Principles of Economics (2nd Ed.)

Description

Mateer and Coppock's approach teaches economic decision-making with applications that students will remember. Mateer and Coppock, leading researchers in Economics teaching who have consistently taught Principles over a combined forty-plus years, brought their innovative teaching experiences to this blockbuster text. They put economics into context by making it relatable through carefully crafted real-world examples, a problem-solving pedagogy that emphasizes economic decision-making, and a voice that speaks directly to students. Cover (Principles of Economics)......Page 1 Front Matter......Page 2 Title Page......Page 4 Copyright......Page 5 Dedication......Page 6 Brief Contents......Page 8 Contents......Page 10 Preface......Page 32 Acknowledgments......Page 46 About the Authors......Page 51 Part I - Introduction......Page 54 1 - Five Foundations of Economics......Page 55 What Is Economics?......Page 57 What Are Five Foundations of Economics?......Page 58 Conclusion......Page 71 2 - Model Building and Gains from Trade......Page 77 How Do Economists Study the Economy?......Page 79 What Is a Production Possibilities Frontier?......Page 84 What Are the Benefits of Specialization and Trade?......Page 90 What Is the Trade-off between Having More Now and Having More Later?......Page 97 Conclusion......Page 101 Graphs That Consist of One Variable......Page 108 Graphs That Consist of Two Variables......Page 110 Cautions in Interpreting Numerical Graphs......Page 116 Part II - The Role of Markets......Page 120 3 - The Market at Work: Supply and Demand......Page 121 What Are the Fundamentals of Markets?......Page 123 What Determines Demand?......Page 126 What Determines Supply?......Page 136 How Do Supply and Demand Interact to Create Equilibrium?......Page 145 Conclusion......Page 148 Appendix 3A: Changes in Both Demand and Supply......Page 155 4 - Elasticity......Page 161 What Is the Price Elasticity of Demand, and What Are Its Determinants?......Page 163 How Do Changes in Income and the Prices of Other Goods Affect Elasticity?......Page 183 What Is the Price Elasticity of Supply?......Page 188 How Do the Price Elasticities of Demand and Supply Relate to Each Other?......Page 192 Conclusion......Page 194 5 - Market Outcomes and Tax Incidence......Page 201 What Are Consumer Surplus and Producer Surplus?......Page 203 When Is a Market Efficient?......Page 209 Why Do Taxes Create Deadweight Loss in Otherwise Efficient Markets?......Page 213 Conclusion......Page 228 6 - Price Controls......Page 235 When Do Price Ceilings Matter?......Page 237 What Effects Do Price Ceilings Have on Economic Activity?......Page 243 When Do Price Floors Matter?......Page 247 What Effects Do Price Floors Have on Economic Activity?......Page 253 Conclusion......Page 260 7 - Market Inefficiencies: Externalities and Public Goods......Page 265 What Are Externalities, and How Do They Affect Markets?......Page 267 What Are Private Goods and Public Goods?......Page 275 What Are the Challenges of Providing Nonexcludable Goods?......Page 282 Conclusion......Page 288 Part III - The Theory of the Firm......Page 294 8 - Business Costs and Production......Page 295 How Are Profits and Losses Calculated?......Page 297 How Much Should a Firm Produce?......Page 302 What Costs Do Firms Consider in the Short Run and the Long Run?......Page 305 Conclusion......Page 317 9 - Firms in a Competitive Market......Page 325 How Do Competitive Markets Work?......Page 327 How Do Firms Maximize Profits?......Page 329 What Does the Supply Curve Look Like in Perfectly Competitive Markets?......Page 343 Conclusion......Page 351 10 - Understanding Monopoly......Page 359 How Are Monopolies Created?......Page 361 How Much Do Monopolies Charge, and How Much Do They Produce?......Page 364 What Are the Problems with, and Solutions for, Monopoly?......Page 373 Conclusion......Page 384 11 - Price Discrimination......Page 389 What Is Price Discrimination?......Page 391 How Is Price Discrimination Practiced?......Page 402 Conclusion......Page 407 12 - Monopolistic Competition and Advertising......Page 413 What Is Monopolistic Competition?......Page 415 What Are the Differences among Monopolistic Competition, Competitive Markets, and Monopoly?......Page 418 Why Is Advertising Prevalent in Monopolistic Competition?......Page 426 Conclusion......Page 437 13 - Oligopoly and Strategic Behavior......Page 441 What Is Oligopoly?......Page 443 How Does Game Theory Explain Strategic Behavior?......Page 451 How Do Government Policies Affect Oligopoly Behavior?......Page 463 What Are Network Externalities?......Page 467 Conclusion......Page 469 Price Leadership......Page 476 Part IV - Labor Markets and Earnings......Page 480 14 - The Demand and Supply of Resources......Page 481 What Are the Factors of Production?......Page 483 Where Does the Demand for Labor Come From?......Page 484 Where Does the Supply of Labor Come From?......Page 489 What Are the Determinants of Demand and Supply in the Labor Market?......Page 495 What Role Do Land and Capital Play in Production?......Page 503 Conclusion......Page 510 15 - Income, Inequality, and Poverty......Page 517 What Are the Determinants of Wages?......Page 519 What Causes Income Inequality?......Page 530 How Do Economists Analyze Poverty?......Page 542 Conclusion......Page 549 Part V - Special Topics in Microeconomics......Page 554 16 - Consumer Choice......Page 555 How Do Economists Model Consumer Satisfaction?......Page 557 How Do Consumers Optimize Their Purchasing Decisions?......Page 561 What Is the Diamond-Water Paradox?......Page 568 Conclusion......Page 570 Indifference Curves......Page 577 Properties of Indifference Curves......Page 580 Using Indifference Curves to Illustrate the Consumer Optimum......Page 585 Conclusion......Page 589 17 - Behavioral Economics and Risk Taking......Page 591 How Do Economists Explain Irrational Behavior?......Page 593 What Is the Role of Risk in Decision-Making?......Page 603 Conclusion......Page 608 18 - Health Insurance and Health Care......Page 613 What Are the Important Issues in the Healthcare Industry?......Page 615 How Does Asymmetric Information Affect Healthcare Delivery?......Page 622 How Do Demand and Supply Contribute to High Medical Costs?......Page 625 How Do Incentives Influence the Quality of Health Care?......Page 631 Conclusion......Page 638 Part VI - Macroeconomic Basics......Page 646 19 - Introduction to Macroeconomics and Gross Domestic Product......Page 647 How Is Macroeconomics Different from Microeconomics?......Page 649 What Does GDP Tell Us about the Economy?......Page 650 How Is GDP Computed?......Page 657 What Are Some Shortcomings of GDP Data?......Page 671 Conclusion......Page 679 20 - Unemployment......Page 685 What Are the Major Reasons for Unemployment?......Page 687 What Can We Learn from the Employment Data?......Page 697 Conclusion......Page 708 21 - The Price Level and Inflation......Page 715 How Is Inflation Measured?......Page 717 What Problems Does Inflation Bring?......Page 732 What Is the Cause of Inflation?......Page 739 Conclusion......Page 742 22 - Savings, Interest Rates, and the Market for Loanable Funds......Page 749 What Is the Loanable Funds Market?......Page 751 What Factors Shift the Supply of Loanable Funds?......Page 757 What Factors Shift the Demand for Loanable Funds?......Page 766 How Do We Apply the Loanable Funds Market Model?......Page 769 Conclusion......Page 773 23 - Financial Markets and Securities......Page 779 How Do Financial Markets Help the Economy?......Page 781 What Are the Key Financial Tools for the Macroeconomy?......Page 784 Conclusion......Page 799 Part VII - The Long and Short of Macroeconomics......Page 806 24 - Economic Growth and the Wealth of Nations......Page 807 Why Does Economic Growth Matter?......Page 809 How Do Resources and Technology Contribute to Economic Growth?......Page 822 What Institutions Foster Economic Growth?......Page 830 Conclusion......Page 835 25 - Growth Theory......Page 841 How Do Macroeconomic Theories Evolve?......Page 843 What Is the Solow Growth Model?......Page 845 How Does Technology Affect Growth?......Page 855 Why Are Institutions the Key to Economic Growth?......Page 860 Conclusion......Page 869 26 - The Aggregate Demand– Aggregate Supply Model......Page 875 What Is the Aggregate Demand–Aggregate Supply Model?......Page 877 What Is Aggregate Demand?......Page 878 What Is Aggregate Supply?......Page 887 How Does the Aggregate Demand–Aggregate Supply Model Help Us Understand the Economy?......Page 896 Conclusion......Page 905 27 - The Great Recession, the Great Depression, and Great Macroeconomic Debates......Page 911 Exactly What Happened During the Great Recession and the Great Depression?......Page 913 What Are the Major Debates in Macroeconomics?......Page 925 Conclusion......Page 928 Appendix 14A: The Aggregate Expenditures Model The Components of Aggregate Expenditures......Page 934 What Are the Implications of the AE Model?......Page 944 Conclusion......Page 948 Part VIII - Fiscal Policy......Page 952 28 - Federal Budgets: The Tools of Fiscal Policy......Page 953 How Does the Government Spend?......Page 955 How Does the Government Tax?......Page 963 What Are Budget Deficits......Page 969 Conclusion......Page 978 29 - Fiscal Policy......Page 981 What Is Fiscal Policy?......Page 983 What Are the Shortcomings of Fiscal Policy?......Page 995 What Is Supply-Side Fiscal Policy?......Page 1001 Conclusion......Page 1007 Part IX - Monetary Policy......Page 1012 30 - Money and the Federal Reserve......Page 1013 What Is Money?......Page 1015 How Do Banks Create Money?......Page 1021 How Does the Federal Reserve Control the Money Supply?......Page 1029 Conclusion......Page 1041 31 - Monetary Policy......Page 1045 What Is the Effect of Monetary Policy in the Short Run?......Page 1047 Why Doesn’t Monetary Policy Always Work?......Page 1055 What Is the Phillips Curve?......Page 1061 Conclusion......Page 1073 Part X - International Economics......Page 1080 32 - International Trade......Page 1081 Is Globalization for Real?......Page 1083 How Does International Trade Help the Economy?......Page 1089 What Are the Effects of Tariffs and Quotas?......Page 1095 Conclusion......Page 1104 33 - International Finance......Page 1109 Why Do Exchange Rates Rise and Fall?......Page 1111 What Is Purchasing Power Parity?......Page 1124 What Causes Trade Deficits?......Page 1128 Conclusion......Page 1141 Glossary......Page 1146 Credits......Page 1156 Index......Page 1164