Microeconomics, Global Edition

Cover
Title Page
Copyright Page
Dedication
About the Authors
Brief Contents
Contents
Preface
Acknowledgments
Global Edition Acknowledgments
Part I: Introduction to Economics
	Chapter 1: The Principles and Practice of Economics
		1.1. The Scope of Economics
			Economic Agents and Economic Resources
			Definition of Economics
			Positive Economics and Normative Economics
			Microeconomics and Macroeconomics
		1.2. Three Principles of Economics
		1.3. The First Principle of Economics: Optimization
			Trade-offs and Budget Constraints
			Opportunity Cost
			Cost-Benefit Analysis
			Evidence-Based Economics: Is Facebook Free?
		1.4. The Second Principle of Economics: Equilibrium
			The Free-Rider Problem
		1.5. The Third Principle of Economics: Empiricism
		1.6. Is Economics Good for You?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 2: Economic Methods and Economic Questions
		2.1. The Scientific Method
			Models and Data
			An Economic Model
			Evidence-Based Economics: How Much More do Workers with a College Education Earn?
			Means and Medians
			Argument by Anecdote
		2.2. Causation and Correlation
			The Red Ad Blues
			Causation versus Correlation
			Choice & Consequence: Spend Now and Pay Later?
			Experimental Economics and Natural Experiments
			Evidence-Based Economics: How Much do Wages Increase when Mandatory Schooling Laws Force People to get an Extra Year of Schooling?
		2.3. Economic Questions and Answers
		Summary
		Key Terms
		Questions
		Problems
		Appendix: Constructing and Interpreting Charts and Graphs
			A Study about Incentives
			Experimental Design
			Describing Variables
			Cause and Effect
		Appendix Key Terms
		Appendix Problems
	Chapter 3: Optimization: Doing the Best You Can
		3.1. Optimization: Choosing the Best Feasible Option
			Choice & Consequence: Do People Really Optimize?
		3.2. Optimization Application: Renting the Optimal Apartment
			Before and After Comparisons
		3.3. Optimization Using Marginal Analysis
			Marginal Cost
			Evidence-Based Economics: How does Location Affect the Rental Cost of Housing?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 4: Demand, Supply, and Equilibrium
		4.1. Markets
			Competitive Markets
		4.2. How Do Buyers Behave?
			Demand Curves
			Willingness to Pay
			From Individual Demand Curves to Aggregated Demand Curves
			Building the Market Demand Curve
			Shifting the Demand Curve
			Evidence-Based Economics: How Much More Gasoline would People buy if its Price were Lower?
		4.3. How Do Sellers Behave?
			Supply Curves
			Willingness to Accept
			From the Individual Supply Curve to the Market Supply Curve
			Shifting the Supply Curve
		4.4. Supply and Demand in Equilibrium
			Curve Shifting in Competitive Equilibrium
			Letting the Data Speak: Technological Breakthroughs Drive Down the Equilibrium Price of Oil
		4.5. What Would Happen If the Government Tried to Dictate the Price of Gasoline?
			Choice & Consequence: The Unintended Consequences of Fixing Market Prices
		Summary
		Key Terms
		Questions
		Problems
Part II: Foundations of Microeconomics
	Chapter 5: Consumers and Incentives
		5.1. The Buyer’s Problem
			What You Like
			Prices of Goods and Services
			Choice & Consequence: Absolutes Versus Percentages
			How Much Money You Have to Spend
		5.2. Putting It All Together
			Price Changes
			Income Changes
		5.3. From the Buyer’s Problem to the Demand Curve
		5.4. Consumer Surplus
			An Empty Feeling: Loss in Consumer Surplus When Price Increases
			Evidence-Based Economics: Would a Smoker quit the Habit for $100 Per Month?
		5.5. Demand Elasticities
			The Price Elasticity of Demand
			The Cross-Price Elasticity of Demand
			The Income Elasticity of Demand
			Letting the Data Speak: Should McDonald’s Be Interested in Elasticities?
		Summary
		Key Terms
		Questions
		Problems
		Appendix: Representing Preferences with Indifference Curves: Another Use of the Budget Constraint
		Appendix Questions
		Appendix Key Terms
	Chapter 6: Sellers and Incentives
		6.1. Sellers in a Perfectly Competitive Market
		6.2. The Seller’s Problem
			Making the Goods: How Inputs Are Turned into Outputs
			The Cost of Doing Business: Introducing Cost Curves
			The Rewards of Doing Business: Introducing Revenue Curves
			Putting It All Together: Using the Three Components to Do the Best You Can
			Choice & Consequence: Maximizing Total Profit, Not Per-Unit Profit
		6.3. From the Seller’s Problem to the Supply Curve
			Price Elasticity of Supply
			Shutdown
			Choice & Consequence: Marginal Decision Makers Ignore Sunk Costs
		6.4. Producer Surplus
		6.5. From the Short Run to the Long Run
			Long-Run Supply Curve
			Choice & Consequence: Visiting a Car Manufacturing Plant
		6.6. From the Firm to the Market: Long-Run Competitive Equilibrium
			Firm Entry
			Firm Exit
			Zero Profits in the Long Run
			Economic Profit Versus Accounting Profit
			Evidence-Based Economics: How would an Ethanol Subsidy Affect Ethanol Producers?
		Summary
		Key Terms
		Questions
		Problems
		Appendix: When Firms Have Different Cost Structures
	Chapter 7: Perfect Competition and the Invisible Hand
		7.1. Perfect Competition and Efficiency
			Social Surplus
			Pareto Efficiency
		7.2. Extending the Reach of the Invisible Hand: From the Individual to the Firm
		7.3. Extending the Reach of the Invisible Hand: Allocation of Resources Across Industries
		7.4. Prices Guide the Invisible Hand
			Deadweight Loss
			Evidence-Based Economics: Do Companies like Uber Make use of the Invisible Hand?
			The Command Economy
			Choice & Consequence: FEMA and Walmart After Katrina
			The Central Planner
			Choice & Consequence: Command and Control at Kmart
		7.5. Equity and Efficiency
			Evidence-Based Economics: Can Markets Composed of Only Self-Interested People Maximize the Overall well-being of Society?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 8: Trade
		8.1. The Production Possibilities Curve
			Calculating Opportunity Cost
		8.2. The Basis for Trade: Comparative Advantage
			Specialization
			Absolute Advantage
			Choice & Consequence: An Experiment on Comparative Advantage
			The Price of the Trade
		8.3. Trade Between States
			Choice & Consequence: Should LeBron James Paint His Own House?
			Economy-Wide PPC
			Comparative Advantage and Specialization Among States
		8.4. Trade Between Countries
			Determinants of Trade Between Countries
			Letting the Data Speak: Fair Trade Products
			Exporting Nations: Winners and Losers
			Importing Nations: Winners and Losers
			Where Do World Prices Come From?
			Determinants of a Country’s Comparative Advantage
		8.5. Arguments Against Free Trade
			National Security Concerns
			Fear of Globalization
			Environmental and Resource Concerns
			Infant Industry Arguments
			The Effects of Tariffs
			Choice & Consequence: Tariffs Affect Trade Between Firms
			Evidence-Based Economics: Will Free Trade Cause you to Lose your Job?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 9: Externalities and Public Goods
		9.1. Externalities
			A “Broken” Invisible Hand: Negative Externalities
			A “Broken” Invisible Hand: Positive Externalities
			Pecuniary Externalities
			Choice & Consequence: Positive Externalities in Spots You Never Imagined
		9.2. Private Solutions to Externalities
			Private Solution: Bargaining
			The Coase Theorem
			Private Solution: Doing the Right Thing
		9.3. Government Solutions to Externalities
			Government Regulation: Command-and-Control Policies
			Evidence-Based Economics: What can the Government do to Lower the Number of Earthquakes in Oklahoma?
			Government Regulation: Market-Based Approaches
			Corrective Taxes
			Corrective Subsidies
			Letting the Data Speak: How to Value Externalities
			Letting the Data Speak: Pay as You Throw: Consumers Create Negative Externalities Too!
		9.4. Public Goods
			Government Provision of Public Goods
			Choice & Consequence: The Free-Rider’s Dilemma
			Private Provision of Public Goods
		9.5. Common Pool Resource Goods
			Choice & Consequence: Tragedy of the Commons
			Choice & Consequence: The Race to Fish
			Evidence-Based Economics: How can the Queen of England Lower her Commute time to Wembley Stadium?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 10: The Government in the Economy: Taxation and Regulation
		10.1. Taxation and Government Spending in the United States
			Where Does the Money Come From?
			Why Does the Government Tax and Spend?
			Choice & Consequence: The Government Budget Constraint
			Letting the Data Speak: Understanding Federal Income Tax Brackets
			Letting the Data Speak: Reducing Inequality the Scandinavian Way
			Taxation: Tax Incidence and Deadweight Losses
			Choice & Consequence: The Deadweight Loss Depends on the Tax
		10.2. Regulation
			Direct Regulation
		10.3. Government Failures
			The Direct Costs of Bureaucracies
			Corruption
			Underground Economy
		10.4. Equity Versus Efficiency
		10.5. Consumer Sovereignty and Paternalism
			The Debate
			Evidence-Based Economics: What is the Optimal Size of Government?
			Letting the Data Speak: The Efficiency of Government Versus Privately Run Expeditions
			Choice & Consequence: Taxation and Innovation
		Summary
		Key Terms
		Questions
		Problems
	Chapter 11: Markets for Factors of Production
		11.1. The Competitive Labor Market
			The Demand for Labor
		11.2. The Supply of Labor: Your Labor-Leisure Trade-off
			Choice & Consequence: Producing Web Sites and Computer Programs
			Labor Market Equilibrium: Supply Meets Demand
			Letting the Data Speak: “Get Your Hot Dogs Here!”
			Labor Demand Shifters
			Factors That Shift Labor Supply
			Letting the Data Speak: Do Wages Really Go Down If Labor Supply Increases?
		11.3. Wage Inequality
			Differences in Human Capital
			Choice & Consequence: Paying for Worker Training
			Differences in Compensating Wage Differentials
			Discrimination in the Job Market
			Choice & Consequence: Compensating Wage Differentials
			Changes in Wage Inequality over Time
			Letting the Data Speak: Broadband and Inequality
		11.4. The Market for Other Factors of Production: Physical Capital and Land
			Letting the Data Speak: The Top 1 Percent Share and Capital Income
			Evidence-Based Economics: Is there Discrimination in the Labor Market?
		Summary
		Key Terms
		Questions
		Problems
Part III: Market Structure
	Chapter 12: Monopoly
		12.1. Introducing a New Market Structure
		12.2. Sources of Market Power
			Legal Market Power
			Natural Market Power
			Control of Key Resources
			Choice & Consequence: Barriers to Entry Lurk Everywhere
			Economies of Scale
		12.3. The Monopolist’s Problem
			Revenue Curves
			Price, Marginal Revenue, and Total Revenue
		12.4. Choosing the Optimal Quantity and Price
			Producing the Optimal Quantity
			Setting the Optimal Price
			How a Monopolist Calculates Profits
			Does a Monopoly Have a Supply Curve?
		12.5. The “Broken” Invisible Hand: The Cost of Monopoly
		12.6. Restoring Efficiency
			Three Degrees of Price Discrimination
			Letting the Data Speak: Third-Degree Price Discrimination in Action
		12.7. Government Policy Toward Monopoly
			The Microsoft Case
			Price Regulation
			Evidence-Based Economics: Can a monopoly ever be good for society?
		Summary
		Key Terms
		Questions
		Problems
	Chapter 13: Game Theory and Strategic Play
		13.1. Simultaneous-Move Games
			Best Responses and the Prisoners’ Dilemma
			Dominant Strategies and Dominant Strategy Equilibrium
			Games without Dominant Strategies
		13.2. Nash Equilibrium
			Finding a Nash Equilibrium
			Choice & Consequence: Work or Surf?
		13.3. Applications of Nash Equilibria
			Tragedy of the Commons Revisited
			Zero-Sum Games
		13.4. How Do People Actually Play Such Games?
			Game Theory in Penalty Kicks
			Evidence-Based Economics: Is there Value in Putting yourself in Someone Else’s Shoes?
		13.5. Extensive-Form Games
			Backward Induction
			First-Mover Advantage, Commitment, and Vengeance
			Evidence-Based Economics: Is there Value in Putting yourself in Someone Else’s Shoes in Extensive-form Games?
			Choice & Consequence: There Is More to Life Than Money
		Summary
		Key Terms
		Questions
		Problems
	Chapter 14: Oligopoly and Monopolistic Competition
		14.1. Two More Market Structures
		14.2. Oligopoly
			The Oligopolist’s Problem
			Oligopoly Model with Homogeneous Products
			Doing the Best You Can: How Should You Price to Maximize Profits?
			Oligopoly Model with Differentiated Products
			Letting the Data Speak: Airline Price Wars
			Collusion: Another Way to Keep Prices High
			Letting the Data Speak: Apple versus Samsung
			Letting the Data Speak: To Cheat or Not to Cheat: That Is the Question
			Choice & Consequence: Collusion in Practice
		14.3. Monopolistic Competition
			The Monopolistic Competitor’s Problem
			Doing the Best You Can: How a Monopolistic Competitor Maximizes Profits
			Letting the Data Speak: Why Do Some Firms Advertise and Some Don’t?
			How a Monopolistic Competitor Calculates Profits
			Long-Run Equilibrium in a Monopolistically Competitive Industry
		14.4. The “Broken” Invisible Hand
			Regulating Market Power
		14.5. Summing Up: Four Market Structures
			Evidence-Based Economics: How Many Firms are Necessary to Make a Market Competitive?
		Summary
		Key Terms
		Questions
		Problems
Part IV: Extending the Microeconomic Toolbox
	Chapter 15: Trade-offs Involving Time and Risk
		15.1. Modeling Time and Risk
		15.2. The Time Value of Money
			Future Value and the Compounding of Interest
			Borrowing Versus Lending
			Present Value and Discounting
		15.3. Time Preferences
			Time Discounting
			Preference Reversals
			Choice & Consequence: Failing to Anticipate Preference Reversals
			Evidence-Based Economics: Do People Exhibit a Preference for Immediate Gratification?
		15.4. Probability and Risk
			Roulette Wheels and Probabilities
			Independence and the Gambler’s Fallacy
			Letting the Data Speak: Roulette Wheels and Elections
			Expected Value
			Extended Warranties
			Choice & Consequence: Is Gambling Worthwhile?
		15.5. Risk Preferences
		Summary
		Key Terms
		Questions
		Problems
	Chapter 16: The Economics of Information
		16.1. Asymmetric Information
			Hidden Characteristics: Adverse Selection in the Used Car Market
			Hidden Characteristics: Adverse Selection in the Health Insurance Market
			Market Solutions to Adverse Selection: Signaling
			Choice & Consequence: Are You Sending a Signal Right Now?
			Evidence-Based Economics: Why do New Cars Lose Considerable Value the Minute they are Driven off the Lot?
			Choice & Consequence: A Tale of a Tail
		16.2. Hidden Actions: Markets with Moral Hazard
			Letting the Data Speak: Moral Hazard on Your Bike
			Market Solutions to Moral Hazard in the Labor Market: Efficiency Wages
			Market Solutions to Moral Hazard in the Insurance Market: “Putting Your Skin in the Game”
			Letting the Data Speak: Designing Incentives for Teachers
			Evidence-Based Economics: Why is Private Health Insurance so Expensive?
		16.3. Government Policy in a World of Asymmetric Information
			Government Intervention and Moral Hazard
			The Equity-Efficiency Trade-off
			Letting the Data Speak: Moral Hazard Among Job Seekers
			Crime and Punishment as a Principal–Agent Problem
		Summary
		Key Terms
		Questions
		Problems
	Chapter 17: Auctions and Bargaining
		17.1. Auctions
			Types of Auctions
			Open Outcry: English Auctions
			Letting the Data Speak: To Snipe or Not to Snipe?
			Open Outcry: Dutch Auctions
			Sealed Bid: First-Price Auctions
			Sealed Bid: Second-Price Auctions
			The Revenue Equivalence Theorem
			Evidence-Based Economics: How should you Bid in an eBay Auction?
		17.2. Bargaining
			What Determines Bargaining Outcomes?
			Bargaining in Action: The Ultimatum Game
			Bargaining and the Coase Theorem
			Evidence-Based Economics: Who Determines how the Household Spends its Money?
			Letting the Data Speak: Sex Ratios Change Bargaining Power Too
		Summary
		Key Terms
		Questions
		Problems
	Chapter 18: Social Economics
		18.1. The Economics of Charity and Fairness
			The Economics of Charity
			Letting the Data Speak: Do People Donate Less When It’s Costlier to Give?
			Letting the Data Speak: Why Do People Give to Charity?
			The Economics of Fairness
			Letting the Data Speak: Dictators in the Lab
			Evidence-Based Economics: Do People Care about Fairness?
		18.2. The Economics of Trust and Revenge
			The Economics of Trust
			The Economics of Revenge
			Choice & Consequence: Does Revenge Have an Evolutionary Logic?
		18.3. How Others Influence Our Decisions
			Where Do Our Preferences Come From?
			The Economics of Peer Effects
			Letting the Data Speak: Is Economics Bad for You?
			Following the Crowd: Herding
			Letting the Data Speak: Your Peers Affect Your Waistline
			Choice & Consequence: Are You an Internet Explorer?
		Summary
		Key Terms
		Questions
		Problems
Endnotes
Glossary
Credits
Index
Back Cover