Microeconomics : Principles, Applications, and Tools
Microeconomics : Principles, Applications, and Tools
- ISBN 13:
9780131572836
- ISBN 10:
0131572830
- Edition: 5th
- Format: Hardcover
- Copyright: 01/01/2007
- Publisher: Prentice Hall
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Summary
The book provides a clear, concise, and accessible presentation of key points. Its hallmark feature includes a focus on the 5 Key Principles of Economics1) Opportunity Cost, 2) The Marginal Principle (comparing marginal benefits and marginal costs), 3) Diminishing Returns, 4) The Spillover Principle (for externalities in production and consumption), 5) The Reality Principle (distinguishing real from nominal magnitudes). For financial professionals and analysts.
Table of Contents
Read morePreface | p. xiv |
Introduction and Key Principles | |
Introduction: What Is Economics? | p. 2 |
What Is Economics? | p. 4 |
Positive Versus Normative Analysis | p. 5 |
The Three Key Economic Questions: What, How, and Who? | p. 6 |
Economic Models | p. 6 |
Economic Analysis and Modern Problems | p. 7 |
Economic View of Traffic Congestion | p. 7 |
Economic View of Poverty in Africa | p. 7 |
Economic View of Japan's Economic Problems | p. 8 |
The Economic Way of Thinking | p. 9 |
Use Assumptions to Simplify | p. 9 |
Isolate Variables-Ceteris Paribus | p. 9 |
Think at the Margin | p. 10 |
Rational People Respond to Incentives | p. 10 |
Pedaling for Television Time | p. 11 |
Preview of Coming Attractions: Macroeconomics | p. 11 |
To Understand Why Economies Grow | p. 11 |
London Solves its Congestion Problem | p. 12 |
To Understand Economic Fluctuations | p. 13 |
To Make Informed Business Decisions | p. 13 |
Preview of Coming Attractions: Microeconomics | p. 13 |
To Understand Markets and Predict Changes | p. 13 |
To Make Personal and Managerial Decisions | p. 14 |
To Evaluate Public Policies | p. 14 |
Summary | p. 15 |
Key Terms | p. 15 |
Exercise | p. 15 |
Using Graphs and Percentages | p. 17 |
Using Graphs | p. 17 |
Computing Percentage Changes and Using Equations | p. 24 |
The Key Principles of Economics | p. 28 |
The Principle of Opportunity Cost | p. 30 |
The Cost of College | p. 30 |
The Opportunity Costs of Time and Invested Funds | p. 31 |
Opportunity Cost and the Production Possibilities Curve | p. 31 |
The Marginal Principle | p. 33 |
The Opportunity Cost of Military Spending | p. 34 |
How Many Movie Sequels? | p. 35 |
Renting College Facilities | p. 36 |
Automobile Emissions Standards | p. 36 |
Continental Airlines Uses the Marginal Principle | p. 37 |
The Principle of Voluntary Exchange | p. 37 |
Exchange and Markets | p. 37 |
Online Games and Market Exchange | p. 38 |
The Principle of Diminishing Returns | p. 38 |
Tiger Woods and Weeds | p. 39 |
Diminishing Returns from Sharing a Production Facility | p. 39 |
Fertilizer and Crop Yields | p. 40 |
The Real-Nominal Principle | p. 40 |
The Declining Real Minimum Wage | p. 41 |
Repaying Student Loans | p. 42 |
Summary | p. 43 |
Key Terms | p. 43 |
Exercises | p. 43 |
Economic Experiment | p. 47 |
Exchange and Markets | p. 48 |
Comparative Advantage and Exchange | p. 50 |
Specialization and the Gains from Trade | p. 50 |
Comparative Advantage Versus Absolute Advantage | p. 52 |
The Division of Labor and Exchange | p. 52 |
Comparative Advantage and International Trade | p. 53 |
Moving Jobs to Different States and Different Countries | p. 54 |
Movie Exports | p. 54 |
Candy Cane Makers Move to Mexico for Cheap Sugar | p. 55 |
Markets | p. 56 |
Virtues of Markets | p. 56 |
Markets in a Prisoner of War Camp | p. 57 |
Market Failure and the Role of Government | p. 58 |
Government Enforces the Rules of Exchange | p. 59 |
Government Can Reduce Economic Uncertainty | p. 60 |
Summary | p. 61 |
Key terms | p. 61 |
Exercises | p. 61 |
Demand, Supply, and Market Equilibrium | p. 66 |
The Demand Curve | p. 68 |
The Individual Demand Curve and the Law of Demand | p. 68 |
From Individual Demand to Market Demand | p. 69 |
The Supply Curve | p. 70 |
The Individual Supply Curve and the Law of Supply | p. 71 |
Why Is the Individual Supply Curve Positively Sloped? | p. 72 |
From Individual Supply to Market Supply | p. 73 |
Why Is the Market Supply Curve Positively Sloped? | p. 74 |
Market Equilibrium: Bringing Demand and Supply Together | p. 74 |
Excess Demand Causes the Price to Rise | p. 75 |
Excess Supply Causes the Price to Drop | p. 76 |
Market Effects of Changes in Demand | p. 76 |
Change in Quantity Demanded Versus Change in Demand | p. 76 |
Increases in Demand Shift the Demand Curve | p. 77 |
Decreases in Demand Shift the Demand Curve | p. 78 |
A Decrease in Demand Decreases the Equilibrium Price | p. 80 |
Market Effects of Changes in Supply | p. 80 |
Change in Quantity Supplied Versus Change in Supply | p. 80 |
Increases in Supply Shift the Supply Curve | p. 81 |
An Increase in Supply Decreases the Equilibrium Price | p. 82 |
Decreases in Supply Shift the Supply Curve | p. 83 |
A Decrease in Supply Increases the Equilibrium Price | p. 83 |
Simultaneous Changes in Demand and Supply | p. 84 |
Predicting and Explaining Market Changes | p. 85 |
Applications of Demand and Supply | p. 86 |
Hurricane Katrina and Baton Rouge Housing Prices | p. 86 |
Ted Koppel Tries to Explain Lower Drug Prices | p. 87 |
Electricity from the Wind | p. 88 |
The Bouncing Price of Vanilla Beans | p. 89 |
Platinum, Jewelry, Catalytic Converters | p. 90 |
Summary | p. 91 |
Key Terms | p. 91 |
Exercises | p. 91 |
Economic Experiment | p. 96 |
A Closer Look at Demand and Supply | |
Elasticity: A Measure of Responsiveness | p. 98 |
The Price Elasticity of Demand | p. 100 |
Computing Percentage Changes and Elasticities | p. 100 |
Price Elasticity and the Demand Curve | p. 102 |
Elasticity and the Availability of Substitutes | p. 102 |
Other Determinants of the Price Elasticity of Demand | p. 105 |
Using Price Elasticity to Predict Changes in Quantity | p. 105 |
Beer Taxes and Highway Deaths | p. 106 |
Subsidized Medical Care in Cote d'Ivoire and Peru | p. 107 |
Price Elasticity and Total Revenue | p. 107 |
How to Cut Teen Smoking by 60 Percent | p. 108 |
Elastic Versus Inelastic Demand | p. 109 |
Market Elasticity Versus Elasticity for a Firm | p. 110 |
Transit Fares and Deficits | p. 110 |
A Bumper Crop Is Bad News for Farmers | p. 111 |
Drug Prices and Property Crime | p. 112 |
Elasticity and Total Revenue for a Linear Demand Curve | p. 112 |
Price Elasticity Along a Linear Demand Curve | p. 112 |
Elasticity and Total Revenue for a Linear Demand Curve | p. 114 |
Other Elasticities of Demand | p. 114 |
Income Elasticity of Demand | p. 115 |
Cross-Price Elasticity of Demand | p. 115 |
The Price Elasticity of Supply | p. 116 |
What Determines the Price Elasticity of Supply? | p. 117 |
The Role of Time: Short-Run Versus Long-Run Supply Elasticity | p. 117 |
Extreme Cases: Perfectly Inelastic Supply and Perfectly Elastic Supply | p. 118 |
Predicting Changes in Quantity Supplied | p. 119 |
Using Elasticities to Predict Changes in Equilibrium Price | p. 119 |
The Price Effects of a Change in Demand | p. 119 |
The Price Effects of a Change in Supply | p. 121 |
Metropolitan Growth and Housing Prices | p. 121 |
An Import Ban and Shoe Prices | p. 123 |
Summary | p. 123 |
Key Terms | p. 124 |
Exercises | p. 124 |
Market Efficiency and Government Intervention | p. 128 |
Consumer Surplus and Producer Surplus | p. 130 |
The Demand Curve and Consumer Surplus | p. 131 |
The Supply Curve and Producer Surplus | p. 131 |
Market Equilibrium and Efficiency | p. 132 |
Total Surplus Is Lower with a Price Below the Equilibrium Price | p. 133 |
Total Surplus Is Lower with a Price Above the Equilibrium Price | p. 134 |
Efficiency and the Invisible Hand | p. 134 |
Government Intervention in Efficient Markets | p. 135 |
Controlling Prices-Maximum and Minimum Prices | p. 135 |
Setting Maximum Prices | p. 135 |
Rent Control | p. 136 |
Milk Mountains | p. 138 |
Setting Minimum Prices | p. 138 |
Controlling Quantities-Licensing and Import Restrictions | p. 138 |
Taxi Medallions | p. 139 |
Licensing and Market Efficiency | p. 139 |
Winners and Losers from Licensing | p. 140 |
Import Restrictions | p. 140 |
U.S. and European Consumers Pay for Import Restrictions | p. 142 |
Who Really Pays Taxes? | p. 142 |
Tax Shifting: Forward and Backward | p. 142 |
Supply and Demand for Human Organs | p. 143 |
Tax Shifting and the Price Elasticity of Demand | p. 144 |
Cigarette Taxes and Tobacco Land | p. 145 |
Tax Burden and Deadweight Loss | p. 145 |
Boat Workers and the Tax on Luxury Boats | p. 145 |
Taxes and December Babies | p. 147 |
Summary | p. 147 |
Key Terms | p. 148 |
Exercises | p. 148 |
Economic Experiment | p. 151 |
Consumer Choice Using Utility Theory | p. 152 |
Total and Marginal utility | p. 154 |
Consumer Choice | p. 155 |
Consumer Constraints: The Budget Line | p. 155 |
Making Choices Using the Equimarginal Rule | p. 156 |
New Zealand's Tax on Light Spirits | p. 157 |
Online Music Stores and Piracy | p. 158 |
The Individual Demand Curve | p. 159 |
The Income and Substitution Effects of a Price Change | p. 159 |
Points on the Demand Curve | p. 160 |
The Substitution Effect of a Gas Tax Decreases Gas Consumption | p. 161 |
Application of Consumer Choice | p. 162 |
Inflation Doesn't Change Consumption or Utility | p. 162 |
Television Versus Radio Advertising | p. 163 |
Summary | p. 164 |
Key Terms | p. 164 |
Exercises | p. 164 |
Consumer Choice with Indifference Curves | p. 168 |
Consumer Constraints and Preferences | p. 168 |
Maximizing Utility | p. 171 |
What's Your MRS? | p. 172 |
Online Music and Piracy | p. 173 |
Inflation Doesn't Change Consumption or Utility | p. 174 |
Drawing the Individual Demand Curve | p. 175 |
The Substitution Effect of a Gas Tax Decreases Gas Consumption | p. 178 |
Summary | p. 179 |
Exercises | p. 180 |
Key Terms | p. 180 |
Market Structures and Pricing | |
Production Technology and Cost | p. 184 |
Economic Cost and Economic Profit | p. 186 |
A Firm with a Fixed Production Facility: Short-Run Costs | p. 187 |
Production and Marginal Product | p. 187 |
Short-Run Total Cost | p. 188 |
Short-Run Average Costs | p. 190 |
Short-Run Marginal Cost | p. 191 |
The Relationship Between Marginal Cost and Average Cost | p. 192 |
Production and Cost in the Long Run | p. 193 |
Expansion and Replication | p. 193 |
Reducing Output with Indivisible Inputs | p. 195 |
Scaling Down and Labor Specialization | p. 195 |
Economies of Scale | p. 196 |
Diseconomies of Scale | p. 196 |
Actual Long-Run Average-Cost Curves | p. 196 |
Short-Run Versus Long-Run Average Cost | p. 197 |
Applications of Production Cost | p. 198 |
The Production Cost of an iPod Nano | p. 198 |
Indivisible inputs and the Cost of Fake Killer Whales | p. 199 |
Scale Economies in Wind Power | p. 200 |
Information Goods and First-Copy Cost | p. 200 |
The Average Cost of Producing Airplanes | p. 201 |
Summary | p. 202 |
Key Terms | p. 203 |
Exercises | p. 203 |
Perfect Competition | p. 206 |
Preview of the Four Market Structures | p. 208 |
The Firm's Short-Run Output Decision | p. 210 |
The Total Approach: Computing Total Revenue and Total Cost | p. 210 |
The Marginal Approach | p. 211 |
Economic Profit and the Break-Even Price | p. 213 |
The Firm's Shut-Down Decision | p. 213 |
Total Revenue, Variable Cost, and the Shut-Down Decision | p. 213 |
The Shut-Down Price | p. 215 |
Fixed Costs and Sunk Costs | p. 215 |
The Break-Even Price for a Corn Farmer | p. 216 |
Short-Run Supply Curves | p. 216 |
The Firm's Short-Run Supply Curve | p. 216 |
The Short-Run Market Supply Curve | p. 217 |
Market Equilibrium | p. 218 |
Wireless Women in Pakistan | p. 219 |
The Long-Run Supply Curve for an Increasing-Cost Industry | p. 219 |
Production Cost and Industry Size | p. 220 |
Drawing the Long-Run Market Supply Curve | p. 220 |
Wolfram Miners Obey the Law of Supply | p. 221 |
The Worldwide Supply of Sugar | p. 222 |
Short-Run and Long-Run Effects of Changes in Demand | p. 222 |
The Short-Run Response to an Increase in Demand | p. 222 |
The Long-Run Response to an Increase in Demand | p. 223 |
Zoning, Land Prices, and the Supply Curve for Apartments | p. 224 |
Long-Run Supply for a Constant-Cost Industry | p. 225 |
Long-Run Supply Curve for a Constant-Cost Industry | p. 225 |
Hurricane Andrew and the Price of Ice | p. 225 |
Summary | p. 227 |
Key Terms | p. 227 |
Exercises | p. 227 |
Monopoly and Price Discrimination | p. 232 |
The Monopolist's Output Decision | p. 234 |
Total Revenue and Marginal Revenue | p. 235 |
A Formula for Marginal Revenue | p. 236 |
Using the Marginal Principle | p. 236 |
The Social Cost of Monopoly | p. 239 |
Deadweight Loss from Monopoly | p. 239 |
Rent Seeking: Using Resources to Get Monopoly Power | p. 241 |
Monopoly and Public Policy | p. 241 |
Ending the Monopoly on Internet Registration | p. 242 |
Patents and Monopoly Power | p. 242 |
Incentives for Innovation | p. 242 |
Trade-Offs from Patents | p. 243 |
Price Discrimination | p. 243 |
Bribing the Makers of Generic Drugs | p. 244 |
Senior Discounts in Restaurants | p. 245 |
Price Discrimination and the Elasticity of Demand | p. 246 |
Paying for a Cold Soft Drink on a Hot Day | p. 246 |
The Pricing of Movie Admission and Popcorn | p. 247 |
Hardback Books Are Relatively Expensive | p. 248 |
Summary | p. 249 |
Key Terms | p. 250 |
Exercises | p. 250 |
Economic Experiment | p. 252 |
Market Entry and Monopolistic Competition | p. 254 |
The Effects of Market Entry | p. 256 |
Entry Squeezes Profits from Three Sides | p. 257 |
Woofer, Tweeter, and the Stereo Business | p. 258 |
Deregulation and Entry in Trucking | p. 258 |
Name Brands Versus Store Brands | p. 259 |
Monopolistic Competition | p. 259 |
When Entry Stops: Long-Run Equilibrium | p. 260 |
Differentiation by Location | p. 261 |
Trade-Offs with Entry and Monopolistic Competition | p. 261 |
Average Cost and Variety | p. 261 |
Opening a Dunkin' Donuts Shop | p. 262 |
Monopolistic Competition Versus Perfect Competition | p. 263 |
Advertising for Product Differentiation | p. 264 |
Celebrity Endorsements and Signaling | p. 264 |
Advertising and Movie Buzz | p. 265 |
Summary | p. 266 |
Key Terms | p. 266 |
Exercises | p. 266 |
Economic Experiment | p. 269 |
Oligopoly and Strategic Behavior | p. 270 |
What Is an Oligopoly? | p. 272 |
Cartel Pricing and the Duopolists' Dilemma | p. 273 |
Price-Fixing and the Game Tree | p. 275 |
Equilibrium of the Price-Fixing Game | p. 276 |
Nash Equilibrium | p. 277 |
Overcoming the Duopolists' Dilemma | p. 277 |
Low-Price Guarantees | p. 277 |
Vitamin Inc. Gets Busted | p. 273 |
Repeated Pricing Games with Retaliation for Underpricing | p. 279 |
Low-Price Guarantees and Empty Promises | p. 280 |
Price-Fixing and the Law | p. 281 |
Alternative Models of Oligopoly Pricing | p. 282 |
Price Leadership | p. 282 |
The Kinked Demand Curve Mode | p. 282 |
Simultaneous Decision Making and the Payoff Matrix | p. 283 |
Simultaneous Price-Fixing Game | p. 283 |
The Prisoners' Dilemma | p. 284 |
The Insecure Monopolist and Entry Deterrence | p. 285 |
The Passive Approach | p. 285 |
Entry Deterrence and Limit Pricing | p. 286 |
Legal and Illegal Entry Deterrence | p. 288 |
Examples: Microsoft Windows and Campus Bookstores | p. 288 |
Entry Deterrence and Contestable Markets | p. 289 |
When Is the Passive Approach Better? | p. 289 |
The Advertisers' Dilemma | p. 289 |
Reynolds International Takes the Money and Leaves the Market | p. 290 |
Summary | p. 292 |
Key Terms | p. 292 |
Exercises | p. 292 |
Economic Experiment | p. 297 |
Controlling Market Power: Antitrust and Regulation | p. 298 |
Natural Monopoly | p. 300 |
Picking an Output Level | p. 300 |
Will a Second Firm Enter? | p. 301 |
Price Controls for a Natural Monopoly | p. 302 |
XM and Sirius Satellite Radio | p. 303 |
A Decrease in Demand Increases The Price of Cable TV | p. 304 |
Antitrust Policy | p. 304 |
Breaking Up Monopolies | p. 304 |
Blocking Mergers | p. 305 |
Merger Remedy for Wonder Bread | p. 306 |
Heinz and Beech-Nut Battle for Second Place | p. 307 |
Regulating Business Practices: Price-Fixing, Tying, and Cooperative Agreements | p. 308 |
Xidex Recovers Its Acquisition Cost in Two Years | p. 309 |
The Microsoft Cases | p. 309 |
A Brief History of U.S. Antitrust Policy | p. 309 |
Deregulation: Airlines, Telecommunications, and Electricity | p. 310 |
Deregulation of Airlines | p. 310 |
Deregulation of Telecommunication Services | p. 311 |
Deregulation of Electricity | p. 311 |
Electricity Deregulation in California | p. 312 |
Electricity Deregulation in Other U.S. States | p. 313 |
Summary | p. 313 |
Key Terms | p. 313 |
Exercises | p. 313 |
Externalities and Information | |
Imperfect Information: Adverse Selection and Moral Hazard | p. 316 |
The Lemons Problem | p. 318 |
Uninformed Buyers and Knowledgeable Sellers | p. 318 |
Equilibrium with All Low-Quality Goods | p. 319 |
A Thin Market: Equilibrium with Some High-Quality Goods | p. 320 |
Responding to the Lemons Problem | p. 322 |
Buyers Invest in Information | p. 322 |
Consumer Satisfaction Scores from ValueStar and eBay | p. 322 |
Guarantees and Lemons Laws | p. 322 |
Evidence of the Lemons Effect | p. 323 |
The Resale Value of a Week-Old Car | p. 323 |
Used Pickup Trucks | p. 324 |
Regulation of the California Kiwifruit Market | p. 324 |
Baseball Pitchers Are Like Used Cars | p. 325 |
Uninformed Sellers and Knowledgeable Buyers: Insurance | p. 326 |
Health Insurance | p. 326 |
Equilibrium with All High-Cost Consumers | p. 326 |
Responding to Adverse Selection in Insurance: Group Insurance | p. 328 |
The Uninsured | p. 328 |
Genetic Testing Benefits Low-Risk People | p. 329 |
Other Types of Insurance | p. 330 |
Insurance and Moral Hazard | p. 330 |
Deposit Insurance for Savings & Loans | p. 331 |
People with Insurance Take More Risks | p. 331 |
Summary | p. 332 |
Key Terms | p. 332 |
Exercises | p. 332 |
Economic Experiments | p. 336 |
Public Goods and Public Choice | p. 338 |
External Benefits and Public Goods | p. 340 |
Public Goods and the Free-Rider Problem | p. 341 |
Free Riders and the Three-Clock Tower | p. 343 |
Overcoming the Free-Rider Problem | p. 343 |
Paying Landowners to Host Wolves | p. 344 |
Asteroid Diversion as a Public Good | p. 344 |
Private Goods with External Benefits | p. 345 |
External Benefits from Education | p. 345 |
External Benefits and the Marginal Principle | p. 345 |
Other Private Goods That Generate External Benefits | p. 346 |
External Benefits from LoJack | p. 347 |
Public Choice | p. 347 |
Voting and the Median-Voter Rule | p. 347 |
Alternative Models of Government: Self-Interest and Special Interests | p. 349 |
Politicians Are Like Ice-Cream Sellers | p. 350 |
Which Theory Is Correct? | p. 351 |
Summary | p. 351 |
Key Terms | p. 351 |
Exercises | p. 351 |
Economic Experiment | p. 353 |
External Costs and Environmental Policy | p. 354 |
The Optimal Level of Pollution | p. 356 |
Using the Marginal Principle | p. 356 |
The Optimal of Level Sulfur Dioxide Emissions | p. 357 |
Taxing Pollution | p. 358 |
A Firm's Response to a Pollution Tax | p. 358 |
The Market Effects of a Pollution Tax | p. 358 |
Traditional Regulation | p. 360 |
Uniform Abatement with Permits | p. 360 |
The Effects of a Carbon Tax | p. 361 |
Command and Control | p. 362 |
Market Effects of Pollution Regulations | p. 362 |
Marketable Pollution Permits | p. 362 |
Dear Abby and Environmental Policy | p. 363 |
Voluntary Exchange and Marketable Permits | p. 364 |
Supply, Demand, and the Price of Marketable Permits | p. 364 |
External Costs from Automobiles | p. 365 |
External Costs from Pollution | p. 365 |
Marketable Permits for Sulfur Dioxide | p. 366 |
Chicago Climate Exchange | p. 367 |
External Costs from Congestion | p. 368 |
External Costs from Collisions | p. 369 |
Young Drivers and Collisions | p. 369 |
Summary | p. 370 |
Key Terms | p. 370 |
Exercises | p. 370 |
Economic experiment | p. 373 |
The Labor Market and Income Distribution | |
The Labor Market, Income, and Poverty | p. 374 |
The Demand for Labor | p. 376 |
Labor Demand by an Individual Firm in the Short Run | p. 376 |
Market Demand for Labor in the Short Run | p. 379 |
Labor Demand in the Long Run | p. 379 |
Short-Run Versus Long-Run Demand | p. 379 |
The Supply of Labor | p. 380 |
The Individual Labor-Supply Decision: How Many Hours? | p. 380 |
Different Responses to a Higher Wage | p. 381 |
The Market Supply Curve for Labor | p. 381 |
Labor Market Equilibrium | p. 382 |
Changes in Demand and Supply | p. 382 |
The Market Effects of the Minimum Wage | p. 383 |
Codes of Conduct and Living Wages | p. 384 |
Trade-Offs from Immigration | p. 385 |
Explaining Differences in Wages and Income | p. 385 |
Why Do Wages Differ Across Occupations? | p. 386 |
The Gender Pay Gap | p. 386 |
Wage Premiums for Dangerous Jobs | p. 387 |
Racial Discrimination | p. 388 |
Why Do College Graduates Earn Higher Wages? | p. 388 |
Lakisha Washington Versus Emily Walsh | p. 389 |
The Distribution of Income | p. 390 |
Income Distribution Facts | p. 390 |
Recent Changes in the Distribution of Income | p. 391 |
Changes in the Top End of Income Distribution: 1920-1998 | p. 392 |
Poverty and Public Policy | p. 393 |
Poverty Rates for Different Groups | p. 393 |
Redistribution Programs for the Poor | p. 394 |
Welfare Reform and TANF | p. 394 |
Welfare and Work Incentives | p. 395 |
Summary | p. 396 |
Key Terms | p. 396 |
Exercises | p. 396 |
Unions, Monopsony, and Imperfect Information | p. 400 |
Labor Unions | p. 402 |
A Brief History of Labor Unions in the United States | p. 402 |
Labor Unions and Wages | p. 403 |
Truckers Trade Off Wages and Jobs | p. 404 |
Market Structure and the Wage-Jobs Trade-Off | p. 405 |
The Effects of Unions on Worker Productivity and Turnover | p. 405 |
Competition Reduces Trucker Wages | p. 406 |
Monopsony Power | p. 406 |
Marginal Labor Cost Exceeds the Wage | p. 407 |
Picking a Quantity of Labor and a Wage | p. 407 |
Monopsony Versus Perfect Competition | p. 408 |
Monopsony and a Minimum Wage | p. 409 |
Monopsony and the Real World | p. 410 |
Pubs and the Labor-Supply Curve | p. 411 |
Imperfect Information and Efficiency Wages | p. 411 |
The Mixed Market for Labor | p. 411 |
Efficiency Wages at Ford Motor Company | p. 413 |
Summary | p. 413 |
Key Terms | p. 414 |
Exercises | p. 414 |
The International Economy | |
International Trade and Public Policy | p. 416 |
Benefits from Specialization and Trade | p. 418 |
Production Possibilities Curve | p. 418 |
Comparative Advantage and the Terms of Trade | p. 419 |
The Consumption Possibilities Curve | p. 420 |
How Free Trade Affects Employment | p. 421 |
Protectionist Policies | p. 422 |
Import Bans | p. 422 |
Quotas and Voluntary Export Restraints | p. 422 |
Responses to Protectionist Policies | p. 424 |
The Impact of Tariff31s on the Poor | p. 424 |
What Are the Rationales for Protectionist Policies? | p. 425 |
To Shield Workers from Foreign Competition | p. 425 |
To Nurture Infant Industries | p. 425 |
Measuring the Costs of Protecting Jobs | p. 426 |
To Help Domestic Firms Establish Monopolies in World Markets | p. 426 |
Protection for Candle Makers | p. 427 |
A Brief History of International Tariff and Trade Agreements | p. 428 |
Ongoing Trade Negotiations | p. 429 |
Recent Policy Debates and Trade Agreements | p. 429 |
Are Foreign Producers Dumping Their Products? | p. 429 |
Do Trade Laws Inhibit Environmental Protection? | p. 430 |
Do Outsourcing and Trade Cause Inequality? | p. 431 |
Why Do People Protest Against Free Trade? | p. 432 |
Summary | p. 433 |
Key Terms | p. 433 |
Exercises | p. 433 |
Glossary | p. 436 |
Photo Credits | p. 441 |
Index | p. 442 |
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