Principles of Microeconomics, Brief Edition

Description

In recent years, innovative texts in mathematics, science, foreign languages, and other fields have achieved dramatic pedagogical gains by abandoning the traditional encyclopedic approach in favor of teaching a shorter list of core principles in depth. Two well-respected writers and researchers, Bob Frank and Ben Bernanke, have shown that the less-is-more approach affords similar gains in introductory economics. The authors introduce a coherent short list of core principles and reinforce them by illustrating and applying each in numerous contexts. Students are periodically asked to apply these principles and to answer related questions and exercises. The BRIEF editions were developed for instructors who appreciate core principles approach, and desire a more manageable amount of content and slightly less rigor. In the brief editions, the authors made careful choices of material to eliminate and condense, in order to produce of more concise coverage. Connect is the only integrated learning system that empowers students by continuously adapting to deliver precisely what they need, when they need it, and how they need it, so that your class time is more engaging and effective. Title Contents PART I Introduction Chapter 1 Thinking Like an Economist Economics: Studying Choice in a World of Scarcity Applying the Cost-Benefit Principle Economic Surplus Opportunity Cost The Role of Economic Models Three Important Decision Pitfalls Pitfall 1: Measuring Costs and Benefits as Proportions Rather Than Absolute Dollar Amounts Pitfall 2: Ignoring Implicit Costs Pitfall 3: Failure to Think at the Margin Normative Economics versus Positive Economics Economics: Micro and Macro The Approach of This Text Economic Naturalism THE ECONOMIC NATURALIST 1.1 THE ECONOMIC NATURALIST 1.2 THE ECONOMIC NATURALIST 1.3 Summary Core Principles Key Terms Review Questions Problems Answers to Concept Checks Appendix: Working with Equations, Graphs, and Tables Chapter 2 Comparative Advantage Exchange and Opportunity Cost The Principle of Comparative Advantage THE ECONOMIC NATURALIST 2.1 Sources of Comparative Advantage THE ECONOMIC NATURALIST 2.2 Comparative Advantage and Production Possibilities The Production Possibilities Curve How Individual Productivity Affects the Slope and Position of the PPC The Gains from Specialization and Exchange A Production Possibilities Curve for a Many- Person Economy Factors That Shift the Economy’s Production Possibilities Curve Why Have Some Countries Been Slow to Specialize? Can We Have Too Much Specialization? Comparative Advantage and International Trade THE ECONOMIC NATURALIST 2.3 Outsourcing THE ECONOMIC NATURALIST 2.4 Summary Core Principles Key Terms Review Questions Problems Answers to Concept Checks Chapter 3 Supply and Demand What, How, and for Whom? Central Planning versus the Market Buyers and Sellers in Markets The Demand Curve The Supply Curve Market Equilibrium Rent Controls Reconsidered Pizza Price Controls? Predicting and Explaining Changes in Prices and Quantities Shifts in Demand THE ECONOMIC NATURALIST 3.1 Shifts in the Supply Curve THE ECONOMIC NATURALIST 3.2 Four Simple Rules THE ECONOMIC NATURALIST 3.3 Efficiency and Equilibrium Cash on the Table Smart for One, Dumb for All Summary Core Principles Key Terms Review Questions Problems Answers to Concept Checks Appendix: The Algebra of Supply and Demand PART 2 Competition and the Invisible Hand Chapter 4 Demand and Elasticity The Law of Demand The Origins of Demand Needs versus Wants THE ECONOMIC NATURALIST 4.1 Applying the Law of Demand Substitution at Work THE ECONOMIC NATURALIST 4. THE ECONOMIC NATURALIST 4. THE ECONOMIC NATURALIST 4.4 The Importance of Income Differences THE ECONOMIC NATURALIST 4. Individual and Market Demand Curves Horizontal Addition Demand and Consumer Surplus Calculating Consumer Surplus Elasticity Price Elasticity of Demand Price Elasticity Defined Determinants of Price Elasticity of Demand Some Representative Elasticity Estimates Using Price Elasticity of Demand THE ECONOMIC NATURALIST 4.6 THE ECONOMIC NATURALIST 4.7 A Graphical Interpretation of Price Elasticity Price Elasticity Changes along a Straight-Line Demand Curve Two Special Cases Elasticity and Total Expenditure Income Elasticity and Cross-Price Elasticity of Demand Summary Key Terms Review Questions Problems Answers to Concept Checks Chapter 5 Perfectly Competitive Supply Thinking about Supply: The Importance of Opportunity Cost Individual and Market Supply Curves Profit-Maximizing Firms in Perfectly Competitive Markets Profit Maximization The Demand Curve Facing a Perfectly Competitive Firm Production in the Short Run Choosing Output to Maximize Profit Price Equals Marginal Cost: The Seller’s Supply Rule Graphing Marginal Cost The “Law” of Supply Determinants of Supply Revisited Technology Input Prices The Number of Suppliers Expectations Changes in Prices of Other Products The Price Elasticity of Supply Determinants of Supply Elasticity THE ECONOMIC NATURALIST 5.1 Unique and Essential Inputs: The Ultimate Supply Bottleneck Applying the Theory of Supply THE ECONOMIC NATURALIST 5.2 Supply and Producer Surplus Calculating Producer Surplus Summary Key Terms Review Questions Problems Answers to Concept Checks Chapter 6 Efficiency, Exchange, and the Invisible Hand in Action The Central Role of Economic Profit Three Types of Profit The Invisible Hand Theory Two Functions of Price Responses to Profits and Losses The Effect of Market Forces on Economic Profit The Importance of Free Entry and Exit Economic Rent versus Economic Profit The Invisible Hand in Action The Invisible Hand at the Supermarket and on the Freeway THE ECONOMIC NATURALIST 6.1 The Invisible Hand and Cost-Saving Innovations The Distinction between an Equilibrium and a Social Optimum Smart for One, Dumb for All THE ECONOMIC NATURALIST 6.2 Market Equilibrium and Efficiency Efficiency Is Not the Only Goal Why Efficiency Should Be the First Goal The Cost of Preventing Price Adjustments Price Ceilings Price Subsidies Summary Key Terms Review Questions Problems Answers to Concept Checks PART 3 Market Imperfections Chapter 7 Monopoly, Oligopoly, and Monopolistic Competition Imperfect Competition Different Forms of Imperfect Competition The Essential Difference between Perfectly and Imperfectly Competitive Firms Five Sources of Market Power Exclusive Control over Important Inputs Patents and Copyrights Government Licenses or Franchises Economies of Scale and Natural Monopolies Network Economies Economies of Scale and the Importance of Start-Up Costs THE ECONOMIC NATURALIST 7.1 19 Profit Maximization for the Monopolist Marginal Revenue for the Monopolist The Monopolist’s Profit-Maximizing Decision Rule Being a Monopolist Doesn’t Guarantee an Economic Profit Why the Invisible Hand Breaks Down under Monopoly Using Discounts to Expand the Market Price Discrimination Defined THE ECONOMIC NATURALIST 7.2 20 How Price Discrimination Affects Output The Hurdle Method of Price Discrimination Is Price Discrimination a Bad Thing? Examples of Price Discrimination THE ECONOMIC NATURALIST 7.3 21 Summary Key Terms Review Questions Problems Answers to Concept Checks Appendix: The Algebra of Monopoly Profit Maximization Chapter 8 Games and Strategic Behavior Using Game Theory to Analyze Strategic Decisions The Three Elements of a Game Nash Equilibrium The Prisoner’s Dilemma The Original Prisoner’s Dilemma The Economics of Cartels THE ECONOMIC NATURALIST 8.1 23 Tit-for-Tat and the Repeated Prisoner’s Dilemma THE ECONOMIC NATURALIST 8.2 23 THE ECONOMIC NATURALIST 8.3 23 Games in Which Timing Matters Credible Threats and Promises Monopolistic Competition When Location Matters THE ECONOMIC NATURALIST 8.4 24 Commitment Problems The Strategic Role of Preferences Are People Fundamentally Selfish? Preferences as Solutions to Commitment Problems Summary Key Terms Review Questions Problems Answers to Concept Checks Chapter 9 Externalities and Property Rights External Costs and Benefits How Externalities Affect Resource Allocation How Do Externalities Affect Supply and Demand? The Coase Theorem Legal Remedies for Externalities THE ECONOMIC NATURALIST 9.1 26 THE ECONOMIC NATURALIST 9.2 26 The Optimal Amount of Negative Externalities Is Not Zero Compensatory Taxes and Subsidies Property Rights and the Tragedy of the Commons The Problem of Unpriced Resources The Effect of Private Ownership When Private Ownership Is Impractical THE ECONOMIC NATURALIST 9.3 26 THE ECONOMIC NATURALIST 9.4 27 Positional Externalities Payoffs That Depend on Relative Performance THE ECONOMIC NATURALIST 9.5 27 Positional Arms Races and Positional Arms Control Agreements Social Norms as Positional Arms Control Agreements Summary Key Terms Review Questions Problems Answers to Concept Checks PART 4 Economics of Public Policy Chapter 10 Using Economics to Make Better Policy Choices The Economics of Health Care The Case for Mandatory Immunization Laws Explaining Rising Health Care Costs Designing a Solution The HMO Revolution THE ECONOMIC NATURALIST 10.1 28 Paying for Health Insurance THE ECONOMIC NATURALIST 10.2 28 Using Price Incentives in Environmental Regulation Taxing Pollution Auctioning Pollution Permits Overcoming Opposition to International Trade Methods of Income Redistribution Welfare Payments and In-Kind Transfers Means-Tested Benefit Programs The Negative Income Tax Minimum Wages The Earned-Income Tax Credit Public Employment for the Poor A Combination of Methods Summary Key Terms Review Questions Problems Answers to Concept Checks Glossary Index