Microeconomics : Principles, Problems, and Policies

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  • Edition: 16th
  • Format: Paperback
  • Copyright: 2004-02-28
  • Publisher: McGraw-Hill College
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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 Graphsp. vi
Prefacep. vii
Contributorsp. xiii
An Introduction to Economics and the Economy
To the Studentp. 2
The Nature and Method of Economicsp. 3
The Economic Perspectivep. 3
Consider This: Free for All?p. 4
Why Study Economics?p. 5
Economic Methodologyp. 6
Macroeconomics and Microeconomicsp. 9
Pitfalls to Sound Reasoningp. 10
A Look Aheadp. 12
Last Word: Fast-Food Lines: An Economic Perspectivep. 12
Graphs and Their Meaningp. 15
The Economizing Problemp. 22
The Foundation of Economicsp. 22
Economics: Employment and Efficiencyp. 24
Unemployment, Growth, and the Futurep. 28
Consider This: A Matter of Degrees: Is College Worth the Cost?p. 32
Economic Systemsp. 33
The Circular Flow Modelp. 34
Last Word: September 11, 2001, and the War on Terrorismp. 35
Individual Markets: Demand and Supplyp. 39
Marketsp. 39
Demandp. 40
Supplyp. 45
Supply and Demand: Market Equilibriump. 48
Consider This: The Cutting Edgep. 50
Application: Government-Set Pricesp. 52
Last Word: Ticket Scalping: A Bum Rap?p. 55
Applications and Extensions of Supply and Demand Analysisp. 59
Changes in Supply and Demandp. 1
Preset Pricesp. 4
Consider This: Taking Back a "Gift"p. 5
Nonpriced Goods: The American Bisonp. 6
Consumer and Producer Surplusp. 7
Last Word: Efficiency Gains from Generic Drugsp. 11
The Market Systemp. 60
Characteristics of the Market Systemp. 60
The Market System at Workp. 64
Consider This: McHits and McMissesp. 66
Competition and the "Invisible Hand"p. 69
Last Word: Shuffling the Deckp. 70
The U.S. Economy: Private and Public Sectorsp. 73
Households as Income Receiversp. 73
Households as Spendersp. 74
The Business Populationp. 75
Legal Forms of Businessesp. 76
The Public Sector: Government's Rolep. 79
Consider This: Street Entertainersp. 82
The Circular Flow Revisitedp. 83
Government Financep. 84
Federal Financep. 85
State and Local Financep. 87
Last Word: The Financing of Corporationsp. 88
The United States in the Global Economyp. 91
International Linkagesp. 91
The United States and World Tradep. 92
Specialization and Comparative Advantagep. 96
The Foreign Exchange Marketp. 99
Consider This: A ticket to Ridep. 100
Government and Tradep. 101
Multilateral Trade Agreements and Free-Trade Zonesp. 103
Global Competitionp. 106
Last Word: Petition of the Candlemakers, 1845p. 106
Microeconomics of Product Markets
Elasticity of Demand and Supplyp. 112
Price Elasticity of Demandp. 112
Consider This: A Bit of a Stretchp. 114
Price Elasticity of Supplyp. 120
Cross Elasticity and Income Elasticity of Demandp. 123
Last Word: Elasticity and Pricing Power: Why Different Consumers Pay Different Pricesp. 125
Consumer Behavior and Utility Maximizationp. 128
A Closer Look at the Law of Demandp. 128
Consider This: Vending Machines and Marginal Utilityp. 131
Theory of Consumer Behaviorp. 132
Utility Maximization and the Demand Curvep. 134
Applications and Extensionsp. 135
Last Word: Criminal Behaviorp. 138
Appendix to Chapter 8: Indifference Curve Analysisp. 142
The Costs of Productionp. 148
Economic Costsp. 148
Short-Run Production Relationshipsp. 150
Consider This: Diminishing Returns from Studyp. 151
Short-Run Production Costsp. 154
Long-Run Production Costsp. 159
Applications and Illustrationsp. 164
Last Word: Irrelevancy of Sunk Costsp. 165
Pure Competitionp. 169
Four Market Modelsp. 169
Pure Competition: Characteristics and Occurrencep. 170
Demand as Seen by a Purely Competitive Sellerp. 171
Profit Maximization in the Short Runp. 172
Consider This: The Still There Motelp. 179
Marginal Cost and Short-Run Supplyp. 179
Profit Maximization in the Long Runp. 183
Pure Competition and Efficiencyp. 187
Last Word: Pure Competition and Consumer Surplusp. 190
Pure Monopolyp. 194
An Introduction to Pure Monopolyp. 194
Barriers to Entryp. 195
Monopoly Demandp. 197
Output and Price Determinationp. 200
Economic Effects of Monopolyp. 203
Price Discriminationp. 207
Consider This: Price Discrimination at the Ballparkp. 208
Regulated Monopolyp. 209
Last Word: De Beers' Diamonds: Are Monopolies Forever?p. 212
Monopolistic Competition and Oligopolyp. 216
Monopolistic Competitionp. 216
Price and Output in Monopolistic Competitionp. 218
Monopolistic Competition and Efficiencyp. 220
Product Varietyp. 222
Oligopolyp. 223
Oligopoly Behavior: A Game-Theory Overviewp. 225
Consider This: Creative Strategic Behaviorp. 226
Three Oligopoly Modelsp. 227
Oligopoly and Advertisingp. 233
Oligopoly and Efficiencyp. 235
Last Word: Oligopoly in the Beer Industryp. 236
Technology, R&D, and Efficiencyp. 240
Invention, Innovation, and Diffusionp. 240
Role of Entrepreneurs and Other Innovatorsp. 242
A Firm's Optimal Amount of R&Dp. 244
Increased Profit via Innovationp. 246
Imitation and R&D Incentivesp. 249
Consider This: Trade Secretsp. 250
Role of Market Structurep. 251
Technological Advance and Efficiencyp. 253
Last Word: On the Path to the Personal Computer and Internetp. 254
Microeconomics of Resource Markets
The Demand for Resourcesp. 260
Significance of Resource Pricingp. 260
Marginal Productivity Theory of Resource Demandp. 261
Consider This: She's The Onep. 265
Determinants of Resource Demandp. 265
Elasticity of Resource Demandp. 269
Optimal Combination of Resourcesp. 270
Marginal Productivity Theory of Income Distributionp. 272
Last Word: Input Substitution: The Case of ATMsp. 273
Wage Determinationp. 277
Labor, Wages, and Earningsp. 277
General Level of Wagesp. 278
A Purely Competitive Labor Marketp. 280
Monopsony Modelp. 282
Three Union Modelsp. 284
Bilateral Monopoly Modelp. 287
The Minimum-Wage Controversyp. 288
Wage Differentialsp. 289
Consider This: My Entire Lifep. 292
Pay for Performancep. 293
Last Word: Are Chief Executive Officers (CEOs) Overpaid?p. 295
Rent, Interest, and Profitp. 298
Economic Rentp. 298
Interestp. 301
Consider This: That Is Interestp. 303
Economic Profitp. 307
Last Word: Determining the Price of Creditp. 309
Income Sharesp. 310
Microeconomics of Government
Government and Market Failurep. 314
Public Goodsp. 314
Externalitiesp. 318
Information Failuresp. 328
Consider This: "Lemons"p. 328
Last Word: Lojack: A Case of Positive Externalitiesp. 332
Public Choice Theory and the Economics of Taxationp. 336
Revealing Preferences through Majority Votingp. 336
Government Failurep. 340
Apportioning the Tax Burdenp. 342
Tax Incidence and Efficiency Lossp. 345
Last Word: "Government Failure" in the Newsp. 350
Microeconomic Issues and Policies
Antitrust Policy and Regulationp. 354
The Antitrust Lawsp. 354
Antitrust Policy: Issues and Impactsp. 356
Consider This: Of Catfish and Sneakers (and Other Things in Common)p. 360
Industrial Regulationp. 360
Deregulationp. 362
Social Regulationp. 363
Last Word: The United States v. Microsoftp. 366
Agriculture: Economics and Policyp. 370
Economics of Agriculturep. 370
Economics of Farm Policyp. 376
Criticisms and Politicsp. 380
Recent Reformp. 382
Last Word: The Sugar Program: A Sweet Dealp. 384
Income Inequality and Povertyp. 387
Facts about Income Inequalityp. 387
Causes of Income Inequalityp. 390
Trends in Income Inequalityp. 392
Equality versus Efficiencyp. 394
Consider This: Slicing the Pizzap. 396
The Economics of Povertyp. 396
The Income-Maintenance Systemp. 398
Welfare: Goals and Conflictsp. 400
Welfare Reformp. 401
Last Word: U.S. Family Wealth and Its Distributionp. 402
Labor Market Institutions and Issues: Unionism, Discrimination, Immigrationp. 406
Unionism in Americap. 406
Collective Bargainingp. 408
Economic Effects of Unionsp. 410
Labor Market Discriminationp. 413
Economic Analysis of Discriminationp. 415
Antidiscrimination Policies and Issuesp. 419
Immigrationp. 421
Last Word: Orchestrating Impartialityp. 424
The Economics of Health Carep. 428
The Health Care Industryp. 428
Twin Problems: Costs and Accessp. 428
High and Rising Health Care Costsp. 429
Limited Accessp. 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 Systemp. 438
Last Word: A Market for Human Organs?p. 442
International Economics and the World Economy
International Tradep. 446
Some Key Factsp. 446
The Economic Basis for Tradep. 447
Comparative Advantage: Graphical Analysisp. 448
Supply and Demand Analysis of Exports and Importsp. 453
Trade Barriersp. 456
The Case for Protection: A Critical Reviewp. 459
Consider This: Shooting Yourself in the Footp. 460
Last Word: The WTO Protestsp. 462
The World Trade Organizationp. 463
Exchange Rates, the Balance of Payments, and Trade Deficitsp. 467
Financing International Tradep. 467
The Balance of Paymentsp. 468
Flexible Exchange Ratesp. 471
Consider This: The Big Mac Indexp. 473
Fixed Exchange Ratesp. 476
International Exchange-Rate Systemsp. 478
Recent U.S. Trade Deficitsp. 482
Last Word: Speculation in Currency Marketsp. 484
Transition Economies: Russia and Chinap. 488
Ideology and Institutionsp. 1
State Ownership and Central Planningp. 2
Problems and Central Planningp. 3
Collapse of the Soviet Economyp. 5
The Russian Transition to a Market Systemp. 6
Market Reforms in Chinap. 10
Outcomes and Prospectsp. 11
Conclusionp. 13
Last Word: Police Smash Down Smirnov's Doorsp. 14
Glossaryp. 1
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