Microeconomics : theory and applications with calculus

Cover
Title Page
Copyright Page
Brief Contents
Contents
Preface
Acknowledgments
Chapter 1 Introduction
	1.1 Microeconomics: The Allocation of Scarce Resources
		Trade-Offs
		Who Makes the Decisions
		How Prices Determine Allocations
		APPLICATION Twinkie Tax
	1.2 Models
		APPLICATION Income Threshold Model and China
		Simplifications by Assumption
		Testing Theories
		Maximizing Subject to Constraints
		Positive Versus Normative
		New Theories
	1.3 Uses of Microeconomic Models in Your Life and Career
		Summary
Chapter 2 Supply and Demand
	CHALLENGE Quantities and Prices of Genetically Modified Foods
	2.1 Demand
		The Demand Function
		Summing Demand Functions
		APPLICATION Aggregating Corn Demand Curves
	2.2 Supply
		The Supply Function
		Summing Supply Functions
		How Government Import Policies Affect Supply Curves
	2.3 Market Equilibrium
		Finding the Market Equilibrium
		Forces That Drive a Market to Equilibrium
	2.4 Shocking the Equilibrium: Comparative Statics
		Comparative Statics with Discrete (Large) Changes
		APPLICATION The Opioid Epidemic’s Labor Market Effects
		Comparative Statics with Small Changes
		Solved Problem 2.1
		Why the Shapes of Demand and Supply Curves Matter
	2.5 Elasticities
		Demand Elasticity
		Solved Problem 2.2
		APPLICATION The Demand Elasticities for Google Play and Apple Apps
		Solved Problem 2.3
		Supply Elasticity
		Solved Problem 2.4
		Long Run Versus Short Run
		APPLICATION Oil Drilling in the Arctic National Wildlife Refuge
		Solved Problem 2.5
	2.6 Effects of a Sales Tax
		Effects of a Specific Tax on the Equilibrium
		The Same Equilibrium No Matter Who Is Taxed
		Firms and Customers Share the Burden of the Tax
		Solved Problem 2.6
		APPLICATION Subsidizing Ethanol
		The Similar Effects of Ad Valorem and Specific Taxes
	2.7 Quantity Supplied Need Not Equal Quantity Demanded
		Price Ceiling
		APPLICATION Venezuelan Price Ceilings and Shortages
		Price Floor
	2.8 When to Use the Supply-and-Demand Model
		CHALLENGE SOLUTION Quantities and Prices of Genetically Modified Foods
		Summary
		Exercises
Chapter 3 A Consumer’s Constrained Choice
	CHALLENGE Why Americans Buy E-Books and Germans Do Not
	3.1 Preferences
		Properties of Consumer Preferences
		APPLICATION You Can’t Have Too Much Money
		Preference Maps
		Indifference Curves
		Solved Problem 3.1
	3.2 Utility
		Utility Function
		Willingness to Substitute Between Goods
		Solved Problem 3.2
		APPLICATION MRS Between Recorded Tracks and Live Music
		Curvature of Indifference Curves
		Solved Problem 3.3
		APPLICATION Indifference Curves Between Food and Clothing
	3.3 Budget Constraint
	3.4 Constrained Consumer Choice
		Finding an Interior Solution Using Graphs
		Solved Problem 3.4
		Finding an Interior Solution Using Calculus
		Solved Problem 3.5
		Solved Problem 3.6
		Solved Problem 3.7
		APPLICATION Utility Maximization for Recorded Tracks and Live Music
		Finding Corner Solutions
		Minimizing Expenditure
		Solved Problem 3.8
	3.5 Behavioral Economics
		Tests of Transitivity
		Endowment Effect
		APPLICATION How You Ask a Question Matters
		Salience
		CHALLENGE SOLUTION Why Americans Buy E-Books and Germans Do Not
		Summary
		Exercises
Chapter 4 Demand
	CHALLENGE Paying Employees to Relocate
	4.1 Deriving Demand Curves
		System of Demand Functions
		Graphical Interpretation
		APPLICATION Cigarettes Versus E-Cigarettes
	4.2 Effects of an Increase in Income
		How Income Changes Shift Demand Curves
		Solved Problem 4.1
		Consumer Theory and Income Elasticities
		Solved Problem 4.2
		APPLICATION Fast-Food Engel Curve
		Solved Problem 4.3
	4.3 Effects of a Price Increase
		Income and Substitution Effects with a Normal Good
		Solved Problem 4.4
		APPLICATION Substituting Marijuana for Alcohol
		Solved Problem 4.5
		Income and Substitution Effects with an Inferior Good
		Solved Problem 4.6
		Compensated Demand Curve
		Solved Problem 4.7
		Slutsky Equation
	4.4 Cost-of-Living Adjustment
		Inflation Indexes
		Effects of Inflation Adjustments
		APPLICATION Reducing the CPI Substitution Bias
	4.5 Revealed Preference
		Recovering Preferences
		Substitution Effect
		CHALLENGE SOLUTION Paying Employees to Relocate
		Summary
		Exercises
Chapter 5 Consumer Welfare and Policy Analysis
	CHALLENGE Per-Hour Versus Lump-Sum Childcare Subsidies
	5.1 Uncompensated Consumer Welfare
		Willingness to Pay
		An Individual’s Consumer Surplus
		A Market’s Consumer Surplus
		APPLICATION Willingness to Pay and Consumer Surplus on eBay
		Effect of a Price Change on Consumer Surplus
		Solved Problem 5.1
	5.2 Compensated Consumer Welfare
		Indifference Curve Analysis
		APPLICATION Compensating Variation and Equivalent Variation for Smartphones and Facebook
		Compensated Demand Curves and Consumer Welfare
		Comparing the Three Welfare Measures
		Solved Problem 5.2
	5.3 Effects of Government Policies on Consumer Welfare
		Quotas
		Food Stamps
		APPLICATION Food Stamps Versus Cash
	5.4 Deriving Labor Supply Curves
		Labor-Leisure Choice
		Solved Problem 5.3
		Income and Substitution Effects
		Solved Problem 5.4
		APPLICATION Fracking Causes Students to Drop Out
		Solved Problem 5.5
		Shape of the Labor Supply Curve
		Income Tax Rates and the Labor Supply Curve
		Solved Problem 5.6
		CHALLENGE SOLUTION Per-Hour Versus Lump-Sum Childcare Subsidies
		Summary
		Exercises
Chapter 6 Firms and Production
	CHALLENGE Labor Productivity During Downturns
	6.1 The Ownership and Management of Firms
		Private, Public, and Nonprofit Firms
		APPLICATION Chinese State-Owned Enterprises
		The Ownership of For-Profit Firms
		The Management of Firms
		What Owners Want
	6.2 Production
		Production Functions
		Time and the Variability of Inputs
	6.3 Short-Run Production: One Variable and One Fixed Input
		Solved Problem 6.1
		Interpretation of Graphs
		Solved Problem 6.2
		Law of Diminishing Marginal Returns
		APPLICATION Malthus and the Green Revolution
	6.4 Long-Run Production: Two Variable Inputs
		Isoquants
		APPLICATION Self-Driving Trucks
		Substituting Inputs
		Solved Problem 6.3
		Diminishing Marginal Rates of Technical Substitution
		The Elasticity of Substitution
		Solved Problem 6.4
	6.5 Returns to Scale
		Constant, Increasing, and Decreasing Returns to Scale
		Solved Problem 6.5
		APPLICATION Returns to Scale in Various Industries
		Varying Returns to Scale
	6.6 Productivity and Technical Change
		Relative Productivity
		Innovations
		APPLICATION Robots and the Food You Eat
		APPLICATION A Good Boss Raises Productivity
		CHALLENGE SOLUTION Labor Productivity During Downturns
		Summary
		Exercises
Chapter 7 Costs
	CHALLENGE Technology Choice at Home Versus Abroad
	7.1 Measuring Costs
		Opportunity Costs
		APPLICATION The Opportunity Cost of an MBA
		Solved Problem 7.1
		Opportunity Cost of Capital
		Sunk Costs
	7.2 Short-Run Costs
		Short-Run Cost Measures
		APPLICATION The Sharing Economy and the Short Run
		Solved Problem 7.2
		Short-Run Cost Curves
		Production Functions and the Shape of Cost Curves
		APPLICATION Short-Run Cost Curves for a Japanese Beer Manufacturer
		Effects of Taxes on Costs
		Short-Run Cost Summary
	7.3 Long-Run Costs
		Input Choice
		Solved Problem 7.3
		Solved Problem 7.4
		How Long-Run Cost Varies with Output
		Solved Problem 7.5
		Solved Problem 7.6
		The Shape of Long-Run Cost Curves
		APPLICATION 3D Printing
		Estimating Cost Curves Versus Introspection
	7.4 Lower Costs in the Long Run
		Long-Run Average Cost as the Envelope of Short-Run Average Cost Curves
		APPLICATION A Beer Manufacturer’s Long-Run Cost Curves
		APPLICATION Choosing an Inkjet or Laser Printer
		Short-Run and Long-Run Expansion Paths
		How Learning by Doing Lowers Costs
		APPLICATION Solar Power Learning Curves
	7.5 Cost of Producing Multiple Goods
		CHALLENGE SOLUTION Technology Choice at Home Versus Abroad
		Summary
		Exercises
Chapter 8 Competitive Firms and Markets
	CHALLENGE The Rising Cost of Keeping On Truckin’
	8.1 Perfect Competition
		Price Taking
		Why a Firm’s Demand Curve Is Horizontal
		Perfect Competition in the Chicago Commodity Exchange
		Deviations from Perfect Competition
		Derivation of a Competitive Firm’s Demand Curve
		Solved Problem 8.1
		Why Perfect Competition Is Important
	8.2 Profit Maximization
		Profit
		Two Steps to Maximizing Profit
	8.3 Competition in the Short Run
		Short-Run Competitive Profit Maximization
		Solved Problem 8.2
		APPLICATION Fracking and Shutdowns
		Short-Run Firm Supply Curve
		Solved Problem 8.3
		Short-Run Market Supply Curve
		Short-Run Competitive Equilibrium
		Solved Problem 8.4
	8.4 Competition in the Long Run
		Long-Run Competitive Profit Maximization
		Long-Run Firm Supply Curve
		APPLICATION The Size of Ethanol Processing Plants
		Long-Run Market Supply Curve
		APPLICATION Industries with High Entry and Exit Rates
		APPLICATION Upward-Sloping Long-Run Supply Curve for Cotton
		APPLICATION Reformulated Gasoline Supply Curves
		Solved Problem 8.5
		Long-Run Competitive Equilibrium
		CHALLENGE SOLUTION The Rising Cost of Keeping On Truckin’
		Summary
		Exercises
Chapter 9 Properties and Applications of the Competitive Model
	CHALLENGE Liquor Licenses
	9.1  Zero Profit for Competitive Firms in the Long Run
		Zero Long-Run Profit with Free Entry
		Zero Long-Run Profit When Entry Is Limited
		APPLICATION What’s a Name Worth?
		The Need to Maximize Profit
	9.2  Producer Surplus
		Measuring Producer Surplus Using a Supply Curve
		Using Producer Surplus
		Solved Problem 9.1
	9.3  Competition Maximizes Welfare
		Measuring Welfare
		Why Producing Less Than the Competitive Output Lowers Welfare
		Solved Problem 9.2
		APPLICATION The Deadweight Loss of Christmas Presents
	9.4 Policies That Shift Supply or Demand Curves
		APPLICATION Welfare Effects of Allowing Fracking
	9.5 Policies That Create a Wedge Between Supply and Demand Curves
		Welfare Effects of a Sales Tax
		APPLICATION The Deadweight Loss from Gas Taxes
		Welfare Effects of a Price Floor
		Solved Problem 9.3
		APPLICATION How Big Are Farm Subsidies and Who Gets Them?
		Welfare Effects of a Price Ceiling
		Solved Problem 9.4
		APPLICATION The Social Cost of a Natural Gas Price Ceiling
	9.6 Comparing Both Types of Policies: Trade
		Free Trade Versus a Ban on Imports
		Solved Problem 9.5
		APPLICATION Russian Food Ban
		Free Trade Versus a Tariff
		Solved Problem 9.6
		A Tariff Versus a Quota
		Rent Seeking
		CHALLENGE SOLUTION Liquor Licenses
		Summary
		Exercises
Chapter 10 General Equilibrium and Economic Welfare
	CHALLENGE Anti–Price Gouging Laws
	10.1 General Equilibrium
		Competitive Equilibrium in Two Interrelated Markets
		APPLICATION Partial-Equilibrium Versus Multimarket-Equilibrium Analysis in Corn and Soybean Markets
		Minimum Wages with Incomplete Coverage
		Solved Problem 10.1
		APPLICATION Urban Flight
	10.2 Trading Between Two People
		Endowments
		Mutually Beneficial Trades
		Solved Problem 10.2
		Deriving the Contract Curve
		Solved Problem 10.3
		Bargaining Ability
	10.3 Competitive Exchange
		Competitive Equilibrium
		Solved Problem 10.4
		The Efficiency of Competition
		Obtaining Any Efficient Allocation Using Competition
	10.4  Production and Trading
		Comparative Advantage
		Solved Problem 10.5
		Efficient Product Mix
		Competition
	10.5  Efficiency and Equity
		Role of the Government
		Efficiency
		Equity
		APPLICATION Extremely Unequal Wealth
		Efficiency Versus Equity
		Theory of the Second Best
		CHALLENGE SOLUTION Anti–Price Gouging Laws
		Summary
		Exercises
Chapter 11 Monopoly and Monopsony
	CHALLENGE Brand-Name and Generic Drugs
	11.1 Monopoly Profit Maximization
		The Necessary Condition for Profit Maximization
		Marginal Revenue and the Demand Curves
		Solved Problem 11.1
		Marginal Revenue Curve and the Price Elasticity of Demand
		APPLICATION Amazon Prime Revenue
		An Example of Monopoly Profit Maximization
		APPLICATION Apple’s iPad
		Solved Problem 11.2
		Choosing Price or Quantity
		APPLICATION Taylor Swift Concert Pricing
		Solved Problem 11.3
		Effects of a Shift of the Demand Curve
	11.2 Market Power and Welfare
		Market Power and the Shape of the Demand Curve
		The Lerner Index
		Solved Problem 11.4
		Sources of Market Power
		Effect of Market Power on Welfare
	11.3 Taxes and Monopoly
		Effects of a Specific Tax
		Solved Problem 11.5
		Welfare Effects of Ad Valorem Versus Specific Taxes
	11.4 Causes of Monopolies
		Cost Advantages
		Solved Problem 11.6
		Government Actions That Create Monopolies
		APPLICATION The Botox Patent Monopoly
	11.5 Government Actions That Reduce Market Power
		Regulating Monopolies
		Solved Problem 11.7
		APPLICATION Natural Gas Regulation
		Increasing Competition
		APPLICATION Movie Studios Attacked by 3D Printers!
		Solved Problem 11.8
	11.6 Internet Monopolies: Networks Effects, Behavioral Economics, and Economies of Scale
		Network Externalities
		APPLICATION Critical Mass and eBay
		Introductory Prices: A Two-Period Monopoly Model
		Two-Sided Markets
		Economies of Scale on the Internet
		Disruptive Technologies
	11.7 Monopsony
		Monopsony Profit Maximization
		Welfare Effects of Monopsony
		Solved Problem 11.9
		CHALLENGE SOLUTION Brand-Name and Generic Drugs
		Summary
		Exercises
Chapter 12 Pricing and Advertising
	CHALLENGE Sale Price
	12.1 Conditions for Price Discrimination
		Why Price Discrimination Pays
		Which Firms Can Price Discriminate
		APPLICATION Disneyland Pricing
		Preventing Resale
		APPLICATION Preventing Resale of Designer Bags
		Not All Price Differences Are Price Discrimination
		Types of Price Discrimination
	12.2 Perfect Price Discrimination
		How a Firm Perfectly Price Discriminates
		Solved Problem 12.1
		Perfect Price Discrimination Is Efficient but Harms Some Consumers
		APPLICATION Botox and Price Discrimination
		Transaction Costs and Perfect Price Discrimination
		APPLICATION Google Uses Bidding for Ads to Price Discriminate
	12.3 Group Price Discrimination
		APPLICATION Tesla Price Discrimination
		Prices and Elasticities
		APPLICATION Age Discrimination
		Solved Problem 12.2
		Identifying Groups
		APPLICATION Buying Discounts
		Solved Problem 12.3
		Welfare Effects of Group Price Discrimination
	12.4 Nonlinear Price Discrimination
	12.5 Two-Part Pricing
		Two-Part Pricing with Identical Consumers
		Two-Part Pricing with Differing Consumers
		APPLICATION Pricing iTunes
	12.6 Tie-In Sales
		Requirement Tie-In Sales
		APPLICATION Ties That Bind
		Bundling
	12.7 Advertising
		Deciding Whether to Advertise
		How Much to Advertise
		Solved Problem 12.4
		APPLICATION Super Bowl Commercials
		CHALLENGE SOLUTION Sale Price
		Summary
		Exercises
Chapter 13 Game Theory
	CHALLENGE Intel and AMD’s Advertising Strategies
	13.1 Static Games
		Normal-Form Games
		Failure to Maximize Joint Profits
		APPLICATION Strategic Advertising
		Pricing Games in Two-Sided Markets
		Multiple Equilibria
		Solved Problem 13.1
		Mixed Strategies
		APPLICATION Boomerang Millennials
		Solved Problem 13.2
	13.2 Repeated Dynamic Games
		Strategies and Actions in Dynamic Games
		Cooperation in a Repeated Prisoners’ Dilemma Game
		Solved Problem 13.3
	13.3 Sequential Game
		Game Tree
		Subgame Perfect Nash Equilibrium
		Credibility
		Dynamic Entry Game
		Solved Problem 13.4
		APPLICATION Keeping Out Casinos
		Solved Problem 13.5
	13.4 Auctions
		Elements of Auctions
		Bidding Strategies in Private-Value Auctions
		Winner’s Curse
		APPLICATION Bidder’s Curse
	13.5 Behavioral Game Theory
		APPLICATION GM’s Ultimatum
		CHALLENGE SOLUTION Intel and AMD’s Advertising Strategies
		Summary
		Exercises
Chapter 14 Oligopoly and Monopolistic Competition
	CHALLENGE Government AircraftSubsidies
	14.1 Market Structures
	14.2 Cartels
		Why Cartels Form
		Why Cartels Fail
		Laws Against Cartels
		APPLICATION Employer “No-Poaching” Cartels
		Maintaining Cartels
		APPLICATION Cheating on the Maple Syrup Cartel
		Mergers
		APPLICATION Airline Mergers
	14.3 Cournot Oligopoly Model
		The Duopoly Nash-Cournot Equilibrium
		The Cournot Model with Many Firms
		APPLICATION Mobile Number Portability
		The Cournot Model with Nonidentical Firms
		Solved Problem 14.1
		APPLICATION How Do Costs, Price Markups, and Profits Vary Across Airlines?
		Solved Problem 14.2
		APPLICATION Differentiating Bottled Water Through Marketing
	14.4 Stackelberg Oligopoly Model
		Calculus Solution
		Graphical Solution
		Why Moving Sequentially Is Essential
		Strategic Trade Policy: An Application of the Stackelberg Model
		Solved Problem 14.3
		Comparison of Collusive, Nash-Cournot, Stackelberg, and Competitive Equilibria
	14.5 Bertrand Oligopoly Model
		Nash-Bertrand Equilibrium with Identical Products
		Nash-Bertrand Equilibrium with Differentiated Products
		APPLICATION Rising Market Power
	14.6 Monopolistic Competition
		APPLICATION Monopolistically Competitive Food Truck Market
		Monopolistically Competitive Equilibrium
		Fixed Costs and the Number of Firms
		Solved Problem 14.4
		APPLICATION Subsidizing the Entry Cost of Dentists
		CHALLENGE SOLUTION Government Aircraft Subsidies
		Summary
		Exercises
Chapter 15 Factor Markets
	CHALLENGE Does Going to College Pay?
	15.1 Factor Markets
		A Firm’s Short-Run Factor Demand Curve
		Solved Problem 15.1
		A Firm’s Long-Run Factor Demand Curves
		Competitive Factor Markets
		APPLICATION Black Death Raises Wages
		Solved Problem 15.2
	15.2 Capital Markets and Investing
		Interest Rates
		Discount Rate
		Stream of Payments
		APPLICATION Saving for Retirement
		Investing
		Solved Problem 15.3
		Solved Problem 15.4
		Durability
		APPLICATION Durability of Telephone Poles
		Time-Varying Discounting
		APPLICATION Behavioral Economics: Falling Discount Rates and Self-Control
		Capital Markets, Interest Rates, and Investments
		Solved Problem 15.5
	15.3 Exhaustible Resources
		When to Sell an Exhaustible Resource
		Price of a Scarce Exhaustible Resource
		APPLICATION Redwood Trees
		Why Price Might Not Rise
		CHALLENGE SOLUTION Does Going to College Pay?
		Summary
		Exercises
Chapter 16 Uncertainty
	CHALLENGE BP and Limited Liability
	16.1 Assessing Risk
		Probability
		APPLICATION Risk of a Cyberattack
		Expected Value
		Solved Problem 16.1
		Variance and Standard Deviation
	16.2 Attitudes Toward Risk
		Expected Utility Theory
		Risk Aversion
		Solved Problem 16.2
		Solved Problem 16.3
		APPLICATION Stocks’ Risk Premium
		Risk Neutrality
		Risk Preference
		APPLICATION Gambling
		Degree of Risk Aversion
		Solved Problem 16.4
	16.3 Reducing Risk
		Just Say No
		Obtaining Information
		Diversification
		APPLICATION Failure to Diversify
		Insurance
		Solved Problem 16.5
		APPLICATION Flight Insurance
		APPLICATION Flooded by Insurance Claims
	16.4 Investing Under Uncertainty
		How Investing Depends on Attitudes Toward Risk
		Investing with Uncertainty and Discounting
		Solved Problem 16.6
	16.5 Behavioral Economics and Uncertainty
		Biased Assessment of Probabilities
		APPLICATION Biased Estimates
		Violations of Expected Utility Theory
		Prospect Theory
		Comparing Expected Utility and Prospect Theories
		CHALLENGE SOLUTION BP and Limited Liability
		Summary
		Exercises
Chapter 17 Property Rights, Externalities, Rivalry, and Exclusion
	CHALLENGE Trade and Pollution
	17.1 Externalities
		APPLICATION Disney’s Positive Externality
	17.2 The Inefficiency of Competition with Externalities
		Supply-and-Demand Analysis
		Cost-Benefit Analysis
		APPLICATION Spam: A Negative Externality
	17.3 Regulating Externalities
		Emissions Standard
		Emissions Fee and Effluent Charge
		Solved Problem 17.1
		APPLICATION Why Tax Drivers
		Benefits Versus Costs from Controlling Pollution
		Taxes Versus Standards Under Uncertainty
	17.4 Market Structure and Externalities
		Monopoly and Externalities
		Monopoly Versus Competitive Welfare with Externalities
		Solved Problem 17.2
		Taxing Externalities in Noncompetitive Markets
	17.5 Allocating Property Rights to Reduce Externalities
		Coase Theorem
		APPLICATION Buying a Town
		Markets for Pollution
		APPLICATION Acid Rain Program
	17.6 Rivalry and Exclusion
		Open-Access Common Property
		APPLICATION Road Congestion
		Club Goods
		APPLICATION Microsoft Word Piracy
		Public Goods
		Solved Problem 17.3
		APPLICATION Free Riding on Measles Vaccinations
		Solved Problem 17.4
		Reducing Free Riding
		APPLICATION What’s Their Beef?
		Valuing Public Goods
		CHALLENGE SOLUTION Trade and Pollution
		Summary
		Exercises
Chapter 18 Asymmetric Information
	CHALLENGE Dying to Work
	18.1 Adverse Selection
		Insurance Markets
		Products of Unknown Quality
		Solved Problem 18.1
		Solved Problem 18.2
	18.2 Reducing Adverse Selection
		Equalizing Information
		APPLICATION Discounts for Data
		APPLICATION Adverse Selection and Remanufactured Goods
		Laws to Prevent Opportunism
	18.3 Price Discrimination Due to False Beliefs About Quality
		APPLICATION Reducing Consumers’ Information
	18.4 Market Power from Price Ignorance
		Tourist-Trap Model
		Solved Problem 18.3
		Advertising and Prices
	18.5 Problems Arising from Ignorance When Hiring
		Cheap Talk
		APPLICATION Cheap Talk in eBay’s Best Offer Market
		Education as a Signal
		Solved Problem 18.4
		Screening in Hiring
		CHALLENGE SOLUTION Dying to Work
		Summary
		Exercises
Chapter 19 Contracts and Moral Hazards
	CHALLENGE Clawing Back Bonuses
	19.1 Principal-Agent Problem
		A Model
		Types of Contracts
		Efficiency
		Solved Problem 19.1
		APPLICATION Honest Cabbie?
	19.2 Production Efficiency
		Efficient Contract
		Full Information
		Solved Problem 19.2
		Asymmetric Information
		APPLICATION Sing for Your Supper
	19.3 Trade-Off Between Efficiency in Production and in Risk Bearing
		Contracts and Efficiency
		Solved Problem 19.3
		Choosing the Best Contract
		APPLICATION Health Insurance and Moral Hazard
		Solved Problem 19.4
	19.4 Monitoring to Reduce Moral Hazard
		Bonding
		Solved Problem 19.5
		APPLICATION Capping Oil and Gas Bankruptcies
		Deferred Payments
		Efficiency Wages
		APPLICATION Walmart’s Efficiency Wages
		After-the-Fact Monitoring
	19.5 Contract Choice
	19.6 Checks on Principals
		APPLICATION Layoffs Versus Pay Cuts
		CHALLENGE SOLUTION Clawing Back Bonuses
		Summary
		Exercises
Calculus Appendix
Regression Appendix
Answers to Selected Exercises
	Chapter 2
	Chapter 3
	Chapter 4
	Chapter 5
	Chapter 6
	Chapter 7
	Chapter 8
	Chapter 9
	Chapter 10
	Chapter 11
	Chapter 12
	Chapter 13
	Chapter 14
	Chapter 15
	Chapter 16
	Chapter 17
	Chapter 18
	Chapter 19
Definitions
References
Sources for Applications and Challenges
	Chapter 1
	Chapter 2
	Chapter 3
	Chapter 4
	Chapter 5
	Chapter 6
	Chapter 7
	Chapter 8
	Chapter 9
	Chapter 10
	Chapter 11
	Chapter 12
	Chapter 13
	Chapter 14
	Chapter 15
	Chapter 16
	Chapter 17
	Chapter 18
	Chapter 19
Index
	A
	B
	C
	D
	E
	F
	G
	H
	I
	J
	K
	L
	M
	N
	O
	P
	Q
	R
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	T
	U
	V
	W
	Z
Credits