Microeconomics : Principles, Problems, and Policies

by McConnell, Campbell R.; Brue, Stanley L.; R, Campbell R.

• ISBN13: 9780072875614
• ISBN10: 0072875615
• Edition: 16th
• Format: Paperback
• Copyright: 2004-02-28
• Publisher: McGraw-Hill College

Summary

Throughout DiscoverEcon you will notice expanded exercises, interactive graphs, and tutorials. You will also notice 25 new videos hosted by Paul Solman, Economics Correspondent for The Lehrer NewsHour on PBS. Solman developed these videos on DVD specifically for Principles of Economics to further illustrate and reinforce basic economic concepts from the text. These videos are linked to DiscoverEcon topics to let you view the videos as you work through each DiscoverEcon chapter. Book jacket.

Author Biography

Campbell R. McConnell taught at the University of Nebraska- Lincoln from 1953 through 1990.

Stanley L. Brue is a professor at Pacific Lutheran University.

Table of Contents

List of Key Graphs	p. vi
Preface	p. vii
Contributors	p. xiii
An Introduction to Economics and the Economy
To the Student	p. 2
The Nature and Method of Economics	p. 3
The Economic Perspective	p. 3
Consider This: Free for All?	p. 4
Why Study Economics?	p. 5
Economic Methodology	p. 6
Macroeconomics and Microeconomics	p. 9
Pitfalls to Sound Reasoning	p. 10
A Look Ahead	p. 12
Last Word: Fast-Food Lines: An Economic Perspective	p. 12
Graphs and Their Meaning	p. 15
The Economizing Problem	p. 22
The Foundation of Economics	p. 22
Economics: Employment and Efficiency	p. 24
Unemployment, Growth, and the Future	p. 28
Consider This: A Matter of Degrees: Is College Worth the Cost?	p. 32
Economic Systems	p. 33
The Circular Flow Model	p. 34
Last Word: September 11, 2001, and the War on Terrorism	p. 35
Individual Markets: Demand and Supply	p. 39
Markets	p. 39
Demand	p. 40
Supply	p. 45
Supply and Demand: Market Equilibrium	p. 48
Consider This: The Cutting Edge	p. 50
Application: Government-Set Prices	p. 52
Last Word: Ticket Scalping: A Bum Rap?	p. 55
Applications and Extensions of Supply and Demand Analysis	p. 59
Changes in Supply and Demand	p. 1
Preset Prices	p. 4
Consider This: Taking Back a "Gift"	p. 5
Nonpriced Goods: The American Bison	p. 6
Consumer and Producer Surplus	p. 7
Last Word: Efficiency Gains from Generic Drugs	p. 11
The Market System	p. 60
Characteristics of the Market System	p. 60
The Market System at Work	p. 64
Consider This: McHits and McMisses	p. 66
Competition and the "Invisible Hand"	p. 69
Last Word: Shuffling the Deck	p. 70
The U.S. Economy: Private and Public Sectors	p. 73
Households as Income Receivers	p. 73
Households as Spenders	p. 74
The Business Population	p. 75
Legal Forms of Businesses	p. 76
The Public Sector: Government's Role	p. 79
Consider This: Street Entertainers	p. 82
The Circular Flow Revisited	p. 83
Government Finance	p. 84
Federal Finance	p. 85
State and Local Finance	p. 87
Last Word: The Financing of Corporations	p. 88
The United States in the Global Economy	p. 91
International Linkages	p. 91
The United States and World Trade	p. 92
Specialization and Comparative Advantage	p. 96
The Foreign Exchange Market	p. 99
Consider This: A ticket to Ride	p. 100
Government and Trade	p. 101
Multilateral Trade Agreements and Free-Trade Zones	p. 103
Global Competition	p. 106
Last Word: Petition of the Candlemakers, 1845	p. 106
Microeconomics of Product Markets
Elasticity of Demand and Supply	p. 112
Price Elasticity of Demand	p. 112
Consider This: A Bit of a Stretch	p. 114
Price Elasticity of Supply	p. 120
Cross Elasticity and Income Elasticity of Demand	p. 123
Last Word: Elasticity and Pricing Power: Why Different Consumers Pay Different Prices	p. 125
Consumer Behavior and Utility Maximization	p. 128
A Closer Look at the Law of Demand	p. 128
Consider This: Vending Machines and Marginal Utility	p. 131
Theory of Consumer Behavior	p. 132
Utility Maximization and the Demand Curve	p. 134
Applications and Extensions	p. 135
Last Word: Criminal Behavior	p. 138
Appendix to Chapter 8: Indifference Curve Analysis	p. 142
The Costs of Production	p. 148
Economic Costs	p. 148
Short-Run Production Relationships	p. 150
Consider This: Diminishing Returns from Study	p. 151
Short-Run Production Costs	p. 154
Long-Run Production Costs	p. 159
Applications and Illustrations	p. 164
Last Word: Irrelevancy of Sunk Costs	p. 165
Pure Competition	p. 169
Four Market Models	p. 169
Pure Competition: Characteristics and Occurrence	p. 170
Demand as Seen by a Purely Competitive Seller	p. 171
Profit Maximization in the Short Run	p. 172
Consider This: The Still There Motel	p. 179
Marginal Cost and Short-Run Supply	p. 179
Profit Maximization in the Long Run	p. 183
Pure Competition and Efficiency	p. 187
Last Word: Pure Competition and Consumer Surplus	p. 190
Pure Monopoly	p. 194
An Introduction to Pure Monopoly	p. 194
Barriers to Entry	p. 195
Monopoly Demand	p. 197
Output and Price Determination	p. 200
Economic Effects of Monopoly	p. 203
Price Discrimination	p. 207
Consider This: Price Discrimination at the Ballpark	p. 208
Regulated Monopoly	p. 209
Last Word: De Beers' Diamonds: Are Monopolies Forever?	p. 212
Monopolistic Competition and Oligopoly	p. 216
Monopolistic Competition	p. 216
Price and Output in Monopolistic Competition	p. 218
Monopolistic Competition and Efficiency	p. 220
Product Variety	p. 222
Oligopoly	p. 223
Oligopoly Behavior: A Game-Theory Overview	p. 225
Consider This: Creative Strategic Behavior	p. 226
Three Oligopoly Models	p. 227
Oligopoly and Advertising	p. 233
Oligopoly and Efficiency	p. 235
Last Word: Oligopoly in the Beer Industry	p. 236
Technology, R&D, and Efficiency	p. 240
Invention, Innovation, and Diffusion	p. 240
Role of Entrepreneurs and Other Innovators	p. 242
A Firm's Optimal Amount of R&D	p. 244
Increased Profit via Innovation	p. 246
Imitation and R&D Incentives	p. 249
Consider This: Trade Secrets	p. 250
Role of Market Structure	p. 251
Technological Advance and Efficiency	p. 253
Last Word: On the Path to the Personal Computer and Internet	p. 254
Microeconomics of Resource Markets
The Demand for Resources	p. 260
Significance of Resource Pricing	p. 260
Marginal Productivity Theory of Resource Demand	p. 261
Consider This: She's The One	p. 265
Determinants of Resource Demand	p. 265
Elasticity of Resource Demand	p. 269
Optimal Combination of Resources	p. 270
Marginal Productivity Theory of Income Distribution	p. 272
Last Word: Input Substitution: The Case of ATMs	p. 273
Wage Determination	p. 277
Labor, Wages, and Earnings	p. 277
General Level of Wages	p. 278
A Purely Competitive Labor Market	p. 280
Monopsony Model	p. 282
Three Union Models	p. 284
Bilateral Monopoly Model	p. 287
The Minimum-Wage Controversy	p. 288
Wage Differentials	p. 289
Consider This: My Entire Life	p. 292
Pay for Performance	p. 293
Last Word: Are Chief Executive Officers (CEOs) Overpaid?	p. 295
Rent, Interest, and Profit	p. 298
Economic Rent	p. 298
Interest	p. 301
Consider This: That Is Interest	p. 303
Economic Profit	p. 307
Last Word: Determining the Price of Credit	p. 309
Income Shares	p. 310
Microeconomics of Government
Government and Market Failure	p. 314
Public Goods	p. 314
Externalities	p. 318
Information Failures	p. 328
Consider This: "Lemons"	p. 328
Last Word: Lojack: A Case of Positive Externalities	p. 332
Public Choice Theory and the Economics of Taxation	p. 336
Revealing Preferences through Majority Voting	p. 336
Government Failure	p. 340
Apportioning the Tax Burden	p. 342
Tax Incidence and Efficiency Loss	p. 345
Last Word: "Government Failure" in the News	p. 350
Microeconomic Issues and Policies
Antitrust Policy and Regulation	p. 354
The Antitrust Laws	p. 354
Antitrust Policy: Issues and Impacts	p. 356
Consider This: Of Catfish and Sneakers (and Other Things in Common)	p. 360
Industrial Regulation	p. 360
Deregulation	p. 362
Social Regulation	p. 363
Last Word: The United States v. Microsoft	p. 366
Agriculture: Economics and Policy	p. 370
Economics of Agriculture	p. 370
Economics of Farm Policy	p. 376
Criticisms and Politics	p. 380
Recent Reform	p. 382
Last Word: The Sugar Program: A Sweet Deal	p. 384
Income Inequality and Poverty	p. 387
Facts about Income Inequality	p. 387
Causes of Income Inequality	p. 390
Trends in Income Inequality	p. 392
Equality versus Efficiency	p. 394
Consider This: Slicing the Pizza	p. 396
The Economics of Poverty	p. 396
The Income-Maintenance System	p. 398
Welfare: Goals and Conflicts	p. 400
Welfare Reform	p. 401
Last Word: U.S. Family Wealth and Its Distribution	p. 402
Labor Market Institutions and Issues: Unionism, Discrimination, Immigration	p. 406
Unionism in America	p. 406
Collective Bargaining	p. 408
Economic Effects of Unions	p. 410
Labor Market Discrimination	p. 413
Economic Analysis of Discrimination	p. 415
Antidiscrimination Policies and Issues	p. 419
Immigration	p. 421
Last Word: Orchestrating Impartiality	p. 424
The Economics of Health Care	p. 428
The Health Care Industry	p. 428
Twin Problems: Costs and Access	p. 428
High and Rising Health Care Costs	p. 429
Limited Access	p. 432
Why the Rapid Rise in Costs?	p. 432
Consider This: What's Cold and Clammy and Out of Date?	p. 438
Reform of the Health Care System	p. 438
Last Word: A Market for Human Organs?	p. 442
International Economics and the World Economy
International Trade	p. 446
Some Key Facts	p. 446
The Economic Basis for Trade	p. 447
Comparative Advantage: Graphical Analysis	p. 448
Supply and Demand Analysis of Exports and Imports	p. 453
Trade Barriers	p. 456
The Case for Protection: A Critical Review	p. 459
Consider This: Shooting Yourself in the Foot	p. 460
Last Word: The WTO Protests	p. 462
The World Trade Organization	p. 463
Exchange Rates, the Balance of Payments, and Trade Deficits	p. 467
Financing International Trade	p. 467
The Balance of Payments	p. 468
Flexible Exchange Rates	p. 471
Consider This: The Big Mac Index	p. 473
Fixed Exchange Rates	p. 476
International Exchange-Rate Systems	p. 478
Recent U.S. Trade Deficits	p. 482
Last Word: Speculation in Currency Markets	p. 484
Transition Economies: Russia and China	p. 488
Ideology and Institutions	p. 1
State Ownership and Central Planning	p. 2
Problems and Central Planning	p. 3
Collapse of the Soviet Economy	p. 5
The Russian Transition to a Market System	p. 6
Market Reforms in China	p. 10
Outcomes and Prospects	p. 11
Conclusion	p. 13
Last Word: Police Smash Down Smirnov's Doors	p. 14
Glossary	p. 1
Index
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