Microeconomics

Description

Cover......Page 1 Title......Page 8 Copyright......Page 9 Expanded Contents......Page 26 Preface......Page 12 Introduction......Page 34 Agricultural Development......Page 35 The National Railroad Network......Page 37 The Age of the Industrial Capitalist......Page 38 The American Economy in the 20th Century......Page 39 The 1930s: The Great Depression......Page 40 The 1940s: World War II and Peacetime Prosperity......Page 43 The Soaring Sixties: The Years of Kennedy and Johnson......Page 47 The 1980s: The Age of Reagan......Page 48 The State of American Agriculture......Page 49 The "New Economy" of the Nineties......Page 50 The Ominous 00s......Page 51 Economics in Action: America's Place in History......Page 52 Economics Defined......Page 58 The Four Economic Resources......Page 59 Opportunity Cost......Page 61 Full Employment and Full Production......Page 62 The Production Possibilities Curve......Page 65 Economic Growth......Page 71 Economics in Action: Will You Be Underemployed When You Graduate?......Page 74 What Shall We Produce?......Page 82 For Whom Shall the Goods and Services Be Produced?......Page 83 The Invisible Hand......Page 84 Competition......Page 85 Equity and Efficiency......Page 86 The Circular Flow Model......Page 87 The Economic Role of Government......Page 88 Externalities......Page 89 Curbing Environmental Pollution......Page 91 Lack of Public Goods and Services......Page 92 Government Failure......Page 93 Capital......Page 95 The "Isms": Capitalism, Communism, Fascism, and Socialism......Page 97 Transformation in China......Page 100 Last Word: The End of the Isms?......Page 101 Economics in Action 2: The Internal Revenue Code......Page 102 Demand......Page 108 Supply......Page 109 Surpluses and Shortages......Page 111 Shifts in Demand and Supply......Page 112 Price Ceilings and Price Floors......Page 116 Interest Rate Determination......Page 121 College Parking......Page 122 The Rationing Function of the Price System......Page 123 Economics in Action: High Gas Prices—Something Only an Economist Could Love......Page 124 Demand Defined......Page 132 Individual Demand and Market Demand......Page 133 Changes in Demand......Page 134 Decreases in Demand......Page 135 Changes in Quantity Demanded and Changes in Demand......Page 136 What Causes Changes in Demand?......Page 137 Supply Defined......Page 141 Individual Supply and Market Supply......Page 142 Practice Problems......Page 143 What Causes Changes in Supply?......Page 144 Graphing the Demand Curve......Page 146 Graphing the Supply Curve......Page 147 The Equilibrium Point......Page 148 Shifts in Demand and Supply......Page 151 Economics in Action: Why Can't I Sell My House?......Page 152 The Elasticity of Demand......Page 164 Measuring Elasticity......Page 165 The Meaning of Elasticity......Page 166 Determinants of the Degree of Elasticity of Demand......Page 172 Advertising......Page 174 Elastic Demand and Total Revenue......Page 176 Income Elasticity of Demand......Page 177 Cross Elasticity of Demand......Page 179 Price Elasticity of Supply......Page 180 Elasticity over Time......Page 181 Tax Incidence......Page 183 Economics in Action: The Price Elasticity of Demand for Oil......Page 186 7 Theory of Consumer Behavior......Page 196 Marginal Utility......Page 197 Maximizing Utility......Page 198 The Water–Diamond Paradox......Page 200 Consumer Surplus......Page 201 Do Price Gougers Rip Us Off?......Page 205 Economics in Action: All-You-Can-Eat Buffets......Page 206 Costs......Page 212 Marginal Cost......Page 213 Average Cost......Page 216 Average Total Cost......Page 217 Graphing the AFC, AVC, ATC, and MC Curves......Page 219 Why Are the AVC and ATC Curves U-Shaped?......Page 223 The Production Function and the Law of Diminishing Returns......Page 224 Economies of Scale......Page 226 Diseconomies of Scale......Page 227 The Decision to Operate or Shut Down......Page 229 The Decision to Go Out of Business or Stay in Business......Page 231 Choosing Plant Size......Page 233 The Long-Run Average Total Cost Curve......Page 235 Economics in Action: Wedding Hall or City Hall?......Page 236 Part I: Profit and Loss......Page 244 Graphing Demand and Marginal Revenue......Page 245 Profit Maximization and Loss Minimization......Page 246 A Summing Up......Page 253 Review of Efficiency and Profit Maximization......Page 255 Definition of Perfect Competition......Page 256 The Perfect Competitor's Demand Curve......Page 259 The Short Run......Page 260 The Long Run......Page 264 Third Method of Calculating Profit and Loss......Page 266 The Perfect Competitor: A Price Taker, Not a Price Maker......Page 268 Economics in Action: The Internet Effect: A More Perfect Knowledge and Lower Prices......Page 269 Monopoly Defined......Page 280 The Graph of the Monopolist......Page 281 Calculating the Monopolist's Profit......Page 283 Review of the Monopolist's Economic Analysis......Page 284 The Monopolist Losing Money......Page 286 Alternative Method of Calculating the Monopolist's Profit or Loss......Page 287 Are All Monopolies Big Companies?......Page 288 Barriers to Entry......Page 289 What Is Natural Monopoly?......Page 293 Two Policy Alternatives......Page 295 When Is Bigness Bad?......Page 296 Conclusion......Page 298 Economics in Action: Would You Allow Walmart to Open a Supercenter in Your Community?......Page 299 Monopolistic Competition Defined......Page 308 The Monopolistic Competitor in the Short Run......Page 309 The Monopolistic Competitor in the Long Run......Page 311 Product Differentiation......Page 312 Advertising and Monopolistic Competition......Page 313 The Typical Monopolistic Competitor......Page 314 Price Discrimination......Page 315 Is the Monopolistic Competitor Inefficient?......Page 319 Economics in Action: Selling Status......Page 321 Oligopoly Defined......Page 326 Two Measures of the Degree of Oligopolization......Page 327 The Herfindahl–Hirschman Index (HHI)......Page 328 Cartels......Page 330 Open Collusion......Page 332 Covert Collusion......Page 333 Price Leadership......Page 334 Cutthroat Competition......Page 335 Game Theory......Page 338 Economics in Action: Cutthroat Competition in the College Textbook Market......Page 339 Perfect Competition......Page 348 Perfect Competition versus Imperfect Competition......Page 349 Summary Tables......Page 350 A Historical Perspective on Corporate Concentration......Page 354 The Sherman Antitrust Act......Page 355 The Federal Trade Commission Act (1914)......Page 357 Partial Breakdown of the Rule of Reason......Page 358 Two Landmark Cases......Page 359 European Antitrust......Page 360 Vertical Mergers......Page 361 Conglomerate Mergers......Page 362 Deregulation......Page 363 The Trend toward Bigness......Page 364 Economics in Action: Pharmaceutical Fraud......Page 367 Derived Demand......Page 374 Prices of Substitute Resources......Page 375 Marginal Revenue Product (MRP)......Page 376 The MRP of the Perfect Competitor......Page 377 The MRP of the Imperfect Competitor......Page 380 The Four Reasons for Changes in Resource Demand......Page 382 Optimum Resource Mix for the Firm......Page 384 Economics in Action: Washing Machines and Women's Liberation......Page 386 The Early Years......Page 392 Key Labor Legislation......Page 393 Craft Unions versus Industrial Unions......Page 395 Union Organizing since the 1950s......Page 397 The Formation of Change to Win......Page 399 The Economic Power of Labor Unions......Page 400 The Economic Power of Large Employers......Page 401 Strikes, Lockouts, and Givebacks......Page 403 The Collective Bargaining Agreement......Page 405 The Strike......Page 406 Will You Ever Be a Member of a Labor Union?......Page 407 Economics in Action: The Card Check Law......Page 408 16 Labor Markets and Wage Rates......Page 414 The Theory of the Dual Labor Market......Page 415 The Backward-Bending Individual Labor Supply Curve......Page 416 The Market Supply of Labor......Page 418 The Marginal Revenue Product Schedule......Page 419 Nonhomogeneous Jobs and Compensating Pay Differentials......Page 420 Determination of the Wage Rate: Supply and Demand......Page 421 High Wage Rates and Economic Rent......Page 423 Real Wages versus Money Wages......Page 424 The Minimum Wage Rate: 1938 to the Present......Page 429 Should There Be a Minimum Wage Rate?......Page 430 The Living Wage......Page 432 Employment Discrimination against Women......Page 433 Economics in Action: The Education Gap......Page 436 What Is Land?......Page 442 How Is Rent Determined?......Page 444 Economic Rent......Page 445 Are Prices High because Rents Are High, or Are Rents High because Prices Are High?......Page 446 How Is the Interest Rate Determined?......Page 447 Interest Rates and Consumer Loans......Page 448 The Present Value of Future Income......Page 450 How Large Are Profits?......Page 453 Theories of Profit......Page 455 Conclusion......Page 457 Economics in Action: Subprime, Fringe, and Payday Lending......Page 458 18 Income Distribution and Poverty......Page 464 The Poor, the Middle Class, and the Rich......Page 465 Distribution of Wealth in the United States......Page 469 Distribution of Income: Equity and Effi ciency......Page 470 What Determines Income Distribution?......Page 471 Poverty Defined......Page 472 Who Are the Poor?......Page 475 Child Poverty......Page 476 The Main Government Transfer Programs......Page 478 Theories of the Causes of Poverty......Page 481 The Conservative View versus the Liberal View......Page 483 Solutions......Page 485 Economics in Action 1: Will You Ever Be Poor?......Page 489 Economics in Action 2: The 1 Percent and the 99 Percent......Page 490 19 International Trade......Page 498 U.S. Trade since 1975......Page 499 The Effect of the Great Recession on Our Balance of Trade......Page 500 U.S. Government Trade Policy......Page 501 Specialization and Trade......Page 502 Comparative Advantage......Page 503 Absolute Advantage versus Comparative Advantage......Page 505 The Arguments for Protection......Page 507 Tariffs or Quotas......Page 510 Conclusion......Page 512 What Are the Causes of Our Trade Imbalance?......Page 513 Part IV: Our Trade Deficit with Japan and China......Page 516 Our Trade Deficit with China......Page 517 Trading with China and Japan: More Differences than Similarities......Page 518 Free Trade in Word and Deed......Page 519 Reducing Our Trade Deficit......Page 520 Economics in Action 2: Globalization......Page 521 Financing International Trade......Page 528 The Balance of Payments......Page 529 The Gold Standard......Page 532 The Gold Exchange Standard, 1944–73......Page 533 The Freely Floating Exchange Rate System, 1973 to the Present......Page 534 The Yen and the Yuan......Page 538 The Falling Dollar and the U.S. Trade Deficit......Page 539 From Largest Creditor to Largest Debtor......Page 542 A Codependent Relationship......Page 544 Editorial: American Exceptionality......Page 545 B......Page 552 C......Page 553 D......Page 554 E......Page 555 G......Page 556 I......Page 557 M......Page 558 P......Page 560 Q......Page 561 S......Page 562 W......Page 563 Photo Credits......Page 564 A......Page 565 B......Page 566 C......Page 567 D......Page 570 E......Page 571 F......Page 573 G......Page 574 I......Page 575 K......Page 577 L......Page 578 M......Page 579 N......Page 581 O......Page 582 P......Page 583 R......Page 586 S......Page 587 T......Page 589 U......Page 590 W......Page 591 Z......Page 592