Microeconomics and Behavior

Title
Contents
PART 1 Introduction
	Chapter 1 Thinking Like an Economist
		The Cost-Benefit Approach to Decisions
		Example 1.1: Should I Turn Down My Stereo?
		The Role of Economic Theory
		Common Pitfalls in Decision Making
		Example 1.2: Should I Go Skiing Today or Work as a Research Assistant?
		Example 1.3: Should I Go Skiing Today or Scrape Plates?
		Example 1.4: Should I Work First or Go to College First?
		Example 1.5: Should I Drive to Boston or Take the Bus?
		Example 1.6: The Pizza Experiment
		Example 1.7a: Should You Drive to Wal-Mart to Save $10 on a $
		Clock Radio?
		Example 1.7b: Should You Drive Downtown to Save $10 on a $
		Television Set?
		Example 1.8: Should Tom Launch Another Boat?
		Example 1.9: How Many Boats Should Tom Launch?
		Using Marginal Benefit and Marginal Cost Graphically
		Example 1.10: How Much Should Susan Talk to Hal Each Month?
		The Invisible Hand
		Example 1.11: Should I Burn My Leaves or Haul Them into the Woods?
		Would Parents Want Their Daughter or Son to Marry Homo economicus?
		The Economic Naturalist
		ECONOMIC NATURALIST 1.1: Why Is Airline Food So Bad?
		ECONOMIC NATURALIST 1.2: Why Do Manual Transmissions Have Five Forward Speeds, Automatics Only Four?
		Positive Questions and Normative Questions
		Microeconomics and Macroeconomics
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 2 Supply and Demand
		Chapter Preview
		Supply and Demand Curves
		Equilibrium Quantity and Price
		Adjustment to Equilibrium
		Some Welfare Properties of Equilibrium
		Free Markets and the Poor
		Example 2.1: Denied Boarding Compensation
		Example 2.2: Rent Controls
		Price Supports
		The Rationing and Allocative Functions of Prices
		Determinants of Supply and Demand
		Predicting and Explaining Changes in Price and Quantity
		ECONOMIC NATURALIST 2.1: Why Do the Prices of Apples Go Down during the Months of Heaviest Consumption While the Prices of Beachfront Cottages Go Up?
		Example 2.3: How Does a Price Support Program in the Soybean Market Affect the Equilibrium Price and Quantity of Beef?
		The Algebra of Supply and Demand
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
PART 2 The Theory of Consumer Behavior
	Chapter 3 Rational Consumer Choice
		Chapter Preview
		The Opportunity Set or Budget Constraint
		Example 3.1: Quantity Discount Gives Rise to a Kinked Budget Constraint: Graphing the Budget Constraint for a Consumer’s Electric Power
		Example 3.2: Budget Constraints Following Theft of Gasoline or Loss of Cash: Should Gowdy Buy More Gas?
		Consumer Preferences
		The Best Feasible Bundle
		Example 3.3: Equilibrium with Perfect Substitutes: Jolt Cola vs. Coca-Cola
		An Application of the Rational Choice Model
		Example 3.4: Is It Better to Give Poor People Cash or Food Stamps?
		ECONOMIC NATURALIST 3.1: Why Do People Often Give Gifts Instead of Cash?
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 3 The Utility Function Approach to the Consumer Budgeting Problem
	Chapter 4 Individual and Market Demand
		Chapter Preview
		The Effects of Changes in Price
		The Effects of Changes in Income
		The Income and Substitution Effects of a Price Change
		Example 4.1: Income and Substitution Effects for Perfect Complements: Skis and Bindings
		Example 4.2: Income and Substitution Effects for Perfect Substitutes: Tea and Coffee
		Consumer Responsiveness to Changes in Price
		Example 4.3: Deriving Individual Demand Curves for Perfect Complements: Car Washes and Gasoline
		Market Demand: Aggregating Individual Demand Curves
		Example 4.4: The Market Demand Curve: Beech Saplings in a Vermont Town Example 4.5: The Market Demand Curve: Ten Consumers
		Price Elasticity of Demand
		Example 4.6: Price Elasticity of Demand: Should the Transit System Raise or Lower Bus Fares?
		The Dependence of Market Demand on Income
		Example 4.7: How Does Income Affect the Market Demand Curve for Food?
		ECONOMIC NATURALIST 4.1: Why Has the Nature of Outdoor Cooking Appliances Changed Dramatically in Recent Decades?
		Application: Forecasting Economic Trends
		Cross-Price Elasticities of Demand
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 4 Additional Topics in Demand Theory
	Chapter 5 Applications of Rational Choice and Demand Theories
		Chapter Preview
		Using the Rational Choice Model to Answer Policy Questions
		Application: A Gasoline Tax and Rebate Policy
		Application: School Vouchers
		Consumer Surplus
		Example 5.1: What Is the Loss in Consumer Surplus from an Oil Price Increase?
		Application: Two-Part Pricing
		ECONOMIC NATURALIST 5.1: Why Do Some Tennis Clubs Have an Annual Membership Charge in Addition to Their Hourly Court Fees?
		ECONOMIC NATURALIST 5.2: Why Do Some Amusement Parks Charge Only a Fixed Admission Fee?
		Overall Welfare Comparisons
		Example 5.2: Price Changes: Was Jones Better Off This Year or Last Year?
		Application: The Welfare Effects of Changes in Housing Prices
		Application: A Bias in the Consumer Price Index
		Using Price Elasticity of Demand
		Application: The MARTA Fare Increase
		Application: The Price Elasticity of Demand for Alcohol
		The Intertemporal Choice Method
		Example 5.3: Will an Increase in the Interest Rate Cause You to Save More?
		Application: The Permanent Income and Life-Cycle Hypotheses
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 6 The Economics of Information and Choice under Uncertainty
		Chapter Preview
		The Economics of Information
		ECONOMIC NATURALIST 6.1: Why Do “Almost New” Used Cars Sell for So Much Less Than Brand New Ones?
		ECONOMIC NATURALIST 6.2: Why Is Coyness Often an Attractive Attribute?
		ECONOMIC NATURALIST 6.3: Why Do People in Small Towns Spend Less on Clothes Than People in Big Cities?
		Choice under Uncertainty
		Example 6.1: Maximizing Expected Utility: Smith and Gambling
		Example 6.2: Will You Always Accept a Favorable Bet?
		Example 6.3: The Lemons Principle: In a Certain Country, What Fraction of Personal Computers Is Defective?
		Example 6.4: Should Sarah Become a Teacher or an Actress? What Is the Most She Would Pay for Smith’s Evaluation?
		Example 6.5: Should Smith Sue the Manufacturer?
		Insuring against Bad Outcomes
		Application: Always Self-Insure against Small Losses
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 6 Search Theory and the Winner’s Curse
		Chapter 7 Explaining Tastes: The Importance of Altruism and Other Nonegoistic Behavior
		Chapter Preview
		An Application of the Present-Aim Standard: Altruistic Preferences Example 7.1: A Utility-Maximizing Altruist: Should Smith Give Some of His Wealth to Jones?
		The Strategic Role of Preferences
		The Commitment Problem
		Illustration: The Cheating Problem
		A Simple Thought Experiment
		Tastes Not Only Can Differ, They Must Differ
		ECONOMIC NATURALIST 7.1: Why Do People Vote in Presidential Elections?
		Application: Predicting Variations in Voter Turnout
		Application: Concerns about Fairness
		Example 7.2: Will Hatfield and McCoy Work Together?
		The Importance of Tastes
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 8 Cognitive Limitations and Consumer Behavior
		Chapter Preview
		Bounded Rationality
		The Asymmetric Value Function
		Sunk Costs
		Out-of-Pocket Costs versus Opportunity Costs
		Affective Forecasting Errors
		Choice under Uncertainty
		Judgmental Heuristics and Biases
		ECONOMIC NATURALIST 8.1: Why Does the Rookie of the Year In Baseball Often Have a Mediocre Second Season?
		The Psychophysics of Perception
		The Difficulty of Actually Deciding
		ECONOMIC NATURALIST 8.2: Why Do Real Estate Agents Show Two Houses That Are Nearly Identical, Even Though One Is Cheaper and in Better Condition?
		The Self-Control Pitfall
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
PART 3 The Theory of the Firm and Market Structure
	Chapter 9 Production
		Chapter Preview
		The Input-Output Relationship, or Production Function
		Production in the Short Run
		ECONOMIC NATURALIST 9.1: Why Can’t All the World’s People Be Fed from the Amount of Grain Grown in a Single Flowerpot?
		Example 9.1: Maximizing Total Output (I): Should the Allocation of Boats of a Fishing Fleet Be Altered?
		Example 9.2: Maximizing Total Output (II): How Should the Allocation of the Boats of a Fishing Fleet Be Altered?
		Example 9.3: What Is the Optimal Amount of Time to Spend on Each Exam Question?
		Production in the Long Run
		Returns to Scale
		ECONOMIC NATURALIST 9.2: Why Do Builders Use Prefabricated Frames for Roofs but Not for Walls?
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 9 Mathematical Extensions of Production Theory
	Chapter 10 Costs
		Chapter Preview
		Costs in the Short Run
		Example 10.1: Graphing the Total, Variable, and Fixed Cost Curves
		Example 10.2: Graphing the Average Fixed, Average Variable, Average Total, and Marginal Costs
		Example 10.3: Graphing the Average Total Cost, Average Variable Cost, Average Fixed Cost, and Marginal Cost Curves
		Allocating Production between Two Processes
		Example 10.4: What Is the Least Costly Way to Produce a Total of 32 Units of Output?
		The Relationship among MP, AP, MC, and AVC
		Costs in the Long Run
		ECONOMIC NATURALIST 10.1: Why Is Gravel Made by Hand in Nepal but by Machine in the United States?
		ECONOMIC NATURALIST 10.2: Why Do Unions Support Minimum Wage Laws So Strongly?
		ECONOMIC NATURALIST 10.3: Why Would a Bathroom Equipment Manager Bake the Image of a Housefly onto the Center of Its Ceramic Urinals?
		Long-Run Costs and the Structure of Industry
		The Relationship between Long-Run and Short-Run Cost Curves
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 10 Mathematical Extensions of the Theory of Costs
	Chapter 11 Perfect Competition
		Chapter Preview
		The Goal of Profit Maximization
		Example 11.1: Should the Owner of Valdosta, Georgia’s, Miniature Golf Course Move the Operation to Manhattan?
		The Four Conditions for Perfect Competition
		The Short-Run Condition for Profit Maximization
		The Short-Run Competitive Industry Supply
		Example 11.2: What Is the Industry Supply Curve for an Industry with 200 Firms?
		Short-Run Competitive Equilibrium
		The Efficiency of Short-Run Competitive Equilibrium
		Producer Surplus
		Example 11.3: Should the Legislature Ban Fireworks?
		Adjustments in the Long Run
		The Invisible Hand
		Application: The Cost of Extraordinary Inputs
		The Long-Run Competitive Industry Supply Curve
		ECONOMIC NATURALIST 11.1: Why Do Color Photographs Cost Less Than Black-and- White Photographs?
		The Elasticity of Supply
		Applying the Competitive Model
		ECONOMIC NATURALIST 11.2: Why Did 18-Wheel Cargo Trucks Suddenly Begin Using Airfoils in the Mid-1970s?
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 12 Monopoly
		Chapter Preview
		Defining Monopoly
		Five Sources of Monopoly
		The Profit-Maximizing Monopolist
		Example 12.1: Finding a Marginal Revenue Curve for a Given Demand Curve
		Example 12.2: What Is a Monopolist’s Profit-Maximizing Price, and How Much Economic Profit Is Earned?
		A Monopolist Has No Supply Curve
		Adjustments in the Long Run
		Price Discrimination
		Example 12.3: Finding and Graphing the Monopolist’s Quantity and Price in the Home Market
		ECONOMIC NATURALIST 12.1: Why Do Some Doctors and Lawyers Offer Discounts to People with Low Incomes?
		ECONOMIC NATURALIST 12.2: Why Do Theater Owners Offer Student Discounts on Admission Tickets but Not on Popcorn?
		The Efficiency Loss from Monopoly
		Public Policy toward Natural Monopoly
		Example 12.4: Will the Monopolist Introduce a New Lightbulb That Lasts 10,000 Hours?
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 13 Imperfect Competition: A Game-Theoretic Approach
		Chapter Preview
		An Introduction to the Theory of Games
		ECONOMIC NATURALIST 13.1: Why Do Cigarette Companies Advertise “Too Much”?
		ECONOMIC NATURALIST 13.2: Why Might a Company Make an Investment It Knew It Would Never Use?
		ECONOMIC NATURALIST 13.3: Why Would a Firm Build a Factory with More Capacity Than It Would Ever Need?
		Some Specific Oligopoly Models
		Example 13.1: Deriving the Reaction Functions for Cournot Duopolists
		Example 13.2: Finding the Equilibrium Price and Quantity for Bertrand Duopolists
		Example 13.3: Finding the Equilibrium Price and Quantity for a Stackelberg Leader and Follower
		Competition When There Are Increasing Returns to Scale
		Chamberlin Model of Monopolistic Competition
		A Spatial Interpretation of Monopolistic Competition
		ECONOMIC NATURALIST 13.4: Why Are There Fewer Grocery Stores in Cities Than There Were in 1930? Why Do Neighborhoods in Manhattan Have More Grocery Stores Than Neighborhoods in Los Angeles?
		Historical Note: Hotelling’s Hot Dog Vendors
		Consumer Preferences and Advertising
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
PART 4 Factor Markets
	Chapter 14 Labor
		Chapter Preview
		The Perfectly Competitive Firm’s Short-Run Demand for Labor
		The Perfectly Competitive Firm’s Long-Run Demand for Labor
		The Market Demand Curve for Labor
		An Imperfect Competitor’s Demand for Labor
		The Supply of Labor
		Example 14.1: The Labor Supply Curve for Someone with a Target Level of Income
		ECONOMIC NATURALIST 14.1: Why Is It So Hard to Find a Taxi on Rainy Days?
		Example 14.2: The Optimal Leisure Demand for Someone Who Views Income and Leisure as Perfect Complements
		Is Leisure a Giffen Good?
		The Noneconomist’s Reaction to the Labor Supply Model
		The Market Supply Curve
		Example 14.3: How Do Rising MBA Enrollments Affect the Salaries and Employment of Economists in Liberal Arts Colleges?
		Monopsony
		Minimum Wage Laws
		Labor Unions
		Discrimination in the Labor Market
		Statistical Discrimination
		The Internal Wage Structure
		Winner-Take-All Markets
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 14 The Economics of Workplace Safety
	Chapter 15 Capital
		Chapter Preview
		Financial Capital and Real Capital
		The Demand for Real Capital
		The Relationship between the Rental Rate and the Interest Rate
		The Criterion for Buying a Capital Good
		Interest Rate Determination
		Real versus Nominal Interest Rates
		The Market for Stocks and Bonds
		ECONOMIC NATURALIST 15.1: Why Is Owning Stock in a Monopoly No Better Than Owning Stock in a Perfectly Competitive Firm?
		The Anomaly of the Investment Newsletter
		Tax Policy and the Capital Market
		Economic Rent
		Peak-Load Pricing
		Exhaustible Resources as Inputs in Production
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
		Appendix 15 A More Detailed Look at Exhaustible Resource Allocation
PART 5 Externailities, Public Goods, and Welfare
	Chapter 16 Externalities, Property Rights, and the Coase Theorem
		Chapter Preview
		The Reciprocal Nature of Externalities
		Example 16.1: The Confectioner and the Doctor (I): Making the Confectioner Liable for Noise Damage
		Example 16.2: The Confectioner and the Doctor (II): Changing Costs and Benefits
		Example 16.3: The Confectioner and the Doctor (III): Installing a Soundproofing Device
		Example 16.4: The Confectioner and the Doctor (IV): Should the Doctor Rearrange His Office?
		Example 16.5: The Confectioner and the Doctor (V): Costly Negotiation When the Confectioner Can Make the Least-Cost Adjustment
		Example 16.6: The Confectioner and the Doctor (VI): Costly Negotiation When the Doctor Can Make the Least-Cost Adjustment
		Application: External Effects from Nuclear Power Plants
		Property Rights
		ECONOMIC NATURALIST 16.1: Why Does the Law Permit Airlines to Operate Flights over Private Land without Permission
		ECONOMIC NATURALIST 16.2: Why Does the Law of Trespass Not Apply along Waterfront Property?
		ECONOMIC NATURALIST 16.3: Why Are Property Rights Often Suspended during Storms?
		ECONOMIC NATURALIST 16.4: Why Do Building Height Limits Vary from City to City?
		Example 16.7: If Village Residents Make Their Investment Decisions Independently, How Many of Their Steers Will Graze on the Commons?
		Externalities, Efficiency, and Free Speech
		Smoking Rules, Public and Private
		Example 16.8: Should Smoker Smith Live with Nonsmoker Jones, or Find a Separate Apartment?
		Positive Externalities
		Positional Externalities
		Taxing Externalities
		Example 16.9: The Confectioner and the Doctor (VII): Taxing the Confectioner for Noise
		Example 16.10: What Is the Best Way for the City Council to Reduce Air Pollution?
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 17 Government
		Chapter Preview
		Public Goods
		Example 17.1: Should the Network Broadcast Jerry Springer or Masterpiece Theater?
		Public Choice
		Example 17.2: If Two People, One Rich and One Poor, Have Opposite Views on a Proposed Public Project, on What Basis Would Each Like to See the Decision Made, Cost-Benefit Analysis or Majority Rule?
		Example 17.3: Which Company Will Win the Cedar Rapids Cable TV Franchise?
		Income Distribution
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
	Chapter 18W General Equilibrium and Market Efficiency (online)
		Chapter Preview
		A Simple Exchange Economy
		Efficiency in Production
		Efficiency in Product Mix
		Gains from International Trade
		Example 18W.1: General Equilibrium and Market Efficiency
		Taxes in General Equilibrium
		Other Sources of Inefficiency
		Summary
		Questions for Review
		Problems
		Answers to In-Chapter Exercises
Index