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Microeconomics with Infotrac,9780324236705

Microeconomics with Infotrac

by
Edition:
7th
ISBN13:

9780324236705

ISBN10:
0324236700
Format:
Paperback
Pub. Date:
12/23/2004
Publisher(s):
South-Western College Pub
List Price: $160.33

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Summary

Offering a unique blend of solid theoretical content and student accessibility, this text: 1) covers all the basics of microeconomics, 2) gives students a clear idea of how economists think about the world, 3) stresses the key concepts in economics, and 4) is extremely rich in intriguing applications that convey the prevalence of economics in everyday life. Many principles instructors are constantly challenged with the goal of getting students excited about realization that economics is everywhere! Arnold has taken this to another level. He is so passionate about touching his students that he felt the need to write a Microeconomics text that is dedicated to opening the science of economics through the pictures and applications of our lives. Arnold is considered the most innovative author in this market to meet the fast pace interests of both instructors and students. His five themes of Theory and Model building, Key Concepts, Primary and Secondary Consequences, Real-World Applications, and the idea that Economics is about gifts, exchanges, and transfers, set the tone for a teaching text that is extremely approachable by instructors and students.

Table of Contents

Preface xiii
Student Learning Guide xxii
An Introduction to Economics
Part 1: Economics: The Science of Scarcity
What Economics Is About
1(32)
Definitions of Economics
2(1)
Economic Categories
2(2)
Positive and Normative Economics
3(1)
Microeconomics and Macroeconomics
3(1)
Key Concepts in Economics
4(12)
Thinking in Terms of Scarcity and Its Effects
4(2)
Thinking in Terms of Opportunity Cost
6(2)
Thinking in Terms of Costs and Benefits
8(1)
Thinking in Terms of Decisions Made at the Margin
9(1)
Thinking in Terms of Efficiency
10(2)
Thinking in Terms of Unintended Effects
12(1)
Thinking in Terms of Equilibrium
13(1)
Thinking in Terms of the Ceteris Paribus Assumption
14(1)
Thinking in Terms of the Difference Between Association and Causation
15(1)
Thinking in Terms of the Difference Between the Group and the Individual
15(1)
Economists Build and Test Theories
16(5)
What Is a Theory?
16(1)
Building and Testing a Theory
17(2)
How Do We Judge Theories?
19(1)
What to Ask a Theorist
20(1)
A Reader Asks
21(1)
Chapter Summary
21(2)
Key Terms and Concepts
23(1)
Questions and Problems
23(1)
Internet Activities
24(1)
Appendix A: Working With Diagrams
25(1)
Two-Variable Diagrams
25(1)
Slope of a Line
26(1)
Slope of a Line Is Constant
26(2)
Slope of a Curve
28(1)
The 45° Line
28(1)
Pie Charts
29(1)
Bar Graphs
29(1)
Line Graphs
30(2)
Appendix Summary
32(1)
Questions and Problems
32(1)
Economic Activities: Producing and Trading
33(27)
The Production Possibilities Frontier
34(7)
The Straight-Line PPF: Constant Opportunity Costs
34(1)
The Bowed-Outward (Concave-Downward) PPF: Increasing Opportunity Costs
35(1)
Law of Increasing Opportunity Costs
36(1)
Economic Concepts Within a PPF Framework
37(4)
Trade or Exchange
41(4)
The Purpose of Trade
41(1)
Periods Relevant to Trade
42(1)
Trade and the Terms of Trade
42(1)
Costs of Trades
43(2)
Trades and Third-Party Effects
45(1)
Production, Trade, and Specialization
45(4)
Producing and Trading
46(2)
Profit and a Lower Cost of Living
48(1)
A Benevolent and All-Knowing Dictator Versus the Invisible Hand
49(1)
Producing, Trading, and Economic Systems
49(4)
Economic Systems
49(2)
But First, a Warning
51(1)
Economic Systems and the PPF
51(1)
Three Economic Questions That Deal With Production
51(1)
Trade
52(1)
Prices
52(1)
Property Rights
53(3)
Economic Systems and Property Rights
53(1)
Do Property Rights Matter?
54(1)
Property Rights and Scarce Resources
54(2)
A Reader Asks
56(1)
Chapter Summary
56(1)
Key Terms and Concepts
57(1)
Questions and Problems
57(1)
Working With Numbers and Graphs
58(1)
Internet Activities
59(1)
Supply and Demand: Theory
60(33)
A Note About Theory
61(1)
Demand
61(11)
The Law of Demand
61(1)
Four Ways to Represent the Law of Demand
62(1)
Absolute and Relative Price
63(1)
Why Quantity Demanded Goes Down as Price Goes Up
63(1)
Individual Demand Curve and Market Demand Curve
64(1)
A Change in Quantity Demanded Versus a Change in Demand
65(3)
What Factors Cause the Demand Curve to Shift?
68(4)
Supply
72(4)
The Law of Supply
72(1)
Why Most Supply Curves Are Upward-Sloping
72(1)
The Market Supply Curve
72(1)
Changes in Supply Mean Shifts in Supply Curves
73(1)
What Factors Cause the Supply Curve to Shift?
74(1)
A Change in Supply Versus a Change in Quantity Supplied
75(1)
The Market: Putting Supply and Demand Together
76(8)
Supply and Demand at Work at an Auction
77(1)
The Language of Supply and Demand: A Few Important Terms
78(1)
Moving to Equilibrium: What Happens to Price When There Is a Surplus or a Shortage?
78(1)
Speed of Moving to Equilibrium
79(1)
Moving to Equilibrium: Maximum and Minimum Prices
80(1)
Equilibrium in Terms of Consumers' and Producers' Surplus
80(2)
What Can Change Equilibrium Price and Quantity?
82(2)
Price Controls
84(5)
Price Ceiling: Definition and Effects
84(3)
Do Buyers Prefer Lower Prices to Higher Prices?
87(1)
Price Floor: Definition and Effects
88(1)
A Reader Asks
89(1)
Chapter Summary
89(1)
Key Terms and Concepts
90(1)
Questions and Problems
90(1)
Working With Numbers and Graphs
91(1)
Internet Activities
92(1)
Supply and Demand: Practice
93(28)
Application 1: Why Do Colleges Use GPAs, ACTs, and SATs for Purposes of Admission?
94(1)
Application 2: What Will Happen to the Price of Marijuana if the Purchase and Sale of Marijuana Are Legalized?
95(1)
Application 3: Where Did You Get That Music?
96(1)
Application 4: The Minimum Wage Law
97(1)
Application 5: Price Ceiling in the Kidney Market
98(2)
Application 6: Health Care and the Right to Sue Your HMO
100(2)
Application 7: If Gold Prices Are the Same Everywhere, Then Why Aren't House Prices?
102(1)
Application 8: Do You Pay for Good Weather?
103(1)
Application 9: Paying All Professors the Same Salary
103(2)
Application 10: Price Floors and Winners and Losers
105(1)
Application 11: College Superathletes
106(2)
Application 12: Supply and Demand on a Freeway
108(1)
Application 13: What Does Price Have to Do With Getting to Class on Time?
109(2)
Application 14: Aisle Seats on Commercial Airplanes
111(1)
Application 15: 10 A.M. Classes in College
112(1)
Application 16: What Is the Price of an A?
113(1)
A Reader Asks
114(1)
Chapter Summary
115(1)
Key Terms and Concepts
116(1)
Questions and Problems
116(1)
Working With Numbers and Graphs
117(1)
Internet Activities
117(1)
Economics in Perspective: Musical Notes, Economic Notes
118(3)
Microeconomics
Part 2: Microeconomic Fundamentals
Elasticity
121(27)
Elasticity: Part 1
122(9)
Price Elasticity of Demand
122(1)
Elasticity Is Not Slope
123(1)
From Perfectly Elastic to Perfectly Inelastic Demand
124(2)
Price Elasticity of Demand and Total Revenue (Total Expenditure)
126(3)
Agriculture: An Application of Price Elasticity of Demand
129(2)
Elasticity: Part 2
131(4)
Price Elasticity of Demand Along a Straight-Line Demand Curve
131(2)
Determinants of Price Elasticity of Demand
133(2)
Other Elasticity Concepts
135(9)
Cross Elasticity of Demand
135(1)
Income Elasticity of Demand
136(2)
Traffic Jams in Bangkok, Sao Paulo, and Cairo
138(1)
Price Elasticity of Supply
138(2)
Price Elasticity of Supply and Time
140(1)
The Relationship Between Taxes and Elasticity
140(4)
A Reader Asks
144(1)
Chapter Summary
145(1)
Key Terms and Concepts
146(1)
Questions and Problems
146(1)
Working With Numbers and Graphs
146(1)
Internet Activities
147(1)
Consumer Choice: Maximizing Utility and Behavioral Economics
148(27)
Utility Theory
149(5)
Utility, Total and Marginal
149(1)
Law of Diminishing Marginal Utility
149(3)
The Millionaire and the Pauper: What the Law Says and Doesn't Say
152(1)
The Solution to the Diamond-Water Paradox
153(1)
Is Gambling Worth the Effort?
153(1)
Consumer Equilibrium and Demand
154(6)
Equating Marginal Utilities per Dollar
154(1)
Consumer Equilibrium and the Law of Demand
155(1)
Income and Substitution Effects
156(2)
Should the Government Provide the Necessities of Life for Free?
158(2)
Behavioral Economics
160(4)
Are People Willing to Reduce Others' Incomes?
160(1)
Is $1 Always $1?
161(1)
Coffee Mugs and the Endowment Effect
162(1)
Does the Endowment Effect Hold Only for New Traders?
163(1)
A Reader Asks
164(1)
Chapter Summary
164(1)
Key Terms and Concepts
165(1)
Questions and Problems
165(1)
Working With Numbers and Graphs
166(1)
Internet Activities
166(1)
Appendix B: Budget Constraint and Indifference Curve Analysis
167(1)
The Budget Constraint
167(1)
Slope of the Budget Constraint
167(1)
What Will Change the Budget Constraint?
168(1)
Indifference Curves
168(4)
Constructing an Indifference Curve
169(1)
Characteristics of Indifference Curves
169(3)
The Indifference Map and the Budget Constraint Come Together
172(1)
From Indifference Curves to a Demand Curve
173(1)
Appendix Summary
174(1)
Questions and Problems
174(1)
The Firm
175(19)
Why Firms Exist
176(4)
The Market and the Firm: Invisible Hand Versus Visible Hand
176(1)
The Alchian and Demsetz Answer
176(1)
Shirking in a Team
176(1)
Ronald Coase on Why Firms Exist
177(2)
Markets: Outside and Inside the Firm
179(1)
The Questions the Firm Must Answer
180(1)
The Objective of the Firm
180(2)
Types of Business Firms
182(3)
Proprietorships
182(1)
Partnerships
183(1)
Corporations
184(1)
Some Financial Aspects of Firms
185(4)
The Balance Sheet of a Firm
185(1)
Financing Corporate Activity
186(3)
Nonprofit Firms
189(1)
A Reader Asks
190(1)
Chapter Summary
191(1)
Key Terms and Concepts
192(1)
Questions and Problems
192(1)
Working With Numbers and Graphs
193(1)
Internet Activities
193(1)
Production and Costs
194(26)
The Firm's Objective: Maximizing Profit
195(2)
Accounting Profit Versus Economic Profit
195(1)
Zero Economic Profit Is Not so Bad as It Sounds
196(1)
Production
197(5)
Production in the Short Run
198(1)
Marginal Physical Product and Marginal Cost
199(3)
Average Productivity
202(1)
Costs of Production: Total, Average, Marginal
202(10)
The AVC and ATC Curves in Relation to the MC Curve
205(2)
Tying Short-Run Production to Costs
207(1)
One More Cost Concept: Sunk Cost
207(5)
Production and Costs in the Long Run
212(4)
Long-Run Average Total Cost Curve
212(2)
Economies of Scale, Diseconomies of Scale, and Constant Returns to Scale
214(1)
Why Economies of Scale?
215(1)
Why Diseconomies of Scale?
215(1)
Minimum Efficient Scale and Number of Firms in an Industry
216(1)
Shifts in Cost Curves
216(1)
Taxes
216(1)
Input Prices
216(1)
Technology
216(1)
A Reader Asks
217(1)
Chapter Summary
217(1)
Key Terms and Concepts
218(1)
Questions and Problems
218(1)
Working With Numbers and Graphs
219(1)
Internet Activities
219(1)
Part 3: Product Markets and Policies Perfect Competition
220(291)
Market Structures
221(26)
The Theory of Perfect Competition
221(1)
A Perfectly Competitive Firm Is a Price Taker
221(4)
The Demand Curve for a Perfectly Competitive Firm Is Horizontal
222(1)
The Marginal Revenue Curve of a Perfectly Competitive Firm Is the Same as Its Demand Curve
223(1)
Theory and Real-World Markets
224(1)
Perfect Competition in the Short Run
225(6)
What Level of Output Does the Profit-Maximizing Firm Produce?
225(1)
The Perfectly Competitive Firm and Resource Allocative Efficiency
226(1)
To Produce or Not to Produce: That Is the Question
227(2)
The Perfectly Competitive Firm's Short-Run Supply Curve
229(1)
From Firm to Market (Industry) Supply Curve
229(1)
Why Is the Market Supply Curve Upward-Sloping?
230(1)
Perfect Competition in the Long Run
231(10)
The Conditions of Long-Run Competitive Equilibrium
231(3)
The Perfectly Competitive Firm and Productive Efficiency
234(1)
Industry Adjustment to an Increase in Demand
234(4)
What Happens as Firms Enter an Industry in Search of Profits?
238(1)
Industry Adjustment to a Decrease in Demand
239(1)
Differences in Costs, Differences in Profits: Now You See It, Now You Don't
239(1)
Profit and Discrimination
240(1)
Topics for Analysis Within the Theory of Perfect Competition
241(1)
Do Higher Costs Mean Higher Prices?
241(1)
Will the Perfectly Competitive Firm Advertise?
242(1)
Supplier-Set Price Versus Market-Determined Price: Collusion or Competition?
242(1)
A Reader Asks
242(1)
Chapter Summary
243(1)
Key Terms and Concepts
244(1)
Questions and Problems
244(1)
Working With Numbers and Graphs
245(1)
Internet Activities
245(2)
Monopoly
247(21)
The Theory of Monopoly
248(2)
Barriers to Entry: A Key to Understanding Monopoly
248(1)
What Is the Difference Between a Government Monopoly and a Market Monopoly?
249(1)
Monopoly Pricing and Output Decisions
250(5)
The Monopolist's Demand and Marginal Revenue
250(2)
The Monopolist's Demand and Marginal Revenue Curves Are Not the Same: Why Not?
252(1)
Price and Output for a Profit-Maximizing Monopolist
252(1)
If a Firm Maximizes Revenue, Does It Automatically Maximize Profit Too?
253(2)
Perfect Competition and Monopoly
255(2)
Price, Marginal Revenue, and Marginal Cost
255(1)
Monopoly, Perfect Competition, and Consumers' Surplus
255(1)
Monopoly or Nothing?
256(1)
The Case Against Monopoly
257(3)
The Deadweight Loss of Monopoly
257(1)
Rent Seeking
258(2)
X-Inefficiency
260(1)
Price Discrimination
260(5)
Types of Price Discrimination
260(1)
Why a Monopolist Wants to Price Discriminate
260(1)
Conditions of Price Discrimination
261(1)
Moving to P = MC Through Price Discrimination
261(2)
You Can Have the Comics, Just Give Me the Coupons
263(2)
A Reader Asks
265(1)
Chapter Summary
265(1)
Key Terms and Concepts
266(1)
Questions and Problems
266(1)
Working With Numbers and Graphs
266(1)
Internet Activities
267(1)
Monopolistic Competition, Oligopoly, and Game Theory
268(27)
The Theory of Monopolistic Competition
269(4)
The Monopolistic Competitor's Demand Curve
269(1)
The Relationship Between Price and Marginal Revenue for a Monopolistic Competitor
269(1)
Output, Price, and Marginal Cost for the Monopolistic Competitor
269(1)
Will There Be Profits in the Long Run?
270(1)
Excess Capacity: What Is It, and Is It ``Good'' or ``Bad''?
271(1)
The Monopolist Competitor and Two Types of Efficiency
272(1)
Advertising and Designer Labels
272(1)
Oligopoly: Assumptions and Real-World Behavior
273(1)
Price and Output Under Three Oligopoly Theories
274(6)
The Cartel Theory
274(2)
The Kinked Demand Curve Theory
276(2)
The Price Leadership Theory
278(2)
Game Theory, Oligopoly, and Contestable Markets
280(6)
Prisoner's Dilemma
280(2)
Oligopoly Firms Cartels, and Prisoner's Dilemma
282(1)
Are Markets Contestable?
283(3)
A Review of Market Structures
286(1)
Applications of Game Theory
287(4)
Grades and Partying
287(1)
The Arms Race
288(1)
Speed Limit Laws
289(1)
The Fear of Guilt as an Enforcement Mechanism
290(1)
A Reader Asks
291(1)
Chapter Summary
292(1)
Key Terms and Concepts
292(1)
Questions and Problems
293(1)
Working With Numbers and Graphs
293(1)
Internet Activities
294(1)
Government and Product Markets: Antitrust and Regulation
295(27)
Antitrust
296(11)
Antitrust Acts
296(1)
Unsettled Points in Antitrust Policy
297(3)
Antitrust and Mergers
300(1)
Eight Antitrust Cases and Actions
300(3)
Network Monopolies
303(2)
Civil Action No. 98-1232
305(2)
Regulation
307(9)
The Case of Natural Monopoly
307(1)
Regulating the Natural Monopoly
308(2)
Regulating Industries That Are Not Natural Monopolies
310(1)
Theories of Regulation
310(2)
The Costs and Benefits of Regulation
312(1)
Some Effects of Regulation Are Unintended
313(1)
Social Regulation
314(1)
Deregulation
315(1)
A Reader Asks
316(1)
Chapter Summary
317(1)
Key Terms and Concepts
317(1)
Questions and Problems
317(1)
Working With Numbers and Graphs
318(1)
Internet Activities
319(1)
Economics in Perspective: Intuition and Counterintuition
320(2)
Part 4: Factor Markets and Related Issues
Factor Markets: With Emphasis on the Labor Market
322(23)
Factor Markets
323(6)
The Demand for a Factor
323(1)
Marginal Revenue Product: Two Ways to Calculate It
323(1)
The MRP Curve Is the Firm's Factor Demand Curve
324(1)
Value Marginal Product
325(1)
An Important Question: Is MRP = VMP?
325(1)
Marginal Factor Cost---The Firm's Factor Supply Curve
325(1)
How Many Units of a Factor Should a Firm Buy?
326(1)
When There Is More Than One Factor, How Much of Each Factor Should the Firm Buy?
327(2)
The Labor Market
329(9)
Shifts in a Firm's MRP, or Factor Demand, Curve
329(1)
Market Demand for Labor
329(3)
The Elasticity of Demand for Labor
332(1)
Market Supply of Labor
333(1)
An Individual's Supply of Labor
334(1)
Shifts in the Labor Supply Curve
334(1)
Putting Supply and Demand Together
335(1)
Why Do Wage Rates Differ?
335(1)
Why Demand and Supply Differ in Different Labor Markets
336(2)
Why Did You Choose the Major That You Chose?
338(1)
Marginal Productivity Theory
338(2)
Labor Markets and Information
340(2)
Screening Potential Employees
340(1)
Promoting From Within
341(1)
Is It Discrimination or Is It an Information Problem?
341(1)
A Reader Asks
342(1)
Chapter Summary
342(1)
Key Terms and Concepts
343(1)
Questions and Problems
343(1)
Working With Numbers and Graphs
343(1)
Internet Activities
344(1)
Wages, Unions, and Labor
345(18)
The Facts and Figures of Labor Unions
346(1)
Types of Unions
346(1)
A Few Facts and Figures
346(1)
Objectives of Labor Unions
347(1)
Employment for All Members
347(1)
Maximizing the Total Wage Bill
347(1)
Maximizing Income for a Limited Number of Union Members
347(1)
Wage-Employment Tradeoff
348(1)
Practices of Labor Unions
348(4)
Affecting Elasticity of Demand for Union Labor
349(1)
Affecting the Demand for Union Labor
349(1)
Affecting the Supply of Union Labor
350(1)
Affecting Wages Directly: Collective Bargaining
351(1)
Strikes
351(1)
Effects of Labor Unions
352(8)
The Case of Monopsony
352(3)
Unions' Effects on Wages
355(2)
Unions' Effects on Prices
357(1)
Unions' Effects on Productivity and Efficiency: Two Views
357(3)
A Reader Asks
360(1)
Chapter Summary
360(1)
Key Terms and Concepts
361(1)
Questions and Problems
361(1)
Working With Numbers and Graphs
361(1)
Internet Activities
362(1)
The Distribution of Income and Poverty
363(22)
Some Facts About Income Distribution
364(5)
Who Are the Rich and How Rich Are They?
364(1)
Adjusting the Income Distribution
364(3)
The Effect of Age on the Income Distribution
367(1)
A Simple Equation
368(1)
Measuring Income Equality
369(3)
The Lorenz Curve
369(1)
The Gini Coefficient
370(1)
A Limitation of the Gini Coefficient
371(1)
Why Income Inequality Exists
372(4)
Factors Contributing to Income Inequality
372(2)
Income Differences: Some Are Voluntary, Some Are Not
374(2)
Normative Standards of Income Distribution
376(3)
The Marginal Productivity Normative Standard
376(2)
The Absolute Income Equality Normative Standard
378(1)
The Rawlsian Normative Standard
378(1)
Size of the Income Pies
379(1)
Poverty
379(3)
What Is Poverty?
379(1)
Limitations of the Official Poverty Income Statistics
380(1)
Who Are the Poor?
380(1)
What Is the Justification for Government Redistributing Income?
380(2)
A Reader Asks
382(1)
Chapter Summary
383(1)
Key Terms and Concepts
384(1)
Questions and Problems
384(1)
Working With Numbers and Graphs
384(1)
Internet Activities
384(1)
Interest, Rent, and Profit
385(18)
Interest
386(6)
Loanable Funds: Demand and Supply
386(2)
The Price for Loanable Funds and the Return on Capital Goods Tend to Equality
388(1)
Why Do Interest Rates Differ?
388(1)
Nominal and Real Interest Rates
389(1)
Present Value: What Is Something Tomorrow Worth Today?
390(1)
Deciding Whether or Not to Purchase a Capital Good
391(1)
Rent
392(5)
David Ricardo, the Price of Grain, and Land Rent
393(1)
The Supply Curve of Land Can Be Upward-Sloping
394(1)
Economic Rent and Other Factors of Production
395(1)
Economic Rent and Baseball Players: The Perspective From Which the Factor Is Viewed Matters
395(1)
Competing for Artificial and Real Rents
396(1)
Do People Overestimate Their Worth to Others, or Are They Simply Seeking Economic Rent?
396(1)
Profit
397(3)
Theories of Profit
397(1)
What Is Entrepreneurship?
398(1)
What Do a Microwave Oven and an Errand Runner Have in Common?
398(1)
Profit and Loss as Signals
399(1)
A Reader Asks
400(1)
Chapter Summary
400(1)
Key Terms and Concepts
401(1)
Questions and Problems
401(1)
Working With Numbers and Graphs
401(1)
Internet Activities
402(1)
Part 5: Market Failure and Public Choice
Market Failure: Externalities, Public Goods, and Asymmetric Information
403(27)
Market Failure
404(1)
Externalities
404(6)
Costs and Benefits of Activities
404(1)
Marginal Costs and Benefits of Activities
405(1)
Social Optimality or Efficiency Conditions
405(1)
Three Categories of Activities
405(1)
Externalities in Consumption and in Production
406(1)
Diagram of a Negative Externality
406(2)
Diagram of a Positive Externality
408(2)
Internalizing Externalities
410(5)
Persuasion
410(1)
Taxes and Subsidies
410(1)
Assigning Property Rights
411(1)
Voluntary Agreements
412(1)
Combining Property Rights Assignments and Voluntary Agreements
412(2)
Beyond Internalizing: Setting Regulations
414(1)
Dealing With a Negative Externality in the Environment
415(3)
Is No Pollution Worse Than Some Pollution?
415(1)
Two Methods to Reduce Air Pollution
416(2)
Public Goods: Excludable and Nonexcludable
418(3)
Goods
418(1)
The Free Rider
419(1)
Nonexcludable Versus Nonrivalrous
420(1)
Asymmetric Information
421(5)
Asymmetric Information in a Product Market
421(1)
Asymmetric Information in a Factor Market
422(1)
Is There Market Failure?
422(1)
Adverse Selection
423(1)
Moral Hazard
424(2)
A Reader Asks
426(1)
Chapter Summary
427(1)
Key Terms and Concepts
428(1)
Questions and Problems
428(1)
Working With Numbers and Graphs
428(1)
Internet Activities
429(1)
Public Choice: Economic Theory Applied to Politics
430(27)
Public Choice Theory
431(1)
The Political Market
431(3)
Moving Toward the Middle: The Median Voter Model
431(1)
What Does the Theory Predict?
432(2)
Voters and Rational Ignorance
434(2)
The Costs and Benefits of Voting
434(1)
Rational Ignorance
435(1)
More About Voting
436(3)
Example 1: Voting for a Nonexcludable Public Good
436(2)
Example 2: Voting and Efficiency
438(1)
Special Interest Groups
439(8)
Information and Lobbying Efforts
439(2)
Congressional Districts as Special Interest Groups
441(1)
Public Interest Talk, Special Interest Legislation
441(1)
Special Interest Groups and Rent Seeking
442(5)
Government Bureaucracy
447(1)
A View of Government
448(1)
A Reader Asks
448(1)
Chapter Summary
449(1)
Key Terms and Concepts
450(1)
Questions and Problems
450(1)
Working With Numbers and Graphs
450(1)
Internet Activities
451(1)
Appendix C: The Economics of Transfers
452(1)
The Marginal Return of Transferring
452(1)
Ability to Effect Transfers
452(1)
The Transaction Costs of Transfers and ``Money for Nothing''
453(1)
Political Extortion and Transfers
453(1)
Voting and Transfers
454(3)
The World Economy
Part 6: International Economics: Theory and Policy
International Trade
457(18)
International Trade Theory
458(3)
How Do Countries Know What to Trade?
458(3)
How Do Countries Know When They Have a Comparative Advantage?
461(1)
Trade Restrictions
461(10)
The Distributional Effects of International Trade
461(2)
Consumers' and Producers' Surplus
463(1)
The Benefits and Costs of Trade Restrictions
464(3)
If Free Trade Results in Net Gain, Why Do Nations Sometimes Restrict Trade?
467(3)
What Price Jobs?
470(1)
The World Trade Organization (WTO)
471(1)
A Reader Asks
471(1)
Chapter Summary
472(1)
Key Terms and Concepts
472(1)
Questions and Problems
473(1)
Working With Numbers and Graphs
473(1)
Internet Activities
474(1)
International Finance
475(36)
The Balance of Payments
476(6)
Current Account
476(4)
Capital Account
480(1)
Official Reserve Account
480(1)
Statistical Discrepancy
480(1)
What the Balance of Payments Equals
481(1)
The Foreign Exchange Market
482(2)
The Demand for Goods
482(1)
The Demand for and Supply of Currencies
483(1)
Flexible Exchange Rates
484(4)
The Equilibrium Exchange Rate
484(1)
Changes in the Equilibrium Exchange Rate
485(1)
Factors That Affect the Equilibrium Exchange Rate
486(2)
Fixed Exchange Rates
488(7)
Fixed Exchange Rates and Overvalued/Undervalued Currency
488(2)
What Is So Bad About an Overvalued Dollar?
490(1)
Government Involvement in a Fixed Exchange Rate System
491(1)
Options Under a Fixed Exchange Rate System
491(2)
The Gold Standard
493(2)
Fixed Exchange Rates Versus Flexible Exchange Rates
495(3)
Promoting International Trade
495(1)
Optimal Currency Areas
495(3)
The Current International Monetary System
498(2)
A Reader Asks
500(1)
Chapter Summary
500(1)
Key Terms and Concepts
501(1)
Questions and Problems
502(1)
Working With Numbers and Graphs
502(1)
Internet Activities
503(2)
Appendix D: Should You Major in Economics?
505(1)
Five Myths About Economics and an Economics Major
506(2)
What Awaits You as an Economics Major?
508(1)
What Do Economists Do?
509(1)
Places to Find More Information
510(1)
Concluding Remarks
510(1)
Self-Test Appendix 511(16)
Glossary 527(8)
Index 535


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