Curves
    1. The Shape of Indifference Curves.
    2. The Slope of Indifference Curves.
    3. Indifference Curves Cannot Cross.
    4. An Indifference Map.
  2. Budget Constraint
  3. Consumer Equilibrium

Summary Key Terms Exercise

Chapter 8 : Supply: The Costs of Doing Business

Preview

  1. Firms and Production
    1. The Relationship Between Output and Resources.
    2. Diminishing Marginal Returns.
  2. From Production to Costs
    1. The Calculation of Costs.
    2. The U-Shape of Cost Curves.
  3. Cost Schedules and Cost Curves
    1. 3.a An Example of Costs.
  4. The Long Run
    1. Economies of Scale and Long-Run Cost Curves.
    2. The Reasons for Economies and Diseconomies of Scale.
    3. The Minimum Efficient Scale.
    4. 4.d The Planning Horizon.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Overhead"

Economically Speaking "Massachusetts-Based Raytheon Threatens Relocation to Arizona"

PART III
PRODUCT MARKETS

Chapter 9 : An Overview of Product Markets and Profit Maximization

Preview

  1. Profit Maximization
    1. Economic Profit.
    2. Accountants and Economic Profit.
  2. Marginal Revenue and Marginal Cost
    1. Demand and Cost Curves.
    2. Profit Maximum: Marginal Revenue Equals Marginal Cost.
  3. Selling Environments or Market Structure,
    1. Characteristics of the Market Structures.
    2. Market-Structure Models.
    3. Comparisons of the Market Structures.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economically Speaking "Coca Cola to Expand Fruitopia Line with Teas"

Chapter 10 : Perfect Competition

Preview

  1. The Perfectly Competitive Firm in the Short Run
    1. The Definition of Perfect Competition.
    2. The Demand Curve of the Individual Firm.
    3. Profit Maximization.
    4. Short-Run Profits and Losses.
    5. Short-Run Break-Even and Shutdown Prices.
    6. The Firm’s Supply Curve in the Short Run.
  2. The Long Run
    1. The Market Supply Curve and Exit and Entry.
    2. Normal Profit in the Long Run.
    3. The Predictions of the Model of Perfect Competition.

Summary Key Terms Internet Exercise Active Learning Exercise

Economically Speaking "Food Marketers Show a Taste for Video Growth"

Chapter 11 : Monopoly

Preview

  1. The Market Structure of Monopoly
    1. Market Definition.
    2. The Creation of Monopolies.
    3. Types of Monopolies.
  2. The Demand Curve Facing a Monopoly Firm
    1. Marginal Revenue.
  3. Profit Maximization
    1. What Price to Charge?.
    2. Monopoly Profit and Loss.
    3. Monopoly Myths.
  4. Price Discrimination
    1. Necessary Conditions for Price Discrimination.
    2. Examples of Price Discrimination.
    3. The Theory of Price Discrimination.
    4. Dumping.
  5. Comparison of Perfect Competition and Monopoly
    1. Costs of Monopoly: Inefficiency.
    2. The Deadweight Loss May Be
    3. Overstated.
    4. The Deadweight Losses May Be
    5. Understated.
  1. Supply and the Monopoly Firm.
  2. Regulation.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "How New York’s Taxicab Monopoly was Broken"

Economically Speaking "FROM THE ETHER: Telecom Analyst Ventures Forth with Documentation of Big Baby Bell Rip-Offs"

Chapter 12 : Monopolistic Competition and Oligopoly

Preview

  1. Monopolistic Competition
    1. Profits and Entry.
    2. Monopolistic Competition vs. Perfect Competition.
    3. Nonprice Competition.
  2. Oligopoly and Interdependence
    1. Oligopoly and Strategic Behavior.
    2. Cooperation.
  3. Summary of Market Structures and the Information Assumption
    1. Brand Names.
    2. Guarantees.
    3. Adverse Selection.
    4. Moral Hazard.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The Prisoner’s Dilemma"

Economically Speaking "Chinese Develop Taste for Brand Names, Says Survey"

Chapter 13 : Government Policy Toward Business

Preview

  1. Government and the Private Sector
    1. Theories of Why the Government Intervenes in Business Activity.
    2. Size and Influence.
    3. Concentration in the United States.
  2. Antitrust Policy
    1. Antitrust and Business Activities.
    2. Interpretation.
    3. Procedures.
    4. Remedies.
    5. Demonstration of Antitrust Violations.
    6. Concentration and Business Policy from a Global Perspective.
  3. Regulation
    1. Regulation of Industries That Are Not Natural.
    2. Deregulation and Privatization in the United States.
    3. Social Regulation.
    4. Regulation and Deregulation in Other Countries.
    5. Multinationals, International Regulation, GATT, and the WTO.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economically Speaking "SO2 Emission Allowance Asset"

PART IV
RESOURCE MARKETS

Chapter 14 : An Overview of Resource Markets

Preview.

  1. Buyers and Sellers of Resources
    1. The Resource Markets.
  2. The Market Demand for and Supply of Resources
    1. Market Demand.
    2. Market Supply.
    3. Equilibrium.
  3. How Firms Decide What Resources to Buy
    1. Individual Firm Demand: Marginal Revenue Product.
    2. Marginal Factor Costs.
    3. Hiring When There Is More Than One Resource
    4. Produce Market Structures and Resource Demand.
    5. A Look Ahead.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The Company Town"

Economically Speaking "State Economy Will Feel Asia’s Money Pains"

Chapter 15 : The Labor Market: Wage Differentials and Personnel Practices

Preview

  1. The Supply of Labor
    1. Individual Labor Supply: Labor Leisure Tradeoff.
    2. From Individual to Market Supply
    3. Equilibrium.
  2. Wage Differentials
    1. Compensating Wage Differentials.
    2. Human Capital.
  3. Real-World Personnel Practices
    1. Age Earnings and Age Productivity Profiles.
    2. CEO Pay Packages.
    3. Frequent Relocation of Managers.
    4. Team Production, Job Rating, and Firm-Size Effects.
    5. The Economics of Superstars.
    6. The Labor Market Model and Reality.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The Overworked American?"

Economic Insight "Different Approaches to Pay and Incentives"

Economically Speaking "Higher Apathy"

Chapter 16 : Wage Differentials: Race, Gender, Age, and Unionization

Preview

  1. Discrimination
    1. Definition of Discrimination.
    2. Theories of Discrimination.
    3. Occupational Segregation.
    4. Immigration.
  2. Wage Differentials and Government Policies
    1. Antidiscrimination Laws.
    2. Comparable Worth.
  3. Unionization and Wage Differentials,
    1. Monopsony.
    2. Bilateral Monopoly.
    3. Economic Effects of Unions.
  4. Labor-Market Laws: Minimum Wages and Occupational Safety and the Family and Medical Leave Act
    1. Minimum Wages.
    2. Occupational Safety.
    3. Labor Policies in Other Industrial Nations.

Summary Key Terms Exercises Internet Exercise

Active Learning Exercise

Economic Insight "Unionization in Japan"

Economically Speaking "Both Sides Wield Same Data in Minimum Wage Debate: Raise Won’t Boost Unemployment, Proponents Say" 000

Chapter 17 : Capital and Technological Change

Preview

  1. Capital
    1. Saving.
    2. The Capital Market.
  2. Technological Change
    1. Measuring Technological Change.
    2. Costs and Technological Change.
    3. Whether to Innovate?.
    4. Demand for Capital: Adoption of Technology.
    5. Technology and the Capital Market
  3. Financial Capital
    1. Stocks.
    2. Bonds.
    3. Market for Financial Capital.
    4. Economic Profit.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economically Speaking "Digital Video Debate Divides Industry"

Chapter 18 : Natural Resources and Environmental Policy

Preview

  1. Natural Resources
    1. The Market for Nonrenewable Resources.
    2. The Market for Renewable Resources.
  2. Environmental Problems
    1. The Definition of Externalities.
    2. Private Property Rights and Externalities.
    3. Public Goods.
  3. Public Policies
    1. Externalities.
    2. Government Regulations of Public Goods.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The Problems of Common Ownership"

Economically Speaking "Boulder Targets Traffic Congestion"

PART V
CURRENT ISSUES INVOLVING THE PUBLIC SECTOR AND THE MARKET ECONOMY

Chapter 19 : Aging, Social Security, and Health Care

Preview

  1. The Household
    1. Children.
    2. Changes in Marriage and the Family.
  2. Aging and Social Security
    1. Social Security.
    2. The Viability of Social Security.
  3. Health Economics
    1. Overview.
    2. The Market for Medical Care.
    3. Alternatives: HMO’s and PPO’s.
    4. National Comparisons.
    5. Do the Laws of Economics Apply to Health Care?.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The World is Aging"

Economic Insight "Myths About Social Security"

Economically Speaking "Many Travel a Painful Circuit for Their Managed Health Care"

Chapter 20 : Income Distribution, Poverty, and Government Policy

Preview

  1. Income Distribution and Poverty,
    1. A Measure of Income Inequality.
    2. Income Distribution Among Nations.
    3. Measuring Poverty.
    4. The Definition of Poverty.
    5. Poverty Distribution and Economic Trends.
  2. The Poor
    1. Temporary and Permanent Poverty.
    2. Causes of Poverty.
  3. Government Antipoverty Policies
    1. Tax Policy.
    2. Transfers.
    3. The Effectiveness of Welfare Programs.
    4. Equity and Efficiency.
    5. The Negative Income Tax and Family Allowance Plans

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Economic Development and Happiness"

Economically Speaking "Middle Class Grows in Size and Wealth"

PART VI
ISSUES IN INTERNATIONAL TRADE AND FINANCE

Chapter 21 : World Trade Equilibrium

Preview.

  1. An Overview of World Trade
    1. The Direction of Trade.
    2. What Goods Are Traded.
  2. An Example of International Trade Equilibrium
    1. Comparative Advantage.
    2. Terms of Trade.
    3. Export Supply and Import Demand.
    4. The World Equilibrium Price and Quantity Traded.
  3. Sources of Comparative Advantage
    1. Productivity Differences.
    2. Factor Abundance.
    3. Other Theories of Comparative Advantage.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The Dutch Disease"

Economically Speaking "Stop U.S.–Japan Squabbling Over Trade"

Chapter 22 : International Trade Restrictions

Preview

  1. Arguments for Protection
    1. Creation of Domestic Jobs.
    2. Creation of a "Level Playing Field,"
    3. Government Revenue Creation.
    4. National Defense.
    5. Infant Industries.
    6. Strategic Trade Policy.
  2. Tools of Policy
    1. Tariffs.
    2. Quotas.
    3. Other Barriers to Trade.
  3. Preferential Trade Agreements
    1. Free Trade Areas and Customs Unions.
    2. Trade Creation and Diversion.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "Smoot-Hawley Tariff"

Economically Speaking "Imports and Competition in Domestic Markets"

Chapter 23 : Exchange-Rate Systems and Practices

Preview

  1. Past and Current Exchange-Rate Arrangements
    1. The Gold Standard.
    2. The Bretton Woods System.
    3. The International Monetary Fund and the World Bank.
    4. The Transition Years.
    5. Floating Exchange Rates.
  2. Fixed or Floating Exchange Rates
    1. Equilibrium in the Foreign Exchange Market.
    2. Adjustment Mechanisms Under Fixed and Flexible Exchange Rates.
    3. Constraints on Economic Policy.
  3. The Choice of an Exchange-Rate System
    1. Country Characteristics.
    2. Multiple Exchange Rates.
    3. Overvalued Exchange Rates.

Summary
Key Terms
Exercises
Internet Exercise
Active Learning Exercise

Economic Insight "The IMF and the World Bank"

Economically Speaking "Germans Urge Delay of Euro Adoption"

Glossary G-I

Credits C-I

Index I-I

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