Economics: A Contemporary Introduction (with InfoTrac)

Front Cover......Page 1
Title Page......Page 2
Copyright......Page 3
Brief Contents......Page 5
Contents......Page 7
Preface......Page 21
CHAPTER 1: The Art and Science of Economic Analysis......Page 34
The Economic Problem: Scarce Resources, Unlimited Wants......Page 35
The Art of Economic Analysis......Page 39
The Science of Economic Analysis......Page 41
SUMMARY......Page 49
PROBLEMS AND EXERCISES......Page 50
EXPERIENTIAL EXERCISES......Page 51
HOMEWORK XPRESS! EXERCISES......Page 52
Appendix: Understanding Graphs......Page 53
CHAPTER 2: Some Tools of Economic Analysis......Page 60
Choice and Opportunity Cost......Page 61
Comparative Advantage, Specialization, and Exchange......Page 64
The Economy's Production Possibilities......Page 67
Economic Systems......Page 72
QUESTIONS FOR REVIEW......Page 75
PROBLEMS AND EXERCISES......Page 76
EXPERIENTIAL EXERCISES......Page 77
HOMEWORK XPRESS! EXERCISES......Page 78
CHAPTER 3: Economic Decision Makers......Page 79
The Household......Page 80
The Firm......Page 82
The Government......Page 86
The Rest of the World......Page 91
SUMMARY......Page 94
QUESTIONS FOR REVIEW......Page 95
EXPERIENTIAL EXERCISES......Page 96
CHAPTER 4: Demand and Supply Analysis......Page 97
Demand......Page 98
Supply......Page 103
Changes in Equilibrium Price and Quantity......Page 109
Disequilibrium......Page 114
Conclusion......Page 116
SUMMARY......Page 117
PROBLEMS AND EXERCISES......Page 118
EXPERIENTIAL EXERCISES......Page 120
HOMEWORK XPRESS! EXERCISES......Page 121
CHAPTER 5: Elasticity of Demand and Supply......Page 122
Price Elasticity of Demand......Page 123
Determinants of the Price Elasticity of Demand......Page 129
Price Elasticity of Supply......Page 133
Other Elasticity Measures......Page 137
SUMMARY......Page 141
PROBLEMS AND EXERCISES......Page 142
EXPERIENTIAL EXERCISES......Page 143
HOMEWORK XPRESS! EXERCISES......Page 144
Appendix: Price Elasticity and Tax Incidence......Page 145
CHAPTER 6: Consumer Choice and Demand......Page 148
Utility Analysis......Page 149
Measuring Utility......Page 150
Conclusion......Page 161
QUESTIONS FOR REVIEW......Page 162
PROBLEMS AND EXERCISES......Page 163
EXPERIENTIAL EXERCISES......Page 164
HOMEWORK XPRESS! EXERCISES......Page 165
Appendix: Indifference Curves and Utility Maximization......Page 166
CHAPTER 7: Production and Cost in the Firm......Page 173
Cost and Profit......Page 174
Production in the Short Run......Page 176
Costs in the Short Run......Page 179
Costs in the Long Run......Page 183
Conclusion......Page 188
QUESTIONS FOR REVIEW......Page 189
PROBLEMS AND EXERCISES......Page 190
EXPERIENTIAL EXERCISES......Page 191
HOMEWORK XPRESS! EXERCISES......Page 192
Appendix: A Closer Look at Production and Costs......Page 193
CHAPTER 8: Perfect Competition......Page 198
An Introduction to Perfect Competition......Page 199
Short-Run Profit Maximization......Page 201
Minimizing Short-Run Losses......Page 204
The Firm and Industry Short-Run Supply Curves......Page 207
Perfect Competition in the Long Run......Page 211
The Long-Run Industry Supply Curve......Page 215
Perfect Competition and Efficiency......Page 218
Conclusion......Page 221
SUMMARY......Page 222
PROBLEMS AND EXERCISES......Page 223
HOMEWORK XPRESS! EXERCISES......Page 225
CHAPTER 9: Monopoly......Page 226
Barriers to Entry......Page 227
Revenue for the Monopolist......Page 230
The Firm's Costs and Profit Maximization......Page 234
Monopoly and the Allocation of Resources......Page 238
Problems Estimating the Deadweight Loss of Monopoly......Page 240
Price Discrimination......Page 242
Conclusion......Page 245
QUESTIONS FOR REVIEW......Page 246
PROBLEMS AND EXERCISES......Page 247
HOMEWORK XPRESS! EXERCISES......Page 248
CHAPTER 10: Monopolistic Competition and Oligopoly......Page 249
Monopolistic Competition......Page 250
An Introduction to Oligopoly......Page 257
Models of Oligopoly......Page 260
Conclusion......Page 267
SUMMARY......Page 268
QUESTIONS FOR REVIEW......Page 269
PROBLEMS AND EXERCISES......Page 270
HOMEWORK XPRESS! EXERCISES......Page 271
CHAPTER 11: Resource Markets......Page 272
The Once-Over......Page 273
The Demand and Supply of Resources......Page 274
A Closer Look at Resource Demand......Page 280
SUMMARY......Page 288
PROBLEMS AND EXERCISES......Page 289
HOMEWORK XPRESS! EXERCISES......Page 290
CHAPTER 12: Labor Markets and Labor Unions......Page 292
Labor Supply......Page 293
Unions and Collective Bargaining......Page 303
Union Wages and Employment......Page 304
SUMMARY......Page 311
QUESTIONS FOR REVIEW......Page 312
EXPERIENTIAL EXERCISES......Page 313
HOMEWORK XPRESS! EXERCISES......Page 314
CHAPTER 13: Capital, Interest, and Corporate Finance......Page 315
The Role of Time in Production and Consumption......Page 316
Present Value and Discounting......Page 323
Corporate Finance......Page 327
SUMMARY......Page 329
PROBLEMS AND EXERCISES......Page 330
HOMEWORK XPRESS! EXERCISES......Page 331
CHAPTER 14: Transaction Costs, Imperfect Information, and Market Behavior......Page 332
Rationale for the Firm and Its Scope of Operation......Page 333
Market Behavior with Imperfect Information......Page 338
Asymmetric Information in Product Markets......Page 341
Asymmetric Information in Labor Markets......Page 344
Conclusion......Page 346
QUESTIONS FOR REVIEW......Page 347
EXPERIENTIAL EXERCISES......Page 348
HOMEWORK XPRESS! EXERCISES......Page 349
CHAPTER 15: Economic Regulation and Antitrust Policy......Page 350
Business Behavior, Public Policy, and Government Regulation......Page 351
Regulating Natural Monopolies......Page 352
Alternative Theories of Economic Regulation......Page 354
Antitrust Law and Enforcement......Page 357
Competitive Trends in the U.S. Economy......Page 362
SUMMARY......Page 367
QUESTIONS FOR REVIEW......Page 368
HOMEWORK XPRESS! EXERCISES......Page 369
CHAPTER 16: Public Goods and Public Choice......Page 371
Public Goods......Page 372
Public Choice in a Representative Democracy......Page 375
Bureaucracy and Representative Democracy......Page 384
SUMMARY......Page 386
QUESTIONS FOR REVIEW......Page 387
HOMEWORK XPRESS! EXERCISES......Page 388
CHAPTER 17: Externalities and the Environment......Page 390
Externalities and the Common-Pool Problem......Page 391
Optimal Level of Pollution......Page 393
Environmental Protection......Page 401
Positive Externalities......Page 406
SUMMARY......Page 409
PROBLEMS AND EXERCISES......Page 410
EXPERIENTIAL EXERCISES......Page 411
HOMEWORK XPRESS! EXERCISES......Page 412
CHAPTER 18: Income Distribution and Poverty......Page 413
The Distribution of Household Income......Page 414
Poverty and the Poor......Page 418
Who Are the Poor?......Page 422
Unintended Consequences of Income Assistance......Page 427
Welfare Reform......Page 428
SUMMARY......Page 432
QUESTIONS FOR REVIEW......Page 433
HOMEWORK XPRESS! EXERCISES......Page 434
CHAPTER 19: International Trade......Page 435
The Gains from Trade......Page 436
Trade Restrictions and Welfare Loss......Page 442
Arguments for Trade Restrictions......Page 450
Conclusion......Page 454
QUESTIONS FOR REVIEW......Page 455
PROBLEMS AND EXERCISES......Page 456
HOMEWORK XPRESS! EXERCISES......Page 457
CHAPTER 20: Introduction to Macroeconomics......Page 458
The National Economy......Page 459
Economic Fluctuations and Growth......Page 461
Aggregate Demand and Aggregate Supply......Page 465
A Short History of the U.S. Economy......Page 468
SUMMARY......Page 474
QUESTIONS FOR REVIEW......Page 475
EXPERIENTIAL EXERCISES......Page 476
HOMEWORK XPRESS! EXERCISES......Page 477
CHAPTER 21: Productivity and Growth......Page 478
Theory of Productivity and Growth......Page 479
Productivity and Growth in Practice......Page 484
Other Issues of Technology and Growth......Page 491
SUMMARY......Page 496
QUESTIONS FOR REVIEW......Page 497
EXPERIENTIAL EXERCISES......Page 498
HOMEWORK XPRESS! EXERCISES......Page 499
CHAPTER 22: Measuring the Economy and the Circular Flow......Page 500
The Product of a Nation......Page 501
The Circular Flow of Income and Expenditure......Page 504
Limitations of National Income Accounting......Page 507
Accounting for Price Changes......Page 510
SUMMARY......Page 515
QUESTIONS FOR REVIEW......Page 516
PROBLEMS AND EXERCISES......Page 517
EXPERIENTIAL EXERCISES......Page 518
Appendix: National Income Accounts......Page 519
CHAPTER 23: Unemployment and Inflation......Page 522
Unemployment......Page 523
Inflation......Page 532
SUMMARY......Page 541
QUESTIONS FOR REVIEW......Page 542
EXPERIENTIAL EXERCISES......Page 543
HOMEWORK XPRESS! EXERCISES......Page 544
CHAPTER 24: Aggregate Expenditure Components......Page 545
Consumption......Page 546
Investment......Page 553
Government......Page 558
Net Exports......Page 559
Composition of Aggregate Expenditure......Page 560
QUESTIONS FOR REVIEW......Page 562
PROBLEMS AND EXERCISES......Page 563
HOMEWORK XPRESS! EXERCISES......Page 564
Appendix: Variable Net Exports......Page 565
CHAPTER 25: Aggregate Expenditure and Aggregate Demand......Page 567
Aggregate Expenditure and Income......Page 568
The Simple Spending Multiplier......Page 572
The Aggregate Demand Curve......Page 576
Conclusion......Page 580
QUESTIONS FOR REVIEW......Page 581
EXPERIENTIAL EXERCISES......Page 582
HOMEWORK XPRESS! EXERCISES......Page 583
Appendix A: Variable Net Exports Revisited......Page 584
Appendix B: The Algebra of Income and Expenditure......Page 587
CHAPTER 26: Aggregate Supply......Page 589
Aggregate Supply in the Short Run......Page 590
From the Short Run to the Long Run......Page 594
Changes in Aggregate Supply......Page 601
SUMMARY......Page 605
QUESTIONS FOR REVIEW......Page 606
PROBLEMS AND EXERCISES......Page 607
HOMEWORK XPRESS! EXERCISES......Page 608
CHAPTER 27: Fiscal Policy......Page 609
Theory of Fiscal Policy......Page 610
Including Aggregate Supply......Page 613
The Evolution of Fiscal Policy......Page 616
Conclusion......Page 623
SUMMARY......Page 624
PROBLEMS AND EXERCISES......Page 625
HOMEWORK XPRESS! EXERCISES......Page 626
Appendix: The Algebra of Demand-Side Equilibrium......Page 627
CHAPTER 28: Money and the Financial System......Page 630
The Evolution of Money......Page 631
Financial Institutions in the United States......Page 638
SUMMARY......Page 650
PROBLEMS AND EXERCISES......Page 651
EXPERIENTIAL EXERCISES......Page 652
CHAPTER 29: Banking and the Money Supply......Page 653
Money Aggregates......Page 654
How Banks Work......Page 658
How Banks Create Money......Page 661
The Fed's Tools of Monetary Control......Page 667
Conclusion......Page 669
SUMMARY......Page 670
QUESTIONS FOR REVIEW......Page 671
PROBLEMS AND EXERCISES......Page 672
EXPERIENTIAL EXERCISES......Page 673
CHAPTER 30: Monetary Theory and Policy......Page 674
The Demand and Supply of Money......Page 675
Money and Aggregate Demand in the Short Run......Page 678
Money and Aggregate Demand in the Long Run......Page 683
Targets for Monetary Policy......Page 688
Conclusion......Page 690
QUESTIONS FOR REVIEW......Page 691
PROBLEMS AND EXERCISES......Page 692
HOMEWORK XPRESS! EXERCISES......Page 693
CHAPTER 31: The Policy Debate: Active or Passive?......Page 694
Active Policy Versus Passive Policy......Page 695
The Role of Expectations......Page 701
Policy Rules Versus Discretion......Page 706
The Phillips Curve......Page 708
Conclusion......Page 713
QUESTIONS FOR REVIEW......Page 714
PROBLEMS AND EXERCISES......Page 715
HOMEWORK XPRESS! EXERCISES......Page 716
CHAPTER 32: Federal Budgets and Public Policy......Page 717
The Federal Budget Process......Page 718
The Fiscal Impact of the Federal Budget......Page 720
The National Debt......Page 727
SUMMARY......Page 733
QUESTIONS FOR REVIEW......Page 734
EXPERIENTIAL EXERCISES......Page 735
CHAPTER 33: International Finance......Page 736
Balance of Payments......Page 737
Foreign Exchange Rates and Markets......Page 742
Development of the International Monetary System......Page 748
Conclusion......Page 751
QUESTIONS FOR REVIEW......Page 752
HOMEWORK XPRESS! EXERCISES......Page 753
Glossary......Page 754
Index......Page 766