Essentials Foundations of Economics plus & MyEconLab

by Bade, Robin; Parkin, Michael

• ISBN13: 9780321412744
• ISBN10: 0321412745
• Edition: 4th
• Format: Package
• Copyright: 2009-01-01
• Publisher: Prentice Hall

Summary

Research shows the best way to learn is to put concepts to work with repeated practice. for this reason, frequent, quality practice is the cornerstone of the tightly-knit Essential Foundations of Economics learning system, building student success in economics by doing economics. First, student attention is focused on what to study through a Checklist of clearly defined core concepts in each chapter. Section by section, Checkpoints demonstrate how to study by stepping through a Practice Problem and then engaging students with a parallel Exercise. In addition, the Third Edition addresses why we study economics through a new feature, Reality Check. With Essential Foundations of Economics, students are taught to view economics as a skill to be honed rather than a collection of topics to be memorized. This text comes packaged with an access kit for the new easy-to-use format of MyEconLab, which requires no set-up by the professor. With this, students can access practice problems for each chapter in the book, graphing questions, learning resources, and live tutoring. Professors who plan to use advanced course management online should order the book with MyEconLab in CourseCompass. View 'Alternate Versions' of this book on the web catalog page, or contact your local representative for details.

Table of Contents

PART 1 INTRODUCTION
Getting Started	1	(32)
Chapter Checklist	1	(1)
Definition and Questions	2	(8)
Scarcity	2	(1)
Economics Defined	3	(1)
What, How, and For Whom?	3	(1)
When Is the Pursuit of Self-Interest in the Social Interest?	4	(5)
Checkpoint 1.1	9	(1)
The Economic Way of Thinking	10	(13)
Core Economic Ideas	10	(1)
Rational Choice	10	(1)
Cost: What You Must Give Up	11	(1)
Benefit: Gain Measured by What You Are Willing to Give Up	11	(1)
On the Margin	12	(1)
Responding to Incentives	13	(1)
The Micro and Macro Views of the World	14	(1)
Economics as Social Science	15	(1)
Economics as Policy Tool	16	(2)
Checkpoint 1.2	18	(1)
Chapter Checkpoint	19	(4)
Appendix: Making and Using Graphs	23	(10)
Basic Idea	23	(1)
Interpreting Data Graphs	24	(2)
Interpreting Graphs Used in Economic Models	26	(3)
The Slope of a Relationship	29	(1)
Relationships Among More Than Two Variables	30	(2)
Appendix Checkpoint	32	(1)
The U.S. and Global Economies	33	(28)
Chapter Checklist	33	(1)
What, How, and For Whom?	34	(8)
What Do We Produce?	34	(2)
How Do We Produce?	36	(3)
For Whom Do We Produce?	39	(2)
Checkpoint 2.1	41	(1)
The Circular Flows	42	(7)
Households and Firms	42	(1)
Markets	42	(1)
Real Flows and Money Flows	42	(2)
Governments	44	(1)
Governments in the Circular Flow	45	(1)
Federal Government Expenditures and Revenue	46	(1)
State and Local Government Expenditures and Revenue	47	(1)
Checkpoint 2.2	48	(1)
The Global Economy	49	(12)
The People	49	(1)
The Countries	49	(1)
What in the Global Economy?	50	(3)
How in the Global Economy?	53	(1)
For Whom in the Global Economy?	54	(2)
Checkpoint 2.3	56	(1)
Chapter Checkpoint	57	(4)
The Economic Problem	61	(28)
Chapter Checklist	61	(1)
Production Possibilities	62	(6)
Production Possibilities Frontier	62	(5)
Checkpoint 3.1	67	(1)
Opportunity Cost	68	(4)
The Opportunity Cost of a Bottle of Water	68	(1)
Increasing Opportunity Cost	69	(1)
Slope of the PPF and Opportunity Cost	69	(1)
Opportunity Cost Is a Ratio	70	(1)
Increasing Opportunity Costs Are Everywhere	70	(1)
Checkpoint 3.2	71	(1)
Using Resources Efficiently	72	(7)
Two Conditions for Allocative Efficiency	72	(1)
Marginal Benefit	73	(2)
Marginal Cost	75	(1)
Efficient Use of Resources	76	(1)
Efficiency in the U.S. Economy	76	(2)
Checkpoint 3.3	78	(1)
Economic Growth	79	(2)
Checkpoint 3.4	80	(1)
Specialization and Trade	81	(8)
Comparative Advantage	81	(1)
Achieving Gains from Trade	82	(2)
Checkpoint 3.5	84	(1)
Chapter Checkpoint	85	(4)
Demand and Supply	89	(28)
Chapter Checklist	89	(1)
Competitive Markets	90	(1)
Demand	91	(7)
The Law of Demand	91	(1)
Demand Schedule and Demand Curve	91	(2)
Individual Demand and Market Demand	93	(1)
Changes in Demand	94	(2)
Change in Quantity Demanded Versus Change in Demand	96	(1)
Checkpoint 4.1	97	(1)
Supply	98	(7)
The Law of Supply	98	(1)
Supply Schedule and Supply Curve	98	(2)
Individual Supply and Market Supply	100	(1)
Changes in Supply	101	(2)
Change in Quantity Supplied Versus Change in Supply	103	(1)
Checkpoint 4.2	104	(1)
Market Equilibrium	105	(12)
Price: A Market's Automatic Regulator	105	(1)
Predicting Price Changes: Three Questions	106	(1)
Effects of Changes in Demand	107	(1)
Effects of Changes in Supply	108	(2)
Changes in Both Demand and Supply	110	(2)
Checkpoint 4.3	112	(1)
Chapter Checkpoint	113	(4)
PART 2 A CLOSER LOOK AT MARKETS
Elasticities of Demand and Supply	117	(26)
Chapter Checklist	117	(1)
The Price Elasticity of Demand	118	(12)
Percentage Change in Price	118	(1)
Percentage Change in Quantity Demanded	119	(1)
Elastic and Inelastic Demand	120	(1)
Influences on the Price Elasticity of Demand	120	(2)
Computing the Price Elasticity of Demand	122	(1)
Interpreting the Price Elasticity of Demand Number	123	(1)
Elasticity Along a Linear Demand Curve	124	(2)
Total Revenue and the Price Elasticity of Demand	126	(2)
Applications of the Price Elasticity of Demand	128	(1)
Checkpoint 5.1	129	(1)
The Price Elasticity of Supply	130	(5)
Elastic and Inelastic Supply	130	(1)
Influences on the Price Elasticity of Supply	130	(2)
Computing the Price Elasticity of Supply	132	(2)
Checkpoint 5.2	134	(1)
Cross Elasticity and Income Elasticity	135	(8)
Cross Elasticity of Demand	135	(1)
Income Elasticity of Demand	136	(2)
Checkpoint 5.3	138	(1)
Chapter Checkpoint	139	(4)
Efficiency and Fairness of Markets	143	(28)
Chapter Checklist	143	(1)
Resource Allocation Methods	144	(4)
Market Price	144	(1)
Command	144	(1)
Majority Rule	145	(1)
Contest	145	(1)
First-Come, First-Served	145	(1)
Sharing Equally	146	(1)
Lottery	146	(1)
Personal Characteristics	146	(1)
Force	146	(1)
Checkpoint 6.1	147	(1)
Value, Price, and Consumer Surplus	148	(3)
Demand and Marginal Benefit	148	(1)
Consumer Surplus	149	(1)
Checkpoint 6.2	150	(1)
Cost, Price, and Producer Surplus	151	(3)
Supply and Marginal Cost	151	(1)
Producer Surplus	152	(1)
Checkpoint 6.3	153	(1)
Are Markets Efficient?	154	(7)
Marginal Benefit Equals Marginal Cost	154	(1)
Total Surplus Is Maximized	155	(1)
The Invisible Hand	155	(2)
Underproduction and Overproduction	157	(1)
Obstacles to Efficiency	158	(1)
Alternatives to the Market	159	(1)
Checkpoint 6.4	160	(1)
Are Markets Fair?	161	(10)
It's Not Fair If the Result Isn't Fair	161	(2)
It's Not Fair If the Rules Aren't Fair	163	(3)
Checkpoint 6.5	166	(1)
Chapter Checkpoint	167	(4)
Government Influences on Markets	171	(28)
Chapter Checklist	171	(1)
Taxes on Buyers and Sellers	172	(6)
Tax Incidence	172	(1)
Taxes and Efficiency	173	(1)
Incidence, Inefficiency, and Elasticity	174	(1)
Incidence, Inefficiency, and the Elasticity of Demand	175	(1)
Incidence, Inefficiency, and the Elasticity of Supply	176	(1)
Checkpoint 7.1	177	(1)
Price Ceilings	178	(7)
A Rent Ceiling	178	(4)
Are Rent Ceilings Efficient?	182	(1)
Are Rent Ceilings Fair?	183	(1)
If Rent Ceilings Are So Bad, Why Do We Have Them?	183	(1)
Checkpoint 7.2	184	(1)
Price Floors	185	(6)
The Minimum Wage	186	(2)
Is the Minimum Wage Efficient?	188	(1)
Is the Minimum Wage Fair?	189	(1)
If the Minimum Wage Is So Bad, Why Do We Have It?	189	(1)
Checkpoint 7.3	190	(1)
Price Supports in Agriculture	191	(8)
How Governments Intervene in Markets for Farm Products	191	(1)
Price Support: An Illustration	191	(3)
Checkpoint 7.4	194	(1)
Chapter Checkpoint	195	(4)
Externalities	199	(24)
Chapter Checklist	199	(1)
Externalities in Our Daily Lives	200	(2)
Negative Production Externalities	200	(1)
Positive Production Externalities	200	(1)
Negative Consumption Externalities	201	(1)
Positive Consumption Externalities	201	(1)
Negative Externalities: Pollution	202	(10)
Private Costs and Social Costs	202	(2)
Production and Pollution: How Much?	204	(1)
Property Rights	205	(1)
The Coase Theorem	206	(1)
Government Actions in the Face of External Costs	207	(4)
Checkpoint 8.1	211	(1)
Positive Externalities: Knowledge	212	(11)
Private Benefits and Social Benefits	212	(2)
Government Actions in the Face of External Benefits	214	(4)
Checkpoint 8.2	218	(1)
Chapter Checkpoint	219	(4)
PART 3 PRICES, PROFITS, AND INDUSTRY PERFORMANCE	223	(112)
Production and Cost	223	(28)
Chapter Checklist	223	(1)
Economic Cost and Profit	224	(4)
The Firm's Goal	224	(1)
Accounting Cost and Profit	224	(1)
Opportunity Cost	224	(1)
Economic Profit	225	(2)
Checkpoint 9.1	227	(1)
Short Run and Long Run	228	(1)
Short-Run Production	229	(6)
Total Product	229	(1)
Marginal Product	230	(2)
Average Product	232	(2)
Checkpoint 9.2	234	(1)
Short-Run Cost	235	(8)
Total Cost	235	(1)
Marginal Cost	236	(1)
Average Cost	237	(2)
Why the Average Total Cost Curve Is U-Shaped	239	(1)
Cost Curves and Product Curves	240	(1)
Shifts in the Cost Curves	240	(2)
Checkpoint 9.3	242	(1)
Long-Run Cost	243	(8)
Plant Size and Cost	243	(1)
The Long-Run Average Cost Curve	244	(2)
Checkpoint 9.4	246	(1)
Chapter Checkpoint	247	(4)
Perfect Competition	251	(26)
Chapter Checklist	251	(1)
Market Types	252	(1)
Perfect Competition	252	(1)
Other Market Types	252	(1)
A Firm's Profit-Maximizing Choices	253	(7)
Price Taker	253	(1)
Revenue Concepts	253	(1)
Profit-Maximizing Output	254	(2)
Marginal Analysis and the Supply Decision	256	(1)
Exit and Temporary Shutdown Decisions	257	(1)
The Firm's Short-Run Supply Curve	257	(2)
Checkpoint 10.1	259	(1)
Output, Price, and Profit in the Short Run	260	(4)
Market Supply in the Short Run	260	(1)
Short-Run Equilibrium in Good Times	261	(1)
Short-Run Equilibrium in Bad Times	262	(1)
Checkpoint 10.2	263	(1)
Output, Price, and Profit in the Long Run	264	(13)
Entry and Exit	265	(3)
Change in Demand	268	(1)
Technological Change	268	(2)
Is Perfect Competition Efficient?	270	(1)
Is Perfect Competition Fair?	271	(1)
Checkpoint 10.3	272	(1)
Chapter Checkpoint	273	(4)
Monopoly	277	(28)
Chapter Checklist	277	(1)
Monopoly and How it Arises	278	(4)
How Monopoly Arises	278	(2)
Monopoly Price-Setting Strategies	280	(1)
Checkpoint 11.1	281	(1)
Single-Price Monopoly	282	(5)
Price and Marginal Revenue	282	(1)
Marginal Revenue and Elasticity	283	(1)
Output and Price Decision	284	(2)
Checkpoint 11.2	286	(1)
Monopoly and Competition Compared	287	(5)
Output and Price	287	(1)
Is Monopoly Efficient?	288	(1)
Is Monopoly Fair?	289	(1)
Rent Seeking	289	(2)
Checkpoint 11.3	291	(1)
Price Discrimination	292	(6)
Price Discrimination and Consumer Surplus	292	(1)
Profiting by Price Discriminating	293	(1)
Perfect Price Discrimination	294	(2)
Price Discrimination and Efficiency	296	(1)
Checkpoint 11.4	297	(1)
Monopoly Policy Issues	298	(7)
Benefits of Monopoly	298	(2)
U.S. Patent Law	300	(1)
Checkpoint 11.5	300	(1)
Chapter Checkpoint	301	(4)
Monopolistic Competition and Oligopoly	305	(30)
Chapter Checklist	305	(1)
Monopolistic Competition	306	(7)
Large Number of Firms	306	(1)
Product Differentiation	306	(1)
Competing on Quality, Price, and Marketing	307	(1)
Entry and Exit	307	(1)
Identifying Monopolistic Competition	307	(2)
Output and Price in Monopolistic Competition	309	(1)
The Firm's Profit-Maximizing Decision	309	(1)
Long Run: Zero Economic Profit	310	(1)
Monopolistic Competition and Efficiency	311	(1)
Checkpoint 12.1	312	(1)
Product Development and Marketing	313	(5)
Innovation and Product Development	313	(1)
Marketing	314	(1)
Selling Costs and Total Costs	315	(2)
Checkpoint 12.2	317	(1)
Oligopoly	318	(5)
Collusion	318	(1)
Duopoly in Airplanes	319	(1)
The Duopolist's Dilemma	320	(2)
Checkpoint 12.3	322	(1)
Game Theory	323	(12)
What Is a Game?	323	(1)
The Prisoners' Dilemma	323	(2)
The Duopolist's Dilemma as a Game	325	(1)
Advertising and Research Games in Oligopoly	326	(2)
Repeated Games	328	(1)
Is Oligopoly Efficient?	328	(2)
Checkpoint 12.4	330	(1)
Chapter Checkpoint	331	(4)
PART 4 MONITORING THE MACROECONOMY	335	(72)
GDP and the Standard of Living	335	(26)
Chapter Checklist	335	(1)
GDP, Income, and Expenditure	336	(5)
GDP Defined	336	(1)
Circular Flows in the U.S. Economy	337	(1)
Expenditure Equals Income	338	(2)
Checkpoint 13.1	340	(1)
Measuring U.S. GDP	341	(6)
The Expenditure Approach	341	(2)
The Income Approach	343	(2)
GDP and Related Measures of Production and Income	345	(1)
Checkpoint 13.2	346	(1)
Nominal GDP Versus Real GDP	347	(4)
Calculating Real GDP	347	(1)
Calculating the GDP Deflator	348	(2)
Checkpoint 13.3	350	(1)
The Use and Limitations of Real GDP	351	(10)
The Standard of Living Over Time	351	(1)
The Standard of Living Among Countries	352	(1)
Goods and Services Omitted from GDP	353	(1)
Other Influences on the Standard of Living	354	(2)
Checkpoint 13.4	356	(1)
Chapter Checkpoint	357	(4)
Jobs and Unemployment	361	(24)
Chapter Checklist	361	(1)
Labor Market Indicators	362	(5)
Current Population Survey	362	(1)
Population Survey Criteria	362	(1)
Two Main Labor Market Indicators	363	(1)
Discouraged Workers	364	(1)
Part-Time Workers	364	(1)
Aggregate Hours	365	(1)
Checkpoint 14.1	366	(1)
Labor Market Trends and Fluctuations	367	(6)
Unemployment	367	(1)
The Participation Rate	368	(1)
Part-Time Workers	369	(1)
Aggregate and Average Hours	370	(2)
Checkpoint 14.2	372	(1)
The Sources and Types of Unemployment	373	(12)
Sources of Unemployment	373	(1)
Types of Unemployment	374	(2)
Duration and Demographics of Unemployment	376	(1)
Full Employment	377	(1)
Unemployment and Real GDP	377	(3)
Checkpoint 14.3	380	(1)
Chapter Checkpoint	381	(4)
The CPI and the Cost of Living	385	(22)
Chapter Checklist	385	(1)
The Consumer Price Index	386	(6)
Reading the CPI Numbers	386	(1)
Constructing the CPI	386	(1)
The CPI Market Basket	386	(1)
The Monthly Price Survey	387	(1)
Calculating the CPI	388	(1)
Measuring Inflation	389	(2)
Checkpoint 15.1	391	(1)
The CPI and the Cost of Living	392	(5)
Sources of Bias in the CPI	392	(1)
The Magnitude of the Bias	393	(1)
Two Consequences of the CPI Bias	393	(1)
The GDP Deflator: A Better Measure?	394	(2)
Checkpoint 15.2	396	(1)
Nominal and Real Values	397	(10)
Dollars and Cents at Different Dates	397	(1)
Nominal and Real Values in Macroeconomics	397	(1)
Nominal and Real Wage Rates	398	(2)
Nominal and Real Interest Rates	400	(2)
Checkpoint 15.3	402	(1)
Chapter Checkpoint	403	(4)
PART 5 UNDERSTANDING THE MACROECONOMY	407
Potential GDP and Economic Growth	407	(30)
Chapter Checklist	407	(1)
Macroeconomic Approaches and Pathways	408	(3)
The Two Main Schools of Thought	408	(1)
The New Macroeconomics	409	(1)
The Road Ahead	409	(2)
Potential GDP	411	(9)
The Production Function	412	(1)
The Labor Market	413	(6)
Checkpoint 16.1	419	(1)
The Basics of Economic Growth	420	(4)
Calculating Growth Rates	420	(1)
The Magic of Sustained Growth	421	(2)
Checkpoint 16.2	423	(1)
The Process of Economic Growth	424	(5)
Aggregate Hours	424	(1)
Labor Productivity	424	(4)
Checkpoint 16.3	428	(1)
Achieving Faster Growth	429	(8)
Preconditions for Economic Growth	429	(1)
Policies to Achieve Faster Growth	430	(1)
How Much Difference Can Policy Make?	431	(1)
Checkpoint 16.4	432	(1)
Chapter Checkpoint	433	(4)
Money and the Monetary System	437	(26)
Chapter Checklist	437	(1)
What Is Money?	438	(8)
Definition of Money	438	(1)
The Functions of Money	438	(2)
Money Today	440	(1)
Credit Cards, Debit Cards, E-Checks, and E-Cash	441	(2)
Official Measures of Money: M1 and M2	443	(2)
Checkpoint 17.1	445	(1)
The Monetary System	446	(7)
Commercial Banks	446	(2)
Thrift Institutions	448	(1)
Money Market Funds	448	(1)
Relative Size of Monetary Institutions	449	(1)
The Economic Functions of Monetary Institutions	450	(2)
Checkpoint 17.2	452	(1)
The Federal Reserve System	453	(10)
The Structure of the Federal Reserve	453	(1)
The Fed's Power Center	454	(1)
The Fed's Policy Tools	455	(1)
The Monetary Base	456	(1)
How the Fed's Monetary Policy Tools Work	457	(1)
Checkpoint 17.3	458	(1)
Chapter Checkpoint	459	(4)
AS-AD, Cycles, and Inflation	463	(30)
Chapter Checklist	463	(1)
Business-Cycle Definitions and Facts	464	(6)
Dating Business-Cycle Turning Points	464	(1)
U.S. Business-Cycle History	464	(1)
Recent Cycles	465	(2)
Checkpoint 18.1	467	(3)
Aggregate Supply	470	(6)
Aggregate Supply Basics	470	(3)
Changes in Aggregate Supply	473	(2)
Checkpoint 18.2	475	(1)
Aggregate Demand	476	(6)
Aggregate Demand Basics	476	(2)
Changes in Aggregate Demand	478	(2)
The Aggregate Demand Multiplier	480	(1)
Checkpoint 18.3	481	(1)
Understanding the Business Cycle	482	(11)
Aggregate Demand Fluctuations	483	(1)
Aggregate Supply Fluctuations	484	(1)
Adjustment Toward Full Employment	485	(1)
Persistent Inflation	486	(2)
Checkpoint 18.4	488	(1)
Chapter Checkpoint	489	(4)
Fiscal Policy and Monetary Policy	493	(26)
Chapter Checklist	493	(1)
The Federal Budget and Fiscal Policy	494	(12)
The Federal Budget	494	(3)
Discretionary Fiscal Policy: Demand-Side Effects	497	(3)
Discretionary Fiscal Policy: Supply-Side Effects	500	(2)
Combined Demand-Side and Supply-Side Effects	502	(1)
Limitations of Discretionary Fiscal Policy	503	(1)
Automatic Fiscal Policy	504	(1)
Checkpoint 19.1	505	(1)
The Federal Reserve and Monetary Policy	506	(13)
The Monetary Policy Process	506	(1)
The Federal Funds Rate Target	507	(1)
The Ripple Effects of the Fed's Actions: A Quick Overview	507	(4)
Monetary Stabilization in the AS-AD Model	511	(2)
Limitations of Monetary Stabilization Policy	513	(1)
Checkpoint 19.2	514	(1)
Chapter Checkpoint	515	(4)
International Trade	519
Chapter Checklist	519	(1)
Trade Patterns and Trends	520	(4)
U.S. Exports and Imports	520	(1)
The Outsourcing Trend	520	(1)
Trading Partners and Trade Agreements	521	(2)
Balance of Trade and International Borrowing	523	(1)
Checkpoint 20.1	523	(1)
The Gains from International Trade	524	(10)
Why the United States Exports Airplanes	524	(1)
Why the United States Imports T-Shirts	525	(2)
Gains From Trade and the PPF	527	(4)
Offshoring and Outsourcing	531	(2)
Checkpoint 20.2	533	(1)
International Trade Restrictions	534	(5)
Tariffs	534	(2)
Nontariff Barriers	536	(2)
Checkpoint 20.3	538	(1)
The Case Against Protection	539
Three Traditional Arguments for Protection	539	(1)
Five Newer Arguments for Protection	540	(2)
Why Is International Trade Restricted?	542	(4)
Checkpoint 20.4	546	(1)
Chapter Checkpoint	547
Glossary	1	(1)
Index	1	(1)
Credits	1