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Microeconomics : Theory and Applications with Calculus

by
Edition:
3rd
ISBN13:

9780321160737

ISBN10:
0321160738
Format:
Hardcover
Pub. Date:
2/1/2003
Publisher(s):
Pearson College Div

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Author Biography

Hugh Gravelle is Professor of Economics at the Centre for Health Economics, University of York, UK.

Table of Contents

Preface xv
Introduction
1(12)
Microeconomics: The Allocation of Scarce Resources
1(3)
Trade-Offs
2(1)
Who Makes the Decisions
2(1)
Application Oregon Decides Which Medical Treatments to Provide
2(1)
Prices Determine Allocations
3(1)
Application Twinkie Tax
4(1)
Models
4(4)
Application Income Threshold Model and China
5(1)
Simplifications by Assumption
5(1)
Testing Theories
6(1)
Positive Versus Normative
7(1)
Uses of Microeconomic Models
8(5)
Uses of Microeconomics by Individuals and Governments
9(1)
Application Putting Saturn in Orbit
9(3)
Summary
12(1)
PART ONE SUPPLY AND DEMAND
Supply and Demand
13(33)
Demand
14(7)
The Demand Curve
15(3)
The Demand Function
18(2)
Summing Demand Curves
20(1)
Application Aggregating the Demand for Cling Peaches
20(1)
Supply
21(6)
The Supply Curve
21(2)
The Supply Function
23(1)
Summing Supply Curves
24(1)
Effects of Government Import Policies on Supply Curves
24(1)
Solved Problem 2.1
25(2)
Market Equilibrium
27(3)
Using a Graph to Determine the Equilibrium
27(1)
Using Math to Determine the Equilibrium
27(1)
Forces That Drive the Market to Equilibrium
28(2)
Shocking the Equilibrium
30(2)
Effects of a Shift in the Demand Curve
30(1)
Effects of a Shift in the Supply Curve
31(1)
Solved Problem 2.2
31(1)
Effects of Government Interventions
32(9)
Policies that Shift Supply Curves
32(2)
Solved Problem 2.3
34(1)
Application American Steel Quotas
35(1)
Policies that Cause Demand to Differ from Supply
35(3)
Application Zimbabwe Price Controls
38(2)
Application Minimum Wage Law in Puerto Rico
40(1)
Why Supply Need Not Equal Demand
40(1)
When to Use the Supply-and-Demand Model
41(5)
Summary
42(1)
Questions
43(2)
Problems
45(1)
Applying the Supply-and-Demand Model
46(27)
How Shapes of Demand and Supply Curves Matter
47(1)
Sensitivity of Quantity Demanded to Price
48(7)
Price Elasticity of Demand
48(2)
Application Web Fees
50(1)
Elasticity Along the Demand Curve
50(3)
Other Demand Elasticities
53(2)
Sensitivity of Quantity Supplied to Price
55(2)
Elasticity of Supply
55(1)
Elasticity Along the Supply Curve
56(1)
Long Run Versus Short Run
57(1)
Demand Elasticities over Time
57(1)
Supply Elasticities over Time
58(1)
Effects of a Sales Tax
58(15)
Two Types of Sales Taxes
58(1)
Equilibrium Effects of a Specific Tax
59(2)
Application Discouraging Smoking
61(1)
Tax Incidence of a Specific Tax
62(1)
Solved Problem 3.1
63(2)
Application Gasoline Taxes as a Revenue Source
65(1)
The Same Equilibrium No Matter Who Is Taxed
65(1)
The Similar Effects of Ad Valorem and Specific Taxes
66(2)
Solved Problem 3.2
68(1)
Application Incidence of Federal Ad Valorem Taxes
69(1)
Summary
70(1)
Questions
70(2)
Problems
72(1)
PART TWO CONSUMER THEORY
Consumer Choice
73(33)
Preferences
74(10)
Properties of Consumer Preferences
75(1)
Preference Maps
76(3)
Solved Problem 4.1
79(4)
Application Indifference Curves Between Food and Clothing
83(1)
Utility
84(3)
Utility Function
84(1)
Ordinal Preferences
84(1)
Utility and Indifference Curves
85(1)
Utility and Marginal Utility
85(2)
Utility and Marginal Rates of Substitution
87(1)
Budget Constraint
87(5)
Slope of the Budget Constraint
89(1)
Purchasing Fractional Quantities
90(1)
Effect of a Change in Price on Consumption
90(1)
Effect of a Change in Income on Consumption
90(1)
Solved Problem 4.2
91(1)
Constrained Consumer Choice
92(14)
The Consumer's Optimal Bundle
92(3)
Solved Problem 4.3
95(1)
Application Taxes and Internet Shopping
96(1)
Optimal Bundles on Convex Sections of Indifference Curves
97(1)
Buying Where More Is Better
98(1)
Solved Problem 4.4
98(2)
Food Stamps
100(1)
Application Food Stamp Experiments
101(2)
Summary
103(1)
Questions
104(1)
Problems
105(1)
Applying Consumer Theory
106(41)
Deriving Demand Curves
107(3)
How Changes in Income Shift Demand Curves
110(8)
Effects of a Rise in Income
110(2)
Solved Problem 5.1
112(1)
Consumer Theory and Income Elasticities
113(4)
Application Income Elasticities of Demand for Cars
117(1)
Effects of a Price Change
118(5)
Income and Substitution Effects with a Normal Good
118(2)
Income and Substitution Effects with an Inferior Good
120(2)
Solved Problem 5.2
122(1)
Application Shipping the Good Stuff Away
122(1)
Cost-of-Living Adjustments
123(8)
Inflation Indexes
123(2)
Application Does Inflation Hurt?
125(1)
Effects of Inflation Adjustments
126(3)
Application Fixing the CPI Substitution Bias
129(2)
Deriving Labor Supply Curves
131(16)
Labor-Leisure Choice
131(2)
Income and Substitution Effects
133(1)
Solved Problem 5.3
134(2)
Application Leisure-Income Choices of Textile Workers
136(1)
Shape of the Labor Supply Curve
137(1)
Income Tax Rates and Labor Supply
138(2)
Application Winning the Good Life
140(1)
Summary
141(1)
Questions
142(1)
Problems
143(1)
Cross-Chapter Analysis: Child-Care Subsidies
144(3)
PART THREE THEORY OF THE FIRM
Firms and Production
147(35)
The Ownership and Management of Firms
148(2)
The Ownership of Firms
149(1)
The Management of Firms
149(1)
What Owners Want
150(1)
Production
150(2)
Production Functions
151(1)
Time and the Variability of Inputs
151(1)
Short-Run Production: One Variable and One Fixed Input
152(7)
Total Product
153(1)
Marginal Product of Labor
153(1)
Average Product of Labor
154(1)
Graphing the Product Curves
154(3)
Law of Diminishing Marginal Returns
157(1)
Application Malthus and Mass Starvation
158(1)
Long-Run Production: Two Variable Inputs
159(9)
Isoquants
160(3)
Application A Semiconductor Integrated Circuit Isoquant
163(2)
Substituting Inputs
165(2)
Solved Problem 6.1
167(1)
Returns to Scale
168(6)
Constant, Increasing, and Decreasing Returns to Scale
168(2)
Solved Problem 6.2
170(1)
Application Returns to Scale in Manufacturing
170(3)
Varying Returns to Scale
173(1)
Productivity and Technical Change
174(8)
Relative Productivity
174(1)
Application German Versus British Productivity
175(1)
Innovations
175(2)
Application Nonneutral Technical Change in Pin Manufacturing
177(1)
Application Dell Computer's Organizational Innovations
177(1)
Summary
178(1)
Questions
179(1)
Problems
180(2)
Costs
182(45)
Measuring Costs
183(3)
Economic Cost
183(1)
Application Opportunity Cost of Waiting Time
184(1)
Capital Costs
184(1)
Application Swarthmore College's Cost of Capital
185(1)
Short-Run Costs
186(12)
Short-Run Cost Measures
186(2)
Application Lowering Transaction Costs for Used Goods at eBay and Abebooks
188(1)
Short-Run Cost Curves
189(2)
Production Functions and the Shape of Cost Curves
191(3)
Application Short-Run Cost Curves for a Printing Firm
194(1)
Effects of Taxes on Costs
195(2)
Solved Problem 7.1
197(1)
Short-Run Cost Summary
198(1)
Long-Run Costs
198(16)
Input Choice
199(5)
Application Rice Milling on Java
204(3)
Solved Problem 7.2
207(1)
How Long-Run Cost Varies with Output
207(2)
Solved Problem 7.3
209(1)
The Shape of Long-Run Cost Curves
209(4)
Application Average Cost of Cement Firms
213(1)
Estimating Cost Curves Versus Introspection
213(1)
Lower Costs in the Long Run
214(8)
Long-Run Average Cost as the Envelope of Short-Run Average Cost Curves
214(2)
Application Long-Run Cost Curves in Printing and Oil Pipelines
216(2)
Application Choosing an Ink-Jet or a Laser Printer
218(1)
Short-Run and Long-Run Expansion Paths
219(1)
How Learning by Doing Lowers Costs
220(1)
Application Learning by Doing in Computer Chips
220(2)
Cost of Producing Multiple Goods
222(5)
Application Dead End
224(1)
Summary
224(1)
Questions
225(1)
Problems
226(1)
PART FOUR PERFECT COMPETITION
Competitive Firms and Markets
227(43)
Competition
228(4)
Price Taking
228(1)
Why the Firm's Demand Curve Is Horizontal
228(2)
Derivation of a Competitive Firm's Demand Curve
230(1)
Why We Study Perfect Competition
231(1)
Profit Maximization
232(5)
Profit
232(1)
Application Breaking Even on Christmas Trees
233(1)
Two Steps to Maximizing Profit
234(3)
Competition in the Short Run
237(13)
Short-Run Competitive Profit Maximization
237(3)
Solved Problem 8.1
240(2)
Solved Problem 8.2
242(1)
Short-Run Firm Supply Curve
243(1)
Application Apple Crunch
243(3)
Short-Run Market Supply Curve
246(1)
Short-Run Competitive Equilibrium
247(3)
Competition in the Long Run
250(14)
Long-Run Competitive Profit Maximization
251(1)
Long-Run Firm Supply Curve
251(1)
Long-Run Market Supply Curve
252(2)
Application Threat of Entry in Shipping
254(1)
Application The Naked Truth About Costs and Entry
255(2)
Application Upward-Sloping Long-Run Supply Curve for Cotton
257(4)
Long-Run Competitive Equilibrium
261(1)
Solved Problem 8.3
262(2)
Zero Profit for Competitive Firms in the Long Run
264(6)
Zero Long-Run Profit with Free Entry
264(1)
Application Abortion Market
264(1)
Zero Long-Run Profit When Entry Is Limited
265(2)
The Need to Maximize Profit
267(1)
Summary
267(1)
Questions
268(1)
Problems
269(1)
Applying the Competitive Model
270(41)
Consumer Welfare
271(7)
Measuring Consumer Welfare Using a Demand Curve
271(3)
Application Consumer Surplus from Television
274(1)
Effect of a Price Change on Consumer Surplus
274(1)
Application Bruce Springsteen's Gift to His Fans
275(2)
Solved Problem 9.1
277(1)
Producer Welfare
278(3)
Measuring Producer Surplus Using a Supply Curve
279(1)
Using Producer Surplus
280(1)
Solved Problem 9.2
280(1)
Competition Maximizes Welfare
281(5)
Why Producing Less than the Competitive Output Lowers Welfare
282(2)
Why Producing More than the Competitive Output Lowers Welfare
284(1)
Application Deadweight Loss of Christmas Presents
285(1)
Policies that Shift Supply Curves
286(5)
Restricting the Number of Firms
287(2)
Application Taxicab Medallions
289(1)
Raising Entry and Exit Costs
290(1)
Policies that Create a Wedge Between Supply and Demand
291(10)
Welfare Effects of a Sales Tax
291(2)
Application Deadweight Loss from Wireless Taxes
293(1)
Welfare Effects of a Subsidy
294(1)
Welfare Effects of a Price Floor
295(2)
Solved Problem 9.3
297(2)
Application International Cost of Agricultural Subsidies
299(1)
Welfare Effects of a Price Ceiling
299(1)
Solved Problem 9.4
300(1)
Comparing Both Types of Policies: Imports
301(10)
Free Trade Versus a Ban on Imports
302(1)
Application Jefferson's Trade Embargo
303(1)
Free Trade Versus a Tariff
304(2)
Free Trade Versus a Quota
306(1)
Rent Seeking
306(2)
Summary
308(1)
Questions
309(1)
Problems
310(1)
General Equilibrium and Economic Welfare
311(40)
General Equilibrium
312(9)
Feedback Between Competitive Markets
313(3)
Application Sin Taxes
316(1)
Minimum Wages with Incomplete Coverage
317(2)
Application Living-Wage Laws
319(1)
Solved Problem 10.1
320(1)
Trading Between Two People
321(4)
Endowments
321(1)
Mutually Beneficial Trades
322(3)
Solved Problem 10.2
325(1)
Bargaining Ability
325(1)
Competitive Exchange
325(4)
Competitive Equilibrium
326(2)
The Efficiency of Competition
328(1)
Obtaining Any Efficient Allocation Using Competition
329(1)
Production and Trading
329(8)
Comparative Advantage
329(3)
Solved Problem 10.3
332(2)
Efficient Product Mix
334(1)
Competition
334(3)
Efficiency and Equity
337(14)
Role of the Government
337(1)
Application Wealth Distribution in the United States
337(3)
Efficiency
340(1)
Equity
340(3)
Application How You Vote Matters
343(2)
Efficiency Versus Equity
345(1)
Summary
346(1)
Questions
347(1)
Problems
348(1)
Cross-Chapter Analysis: Incidence of Gasoline Taxes
349(2)
PART FIVE MARKET POWER AND MARKET STRUCTURE
Monopoly
351(36)
Monopoly Profit Maximization
352(8)
Marginal Revenue
352(4)
Choosing Price or Quantity
356(1)
Graphical Approach
357(2)
Mathematical Approach
359(1)
Market Power
360(3)
Market Power and the Shape of the Demand Curve
360(1)
Lerner Index
361(1)
Application Humana Hospitals
362(1)
Sources of Market Power
362(1)
Effects of a Shift of the Demand Curve
363(1)
Welfare Effects of Monopoly
364(6)
Graphing the Welfare Loss
364(2)
Solved Problem 11.1
366(2)
Application Competitive Versus Monopoly Sugar Tax Incidence
368(1)
Welfare Effects of Ad Valorem Versus Specific Taxes
368(2)
Cost Advantages that Create Monopolies
370(3)
Sources of Cost Advantages
370(1)
Natural Monopoly
370(2)
Solved Problem 11.2
372(1)
Application Electric Power Utilities
372(1)
Government Actions that Create Monopolies
373(4)
Barriers to Entry
373(1)
Application Iceland's Government Creates Genetic Monopoly
374(1)
Patents
374(1)
Application Botox Patent Monopoly
375(2)
Government Actions That Reduce Market Power
377(10)
Regulating Monopolies
377(2)
Solved Problem 11.3
379(3)
Increasing Competition
382(1)
Dominant Firm and Competitive Fringe
383(1)
Summary
384(1)
Questions
385(1)
Problems
386(1)
Pricing
387(36)
Why and How Firms Price Discriminate
388(6)
Why Price Discrimination Pays
388(2)
Application Disneyland Pricing
390(1)
Who Can Price Discriminate
391(1)
Preventing Resales
392(1)
Application Flight of the Thunderbirds
392(1)
Not All Price Differences Are Price Discrimination
393(1)
Types of Price Discrimination
393(1)
Perfect Price Discrimination
394(7)
How a Firm Perfectly Price Discriminates
394(2)
Application Amazon is Watching You
396(1)
Perfect Price Discrimination: Efficient but Hurts Consumers
396(2)
Application Botox Revisited
398(2)
Solved Problem 12.1
400(1)
Transaction Costs and Perfect Price Discrimination
400(1)
Quantity Discrimination
401(2)
Multimarket Price Discrimination
403(8)
Multimarket Price Discrimination with Two Groups
403(3)
Solved Problem 12.2
406(1)
Application Generics and Brand-Name Loyalty
407(1)
Identifying Groups
408(1)
Application Consumers Pay for Lower Prices
409(1)
Welfare Effects of Multimarket Price Discrimination
410(1)
Two-Part Tariffs
411(4)
A Two-Part Tariff with Identical Consumers
412(1)
A Two-Part Tariff with Nonidentical Consumers
413(1)
Application Warehouse Stores
414(1)
Tie-in Sales
415(8)
Requirement Tie-In Sales
415(1)
Application IBM
415(1)
Bundling
416(2)
Summary
418(1)
Questions
418(1)
Problems
419(2)
Cross-Chapter Analysis: Docking Their Pay
421(2)
Oligopoly and Monopolistic Competition
423(55)
Market Structures
424(2)
Game Theory
426(5)
A Single-Period, Two-Firm, Quantity-Setting Game
427(1)
Why Firms Do Not Cooperate in a Single-Period Game
428(1)
Collusion in Repeated Games
429(1)
Application Oligopoly Competition Among Governments
430(1)
Cooperative Oligopoly Models
431(8)
Laws Against Cartels
432(1)
Application The Art of Price Fixing
433(1)
Why Cartels Form
434(1)
Why Cartels Fail
435(1)
Maintaining Cartels
436(1)
Application A Government-Created Cartel
437(1)
Entry and Cartel Success
438(1)
Application Bail Bonds
438(1)
Mergers
438(1)
Application Airline Mergers
439(1)
Cournot Model of Noncooperative Oligopoly
439(11)
Cournot Model of an Airline Market
440(4)
Comparing the Cournot and Cartel Models
444(2)
The Cournot Equilibrium and the Number of Firms
446(2)
Application Air Ticket Prices and Rivalry
448(2)
Stackelberg Model of Noncooperative Behavior
450(9)
Stackelberg Game Tree
450(2)
Stackelberg Graphical Model
452(2)
Why Moving Sequentially Is Essential
454(1)
Strategic Trade Policy
454(4)
Solved Problem 13.1
458(1)
Application European Cigarette Tax Incidence
459(1)
Comparison of Collusive, Cournot, Stackelberg, and Competitive Equilibria
459(2)
Application Deadweight Losses in the Food and Tobacco Industries
460(1)
Monopolistic Competition
461(4)
Monopolistically Competitive Equilibrium
461(1)
Fixed Costs and the Number of Firms
462(2)
Solved Problem 13.2
464(1)
Bertrand Price-Setting Model
465(13)
Bertrand Equilibrium with Identical Products
465(2)
Bertrand Equilibrium with Differentiated Products
467(1)
Differentiating Products
468(1)
Application Blue Fries, Green Ketchup
469(1)
Application Welfare Gain from New Cereals
470(1)
Summary
471(1)
Questions
472(1)
Problems
473(2)
Cross-Chapter Analysis: Frequent Flier Programs
475(3)
Strategy
478(38)
Application Cleaning the Air
479(1)
Preventing Entry: Simultaneous Decisions
480(3)
Room for Two Firms
480(1)
Room for Only One Firm
481(1)
Summary of the Simultaneous-Decision Entry Game
482(1)
Solved Problem 14.1
482(1)
Preventing Entry: Sequential Decisions
483(14)
To Act or Not to Act?
484(2)
Application Government's Helping Hand
486(1)
Commitment and Entry Prevention
487(3)
Solved Problem 14.2
490(1)
Commitment and Fixed Costs
490(6)
Solved Problem 14.3
496(1)
Creating and Using Cost Advantages
497(6)
Lowering Marginal Cost While Raising Total Cost
497(1)
Learning by Doing
498(1)
Raising Rivals' Costs
499(1)
Application Hitting Rivals Where It Hurts
499(1)
Raising All Firms' Costs
500(1)
Advantages and Disadvantages to Moving First
501(1)
Preventing Entry: Summary
502(1)
Application Evidence on Strategic Entry Deterrence
502(1)
Advertising
503(13)
Monopoly Advertising
504(1)
Application Drug Commercials
504(3)
Application O. J. Trial Effect
507(1)
Strategic Advertising
508(1)
Application Splenda
508(2)
Summary
510(1)
Questions
511(1)
Problems
512(1)
Cross-Chapter Analysis: Magazine Subscriptions
513(3)
PART SIX FACTOR MARKETS
Factor Markets and Vertical Integration
516(38)
Competitive Factor Market
517(10)
Short-Run Factor Demand of a Firm
517(5)
Solved Problem 15.1
522(1)
Application Thread Mill
522(1)
Long-Run Factor Demand
523(1)
Factor Market Demand
524(3)
Competitive Factor Market Equilibrium
527(1)
Effect of Monopolies on Factor Markets
527(9)
Market Structure and Factor Demands
527(2)
A Model of Market Power in Input and Output Markets
529(2)
Application Record Prices
531(1)
Application Union Monopoly Power
532(2)
Solved Problem 15.2
534(1)
Application Baseball Salaries and Ticket Prices
535(1)
Monopsony
536(7)
Monopsony Profit Maximization
536(3)
Application Monopsony Wage Setting
539(1)
Welfare Effects of Monopsony
539(1)
Solved Problem 15.3
539(2)
Monopsony Price Discrimination
541(1)
Application Monopsony Price Discrimination
542(1)
Vertical Integration
543(11)
Stages of Production
543(1)
Degree of Vertical Integration
544(1)
Produce or Buy
544(1)
Application Automaker Buying Site
545(1)
Application Aluminum
546(2)
Application Shelf-ish Behavior
548(1)
Summary
549(1)
Questions
549(1)
Problems
550(1)
Cross-Chapter Analysis: Why the Black Death Drove Up Wages
551(3)
Interest Rates, Investments, and Capital Markets
554(35)
Comparing Money Today to Money in the Future
555(12)
Interest Rates
555(1)
Application Usury
556(3)
Using Interest Rates to Connect the Present and Future
559(1)
Application Power of Compounding
559(2)
Stream of Payments
561(2)
Solved Problem 16.1
563(1)
Application Saving for Retirement
564(1)
Inflation and Discounting
565(1)
Application Winning the Lottery
566(1)
Choices over Time
567(9)
Application Comparing Two Contracts
568(1)
Investing
568(2)
Solved Problem 16.2
570(1)
Solved Problem 16.3
571(1)
Rate of Return on Bonds
571(1)
Durability
572(1)
Application Durability of Telephone Poles
572(1)
Human Capital
573(3)
Exhaustible Resources
576(8)
When to Sell an Exhaustible Resource
576(1)
Price of a Scarce Exhaustible Resource
577(3)
Application Redwood Trees
580(2)
Why Price May Be Constant or Fall
582(2)
Capital Markets, Interest Rates, and Investments
584(5)
Increased Savings, More Investment
585(1)
Increased Government Demand, Less Private Investment
585(1)
Application Taking from Future Generations
586(1)
Summary
586(1)
Questions
587(1)
Problems
587(2)
PART SEVEN UNCERTAINTY, MISSING MARKETS, AND LIMITED INFORMATION
Uncertainty
589(31)
Degree of Risk
590(5)
Probability
590(2)
Expected Value
592(1)
Solved Problem 17.1
592(1)
Variance and Standard Deviation
593(2)
Decision Making Under Uncertainty
595(8)
Expected Utility
595(1)
Risk Aversion
596(2)
Solved Problem 17.2
598(1)
Risk Neutrality
599(1)
Risk Preference
599(1)
Application Gambling
600(3)
Avoiding Risk
603(8)
Just Say No
603(1)
Obtain Information
604(1)
Diversify
604(2)
Insure
606(1)
Solved Problem 17.3
607(2)
Application Flight Insurance
609(1)
Application No Insurance for Terrorism and Natural Disasters
610(1)
Investing Under Uncertainty
611(9)
How Investing Depends on Attitudes Toward Risk
611(2)
Application Risk Premium
613(1)
Investing with Uncertainty and Discounting
613(1)
Investing with Altered Probabilities
614(1)
Application Loans, Defaults, and Usury Laws
615(2)
Summary
617(1)
Questions
617(1)
Problems
618(2)
Externalities, Commons, and Public Goods
620(38)
Externalities
621(2)
Application Death by SUV
622(1)
Application Michael Jordan's Positive Externalities
622(1)
The Inefficiency of Competition with Externalities
623(12)
Supply-and-Demand Analysis
623(5)
Solved Problem 18.1
628(1)
Application Taxes on Fuels
629(1)
Application Sobering Drunk Drivers
630(1)
Cost-Benefit Analysis
631(2)
Application Emissions Standards for Ozone
633(2)
Market Structure and Externalities
635(3)
Monopoly and Externalities
635(1)
Monopoly Versus Competitive Welfare with Externalities
635(2)
Solved Problem 18.2
637(1)
Taxing Externalities in Noncompetitive Markets
637(1)
Allocating Property Rights to Reduce Externalities
638(5)
Coase Theorem
638(3)
Markets for Pollution
641(1)
Application Pollution Markets
642(1)
Common Property
643(3)
Overuse of Common Property
643(1)
Application Overfishing
644(1)
Solving the Commons Problem
645(1)
Application For Whom the Bridge Tolls
645(1)
Public Goods
646(12)
Types of Goods
647(1)
Markets for Public Goods
648(3)
Reducing Free Riding
651(1)
Application Free Riding on Water
651(1)
Valuing Public Goods
652(2)
Summary
654(1)
Questions
654(1)
Problems
655(1)
Cross-Chapter Analysis: Emissions Fees Versus Standards Under Uncertainty
656(2)
Asymmetric Information
658(30)
Problems Due to Asymmetric Information
659(1)
Responses to Adverse Selection
660(2)
Controlling Opportunistic Behavior Through Universal Coverage
660(1)
Equalizing Information
661(1)
Application Risky Hobbies
662(1)
How Ignorance About Quality Drives Out High-Quality Goods
662(9)
Lemons Market with Fixed Quality
663(3)
Solved Problem 19.1
666(1)
Lemons Market with Variable Quality
666(1)
Limiting Lemons
667(1)
Application Recycling Lemons
667(3)
Application College Guarantee
670(1)
Price Discrimination Due to False Beliefs About Quality
671(1)
Application Multiple Brand Names
671(1)
Market Power from Price Ignorance
672(4)
Tourist-Trap Model
673(1)
Solved Problem 19.2
674(1)
Advertising and Prices
675(1)
Application Advertising Lowers Prices
675(1)
Problems Arising from Ignorance When Hiring
676(12)
Information About Employment Risks
676(1)
Cheap Talk
677(2)
Education as a Signal
679(2)
Solved Problem 19.3
681(3)
Screening in Hiring
684(1)
Summary
685(1)
Questions
686(1)
Problems
687(1)
Contracts and Moral Hazards
688
Principal-Agent Problem
689(3)
A Model
690(1)
Types of Contracts
690(1)
Efficiency
691(1)
Production Efficiency
692(8)
Efficient Contract
692(1)
Full Information
693(5)
Solved Problem 20.1
698(1)
Asymmetric Information
698(1)
Application Contracts and Productivity in Agriculture
699(1)
Trade-Off between Efficiency in Production and in Risk Bearing
700(6)
Contracts and Efficiency
700(3)
Choosing the Best Contract
703(1)
Application Lawyers' Contingent Fees
704(1)
Solved Problem 20.2
704(2)
Payments Linked to Production or Profit
706(3)
Piece-Rate Hire Contracts
706(1)
Application Pleased to Be Paid by the Piece
707(1)
Contingent Contract Rewards Linked to a Firm's Success
708(1)
Application Increasing Use of Incentives
708(1)
Monitoring
709(9)
Bonding
709(2)
Solved Problem 20.3
711(1)
Deferred Payments
712(1)
Efficiency Wages
713(2)
After-the-Fact Monitoring
715(1)
Application Abusing Leased Cars
716(1)
Application Savings and Loans Moral Hazards
717(1)
Checks on Principals
718(3)
Application Performance Termination Contracts
719(2)
Contract Choice
721
Summary
722(1)
Questions
723(1)
Problems
724
CHAPTER APPENDIXES
Appendix 2A: Regressions
1(2)
Appendix 3A: Effects of a Specific Tax on Equilibrium
3(1)
Appendix 4A: Utility and Indifference Curves
4(2)
Appendix 4B: Maximizing Utility
6(2)
Appendix 5A: The Slutsky Equation
8(1)
Appendix 5B: Labor-Leisure Model
9(1)
Appendix 6A: Properties of Marginal and Average Product Curves
10(1)
Appendix 6B: Cobb-Douglas Production Function
11(1)
Appendix 7A: Minimum of the Average Cost Curve
11(1)
Appendix 7B: Norwegian Printing Firm's Short-Run Cost Curves
12(1)
Appendix 7C: Minimizing Cost
13(2)
Appendix 8A: The Elasticity of the Residual Demand Curve
15(1)
Appendix 8B: Profit Maximization
15(1)
Appendix 9A: Demand Elasticities and Surplus
16(1)
Appendix 11A: Relationship Between a Linear Demand Curve and Its Marginal Revenue Curve
17(1)
Appendix 11B: Incidence of a Specific Tax on a Monopoly
17(1)
Appendix 12A: Perfect Price Discrimination
18(1)
Appendix 12B: Quantity Discrimination
19(1)
Appendix 12C: Multimarket Price Discrimination
19(1)
Appendix 12D: Two-Part Tariffs
20(1)
Appendix 13A: Cournot Equilibrium
20(3)
Appendix 13B: Stackelberg Equilibrium
23(1)
Appendix 13C: Bertrand Equilibrium
23(2)
Appendix 14A: Mixed Strategies
25(1)
Appendix 14B: Profit-Maximizing Advertising and Production
25(1)
Appendix 15A: Factor Demands
26(1)
Appendix 15B: Monopsony
27(1)
Appendix 16A: Perpetuity
28(1)
Appendix 18A: Welfare Effects of Pollution in a Competitive Market
28(2)
Appendix 20A: Nonshirking Condition
30(1)
Answers to Selected Problems 31(9)
Answers to Questions for Cross-Chapter Analysis 40(2)
Definitions 42(6)
References 48(7)
Sources for Applications 55(8)
Credits 63(1)
Index 64


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