Introduction To Microeconomics | |
Introduction | |
Wants and Scarcity | |
Can Human Wants Ever Be Fully Satisfied? | |
Scarcity: The Pervasive Economic Problem | |
More Health Care Means Less of Other Goods and Services | |
Functions of an Economic System | |
Microeconomic Theory and the Price System | |
The Circular Flow of Economic Activity | |
Determination and Function of Prices | |
Drought in Kansas Sends Wheat Prices Soaring | |
What Role for the Government? | |
Economic Inefficiencies Cause Collapse of Communist Regimes | |
The Margin: The Key Unifying Concept in Microeconomics | |
The Crucial Importance of the Concept of the Margin | |
Marginal Analysis in TV Advertising | |
Some Clarification on the Use of the Margin | |
Specializing, Exchange, and the International Framework of Microeconomics | |
Specialization and Exchange | |
The International Framework of Miocroeconomics | |
Even the IBM PC and the Boeing 777 Are Not All American! | |
Models, Methodology, and Value Judgments | |
Models and Methodology | |
Positive and Normative Analysis | |
At the Frontier Do Economists Ever Agree on Anything? | |
Basic Demand and Supply Analysis | |
Market Analysis | |
Market Demand | |
Demand Schedule and Demand Curve | |
Changes in Demand | |
Market Supply | |
Supply Schedule and Supply Curve | |
Changes in Supply | |
When Is a Market in Equilibrium? | |
Adjustment to Changes in Demand and Supply: Comparative Static Analysis | |
Adjustments to Changes in Demand | |
Adjustments to Changes in Supply | |
Changes in Demand and Supply and Coffee Prices | |
Domestic Demand and Supply, Imports, and Prices | |
The Large U.S. Automotive Trade Deficit and U.S. Auto Prices | |
Interfering With Versus Working Through the Market. | |
Rent Control Harms the Housing Market | |
The Economics of U.S. Farm Support Programs | |
Working Through the Market with an Excise Tax | |
Fighting the Drug War by Reducing Demand and Supply | |
At the Frontier Nonclearing Market Theory | |
Theory Of Consumer Behavior and Demand | |
Consumer Preferences and Choice | |
Utility Analysis | |
Total and Marginal Utility | |
Cardinal or Ordinal Utility? | |
Does Money Buy Happiness? | |
Consumer's Tastes: Indifference Curves | |
Indifference Curves--What Do They Show? | |
Characteristics of Indifference Curves | |
The Marginal Rate of Subsititution | |
Some Special Types of Indifference Curves | |
How Ford Decided on the Characteristics of Its Taurus | |
International Convergence of Tastes | |
Gillette Introduces the Sensor and Mach3 Razors--Two Truly Global Products | |
The Consumer's Income and Price Constraints: The Budget Line | |
Definition of the Budget Line | |
Changes in Income and Prices and the Budget Line | |
Time as a Constraint | |
Consumer's Choice | |
Utility Maximization | |
Utility Maximization and Government Warnings on Junk Food | |
Corner Solutions | |
Water Rationing in the West | |
Marginal Utility Approach to Utility Maximization | |
At the Frontier The Theory of Revealed Preference | |
Consumer Behavior and Individual Demand | |
Changes in Income and the Engel Curve | |
Income-Consumption Curve and Engel Curve | |
Engel's Law After a Century | |
Normal and Inferior Goods | |
Many People Are Blowing Their Pension Money Long Before Retirement | |
Changes in Price and the Individual Demand Curve | |
Higher Alcohol Prices Would Sharply Reduce Youth Alcohol Use and Traffic Deaths | |
Substitution and Income Effects | |
How Are the Substitution and Income Effects Separated? | |
The Substitution and Income Effects of a Gasoline Tax | |
Substitution and Income Effects for Inferior Goods | |
Substitution Between Domestic and Foreign Goods | |
What Is an ""American"" car? | |
Some Applications of Indifference Curve Analysis | |
Is a Cash Subsidy Better Than Food Stamps? | |
Consumer Surplus Measures Unpaid Benefits | |
Benefits from Exchange | |
At the Frontier The Characteristics Approach to Consumer Theory | |
Market Demand and Elasticities | |
The Market Demand for a Commodity | |
The Demand for Big Macs | |
Measuring the Price Elasticity of Demand | |
Price Elasticity of Market Demand | |
Price Elasticity Graphically | |
Price Elasticity and Total Expenditures | |
What Determines Price Elasticity? | |
The Price Elasticity of Demand for Clothing Increaces with Time | |
Income Elasticity of Demand | |
Transatlantic Air Travel Is a Luxury, Flour an Inferior Good | |
Cross Elasticity of Demand | |
Margarine and Butter are Substitutes, Cereals and Fresh Fish Complements | |
Price and Income Elasticities of Imports and Exports | |
Price and Income Elasticities of Imports and Exports in the Real World | |
Marginal Revenue and Elasticity | |
Demand, Total Revenue, and Marginal Revenue | |
Geometry of Marginal Revenue Determination | |
Marginal Revenue, Price, and Elasticity | |
The U.S. Consumer Demand for Alcoholic Beverages | |
At the Frontier The Marketing Revolution with Micromarketing | |
Choice Under Uncertainty | |
Risk and Uncertainty in Demand Choices | |
The Risk that Coca Cola Faced in Changing Its Secret Formula | |
Measuring Risk | |
Probability Distributions | |
The Standard Deviation | |
Risk and Crime Deterrence | |
Utility Theory and Risk Aversion | |
Different Preferences Toward Risk | |
Maximizing Expected Utility | |
America's Gambling Craze | |
Insurance and Gambling | |
Why Do Some Individuals Buy Insurance? | |
Why Do Some Individuals Gamble? | |
Gambling and Insuring by the Same Individual--A Seeming Contradiction | |
Risk Aversion and Indefference Curves | |
Spreading Risks in the Choice of a Portfolio | |
Reducing Risk | |
Gathering More Information | |
Diversification | |
Insurance | |
Some Disasters Are Non-Diversifiable | |
At the Frontier Foreign Exchange Risk and Hedging | |
Production, Costs, and Competitive Markets | |
Production Theory | |
Relating Outputs to Inputs | |
Organization of Production | |
Classification of Inputs | |
Production with One Variable Input | |
Total, Average, and Marginal Product | |
The Geometry of Average and Marginal Product Curves | |
The Law of Diminishing Returns | |
Economics--The Dismal Science Because of Diminishing Returns | |
Production with Two Variable Inputs | |
What Do Isoquants Show? | |
Derivation of Total Product Curves from the Isoquant Map | |
The Shape of Isoquants | |
Characteristics of Isoquants | |
Economic Region of Production | |
Fixed-Proportions Production Functions | |
Trading Traveling Time for Gasoline Consumption on the Nation's Highways | |
Constant, Increasing, and Decreasing Returns to Scale. | |
General Motors Decides Smaller is Better | |
Technological Progress and International Competitiveness | |
Meaning and Importance of Innovations | |
How Do Firms Get New Technology? | |
Innovations and the International Competitiveness of U.S. Firms | |
How Xerox Lost, Regained, but Is now Struggling to Remain Internationally Competitive | |
Score Card on American Industry | |
At the Frontier The New Computer-Aided Production Revolution and the International Competitiveness of U.S. Firms | |
Costs of Production | |
The Nature of Production Costs | |
The Cost of Attending College | |
Cost in the Short Run | |
Total Costs | |
Per-Unit Costs | |
Geometry of Per-Unit Cost Curves | |
Per-Unit Cost Curves in Corn Production | |
Cost in the Long Run | |
Isocost Lines | |
Least-Cost Input Combination | |
Cost Minimization in the Long Run and in the Short Run | |
The Least-Cost Combination of Gasoline and Driving Time | |
Expansion Path and Long Run Cost Curves | |
Expansion Path and Long-Run Total Cost Curves | |
Derivation of the Long-Run Average and Marginal Cost Curves | |
The Relationship Between Short- and Long-Run Average Cost Curves | |
Long-Run Average Cost Curve in Electricity Generation | |
Shape of the Long-Run Average Cost Curve | |
L-Shaped Long-Run Average cost Curves in Various Industries | |
The Minimum Efficient Scale in Various U.S. Food Industries | |
Multiproduct Firms and Dynamic Changes in Costs | |
Economies of Scope | |
The Learning Curve | |
The Learning Curve for the Lockheed L-1011 Aircraft and for Semiconductors | |
At the Frontier Minimizing Costs Internationally--The New Economies of Scale | |
Price and Output Under Perfect Competition | |
Market Structure: Perfect Competition | |
Competition in the New York Stock Market | |
Price Determination in the Market Period | |
Short-Run Equilibrium of the firm | |
Total Approach: Maximizing the Positive Difference Between Total Revenue and Total Costs | |
Marginal Approach: Equating Marginal Revenue and Marginal Cost | |
Profit Maximization or Loss Minimiaztion? | |
Short-Run Supply Curve and Equilibrium | |
Short-Run Supply Curve of the Firm and Industry | |
The Supply Curve of Petroleum from Tar Sands | |
The Short-Run World Supply Curve of Copper | |
Short-Run Equilibrium of the Industry and Firm | |
Long-Run Equilibrium of the Firm and Industry | |
Long-Run Equilibrium of the Firm | |
Long-Run Equilibrium of the Industry and Firm | |
Efficiency Implications of Perfect Competition | |
Long-Run Adjustment in the U.S. Cotton Textile Industry | |
Constant, Increasing, and Decreasing Cost Industries | |
Constant Cost Industries | |
Increasing Cost Industries | |
Decreasing Cost Industries | |
International Competition in the Domestic Economy | |
Analysis of Competitive Markets | |
Producer Surplus | |
Consumers' and Producers' Surplus, and the Efficiency of Perfect Competition | |
Welfare Effects of an Excise Tax | |
Effects of an Import Tariff | |
At the Frontier Auctioning Airwaves | |
Appendix The Foreign Exchange Market and the Dollar Exchange Rate | |
Foreign Exchange Quotations | |
Depreciation of the Dollar and Profitability of U.S. Firms | |
Imperfectly Competitive Markets | |
Price and Output Under Pure Monopoly | |
Pure Monopoly--The Opposite Extreme from Perfect Competition | |
Definition and Sources of Monopoly | |
Barriers to Entry and Monopoly by Alcoa | |
The Monopolist Faces the Market Demand Curve for the Commodity | |
DeBeers Abandons Its Diamond Monopoly | |
Short-Run Equilibrium Price and Output | |
Total Approach: Maximizing the Positive Difference Between Total Revenue and Total Costs | |
Margianl Approach: Equating Marginal REvenue and Marginal Cost | |
Profit Maximization or Loss Minimization? | |
Short-Run Marginal Cost and Supply | |
Long-Run Equilibrium price and Output | |
Profit Maximization in the Long Run | |
Monopoly Profits in the New York Taxi Industry | |
Comparison with Perfect Competition: The Social Cost of Monopoly | |
Estimates of the Social Cost of Monopoly in the United States | |
Profit Maximization by the Muliplant Monopolist | |
Short-Run Equilibrium | |
Long-Run Equilibrium | |
Price Discrimination--A Monopolist's Method of Increasing Profits | |
Charging Different Prices for Different Quantities | |
First Degree Price Discrimination in Undergraduate Financial Aid at American Colleges | |
Charging Different Prices in Different Markets | |
Price discrimination by Con Edison | |
International Price Discrimination and Dumping | |
Kodak Antidumping Victory Over Fuji--But Still Faces Competitive Problems | |
Two-Part Tariff, Tying, and Bundling | |
Two-Part Tariff | |
Tying and Bundling | |
Bundling in the Leasing of Movies | |
Analysis of Monopoly Markets | |
Per-Unit Tax: Perfect Competition and Monopoly Compared | |
Price Discrimination and the Existence of the Industry | |
Do Monopolists Suppress Inventions? | |
At the Frontier Windows 95--A Software Near Monopoly--Lands Microsoft in the Courts | |
Price and Output Under Monopolistic Competition and Oligopoly | |
Monopolistic Competition: Many Sellers of a Differentiated Product | |
Monopolistic Competition: Short-Run and Long-Run Analysis | |
Price and Output Decisions Under Monopolistic Competition | |
Product Variation and Selling Expenses | |
Advertisers Are Taking on Competitors by Name . . . and Being Sued | |
How Useful Is the Theory of Monopolistic Competition? | |
Oligopoly: Interdepenence Among the Few Producers in the Industry | |
Industiral concentration in the United States | |
The Cournot and the Kinked-Demand Curve Models | |
The Cournot Model: Interdependence Not Recognized | |
The Kinked-Demand Curve Model: Interdependence Recognized | |
Collusion: Cartels and Price Leadership Models | |
A Centralized Cartel Operates as a Monopolist | |
The Organization of Petroleum Exporting Countries (OPEC) Cartel | |
Market-Sharing Cartel | |
The Market-Sharing Ivy Cartel | |
Price Leadership | |
Long-Run Adjustments and Efficiency Implications of Oligopoly | |
Long-Run Adjustments in Oligopoly | |
Nonprice Competition Among Oligopolists | |
Welfare Effects of Oligopoly | |
Firm Size and Profitability | |
Other Oligopolistic Pricing Practices | |
Limit Pricing as a Barrier to Entry | |
Cost-Plus Pricing: A Common Short-Cut Pricing Practice | |
At The Frontier The Art of Devising Air Fares | |
The March of Global Oligopolists | |
Risin Competition in Global Banking | |
Globalization of the Pharmaceutial Industry | |
Appendix The Cournot and Stackelberg Models | |
The Cournot Model--An Extended Treatment | |
The Stackelberg Model | |
Game Theory and Oligopolistic Behavior | |
Game Theory: Definition, Objectives, and Usefulness | |
Military Strategy and Strategic Business Decisions | |
Dominant Strategy and Nash Equilibrium | |
Dominant Strategy | |
Nash Equilibrium | |
Dell Computers and Nash Equilibrium | |
The Prisoners' Dilemma, Price and Nonprice Competition, and Cartel Cheating | |
The Prisoners' Dilemma: Definition and Importance | |
Price and Nonprice Competition, Cartel Cheating, and the Prisoners' Dilemma | |
The Airlines' Fare War and the Prisoners' Dilemma | |
Repeated Games and Tit-for-Tat Strategy | |
Strategic Moves | |
Threats, Commitments, and Credibility | |
Entry Deterrence | |
Wal-Mart's Preemptive Expansion Marketing Strategy | |
Strategic Moves and International Competitiveness | |
Companies' Strategic Mistakes and Failures | |
At the Frontier The Virtual Corporation | |
Market Structure, Efficiency, and Regulation | |
Market Structure and Efficiency | |
Measuring Monopoly Power | |
The Lerner Index as a Measure of Monopoly Power | |
Concentration and Monopoly Power: The Herfindahl Index | |
Contestable Markets: Effective Competition Even with Few Firms | |
At the Frontier Functioning of Markets and Experimental Economics | |
Social Costs and Dynamic Benefits of Monopoly Power | |
Controlling Monopoly Power: Antitrust Policy | |
Antitrust Policy in Action--The Breakup of AT&T and the Creation of Competition in the Long-Distance Telephone Service | |
Regulation and the Price of International Telephone Calls in Europe | |
Public-Utility Regulation | |
Public Utilities as Natural Monopolies | |
Difficulties in Public-Utility Regulation | |
Regulated Electricity Rates for Con Edison--A Thing of the Past | |
The Deregulation Movement | |
Deregulation of the Airline Industry: An Assessment | |
Deregulation and the New Merger Boom | |
Regulating International Competition: Voluntary Export Restraints on Japanese Automobiles to the United States | |
Some Applications of Market Structure, Efficiency, and Regulation | |
Regulating Monopoly Price | |
Regulation and Peak-Load Pricing | |
Regulation and Transfer Pricing | |
Pricing and Employment Of Inputs | |
Input Price and Employment Under Perfect Competition | |
Profit Maximization and Optimal Input Employment | |
The Demand Curve of a Firm for an Input | |
The Demand Curve of a Firm for One Variable Input | |
The Demand Curve of a Firm for One of Several Variable Inputs | |
The Market Demand Curve for an Input and its Elasticity | |
The Market Demand Curve for an Input | |
The Increase in the Demand for Temporary Workers | |
Determinants of the Price Elasticity of Demand for an Input | |
Price Elasticity of Demand for Inputs in Manufacturing Industries | |
The Supply Curve of an Input | |
The Supply of Labor by an Individual | |
Substitution and Income Effects of a Wage Increase | |
Labor Force Participation Rates | |
The Market Supply Curve for an Input | |
Backward-Bending Supply Curve of Physicians' Services and Other Labor | |
Pricing and Employment of an Input | |
Labor Productivity and Total Compensation in the United States and Abroad | |
Input Price Equalitzation Among Industries, Regions, and Countries | |
Input Price Equalitzation Among Industries and Regions of a Country | |
Input Price Equalitzation Among Countries | |
Convergence in Hourly Compensation in the Leading Industrial Countries | |
Economic Rent: An Unnecessary Payment to Bring Forth the Supply of an Input | |
Analysis of Labor Markets Under Perfect Competition | |
Substitution and Income Effects of a Wage Rate Change | |
Overtime Pay and the Supply of Labor Services | |
Wage Differentials | |
Effect of Minimum Wages | |
At the Frontier Do Minimum Wages Really Reduce Employment | |
Input Price and Employment Under Imperfect Competition | |
Profit Maximization and Optimal Input Employment | |
The Demand Curve of a Firm for an Input | |
The Demand Curve of a Firm for One Variable Input | |
The Demand Curve of a Firm for One of Several Variable Inputs | |
The Market Demand Curve, and Input Price and Employment | |
the Dynamics of the Engineers' Shortage | |
Monopsony: A Single Firm Hiring an Input | |
Occupational Licensing, Mobility, and Imperfect Labor Markets | |
Monopsony Pricing and Employment of One Variable Input | |
Monopsonistic Exploitation in Major League Baseball | |
Monopsony Pricing and Employment of Several Variable Inputs | |
Imperfect Competition in Labor Markets and the Pay of Top Executives | |
International Migration and the Brain Drain | |
British and Russian Brain Drain Is U.S. Brain Gain | |
The Debate Over U.S. Immigration Policy | |
Analysis of Imperfect Input Markets | |
Regulation of Monopsony | |
Bilateral Monopoly: A Monopsonistic Buyer Facing a Monopolistic Seller | |
Effect of Labor Unions on Wages | |
Economics of Discrimination in Employment | |
At the Frontier Discrimination, and Gender and Race Wage Differentials | |
Financial Microeconomics: Interest, Investment, and the Cost of Capital | |
Lending-Borrowing Equilibrium | |
Lending | |
Borrowing | |
The Market Rate of Interest with Borrowing and Lending | |
Personal Savings in the United States | |
Saving-Investment Equilibrium | |
Saving-Investment Equilibrium Without Borrowing and Lending | |
Saving-Investment Equilibrium With Borrowing and Lending | |
The Market Rate of interest with Saving and Investment, Borrowing and Lending | |
Personal and Business Savings, and Gross and Net Private Domestic Investment in the United States | |
Investment Decisions | |
Net Present Value Rule for Investment Decisions: The Two-Period Case | |
Net Present Value Rule for Investment Decisions: The Multiperiod Case | |
Fields of Education and Higher Lifetime Earnings in the United States | |
Determinants of the Market Rates of Interest | |
Nominal and REal Interest RAtes in the United States: 1981-2000 | |
Investment Risks and Returns in the United States | |
The Cost of Capital | |
Cost of Debt | |
Cost of Equity Capital: The Risk-Free Rate Plus Premium | |
Cost of Equity Capital: The Dividend Valuation Model | |
Cost of Equity Capital: The Capital Asset Pricing Model (CAPM) | |
Weighted Cost of Capital | |
At the Frontier Derivatives: Useful But Dangerous | |
Effects of Foreign Investments on the Receiving Nation | |
Fluctuations in the Flow of Foreign Direct Investments to the United States | |
Some Applications of Financial Microeconomics | |
Investment in Human Capital | |
Investment in Human Capital and Hours of Work | |
Pricing of Exhaustible Resources | |
Management of Nonexhaustible Resources | |
General Equilibrium, Efficiency, and Public Goods | |
General Equilibrium and Welfare Economics | |
Partial Versus General Equilibrium Analysis | |
Effect of a Reduction in Demand for Domestically Produced Automobiles in the United States | |
General Equilibrium of Exchange and Production | |
General Equilibrium of Exchange | |
General Equilibrium of Production | |
Derivation of the Production-Possibilities Frontier | |
General Equilibrium of Production and Exchange and Pareto Optimality | |
General Equilibrium of Production and Exchange Simultaneously | |
Marginal Conditions for Economic Efficiency and Pareto Optimality | |
Perfect Competition, Economic Efficiency, and Equity | |
Perfect Competition and Economic Efficiency | |
Efficiency and Equity | |
Watering Down Efficiency in the Pricing of Water | |
General Equilitbrium of Production and Exchange with International Trade | |
The Basis and the Gains from International Trade | |
Welfare Economics and Utility-Possibilities Frontiers The Meaning of Welfare Economics | |
""The Painful Prescription: Rationing Hospital Care"" | |
Utility-Possibilities Frontier | |
Grand Utility-Possibilities Frontier | |
From Welfare to Work--The Success of Welfare Reform in the United States | |
Social Policy Criteria | |
Measuring Changes in Social Welfare | |
Arrow's Impossibility Theorem | |
At the Frontier: The Hotly-Debated Issue of Income Inequality in the United States | |
Trade Protection and Economic Welfare | |
Welfare Effects of Removing U.S. Trade Restrictions | |
Externalities, Public Goods, and the Role of Government | |
Externalities | |
Externalities Defined | |
Externalities and Market Failure | |
The Case for Government Support for Basic Research | |
Externalities and Property Rights | |
Commercial Fishing: Fewer Boats but Exclusive Rights? | |
Public Goods | |
Nature of Public Goods | |
The Economics of a Lighthouse and Other Public Goods | |
Provision of Public Goods | |
At the Frontier Efficiency Versus Equity in U.S. Tax System | |
Benefit-Cost Analysis | |
Benefit-Cost Analysis and the SST | |
The Theory of Public Choice | |
Meaning and Importance of Public-Choice Theory | |
The Public-Choice Process | |
Policy Implications of Public-Choice Theory | |
Strategic Trade Policy | |
Strategic and Industrial Policy in the United States | |
Government Control and Regulation of Environmental Pollution | |
Environmental Pollution | |
Optimal Pollution Control | |
Direct Regulation and Effluent Fees for Optimal Pollution Control | |
The Market for Dumping Rights | |
The Economics of Information | |
The Economics of Search | |
Search Costs | |
Searching for the Lowest Price | |
Search and Advertising | |
No Haggling Value Pricing in Car Buying | |
At the Frontier The Internet and the Information Revolution | |
Asymmetric Information: The Market for Lemons and Adverse Selection | |
Asymmetric Information and the Market for Lemons | |
The Insurance MArket and Adverse Selection | |
Market Signaling | |
The Problem of Moral Hazard | |
Increased Disability Payments Reduce Labor-Force Participation | |
Medicare and Medicaid and Moral Hazard | |
The Principal-Agent Problem | |
Do Golden Parachutes Reward Failure? | |
The Efficiency Wage Theory | |
The Efficiency Wage at Ford | |
Appendices | |
Mathematical Appendix | |
Answers to Selected Problems | |
Glossary | |
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