MicroEconomics for Life: Smart Choices for You

Cover
Title Page
Copyright Page
About the Author
Table of Contents
Preface to Students
Preface to Instructors
Acknowledgments
Chapter 1 What’s in Economics for You? Scarcity, Opportunity Cost, Trade, and Models
	1.1 Are You Getting Enough? Scarcity and Choice
	1.2 Give It Up for Opportunity Cost! Opportunity Cost
		Choose to Snooze?
		Opportunity Cost Beats Money Cost
	Economics Out There Where Have All the Men Gone?
	1.3 Why Don’t You Cook Breakfast? Gains from Trade
		Voluntary Trade
		Deal or No Deal? Do the Numbers
		Smart Deals
	1.4 Economists as Mapmakers and Scientists: Thinking Like an Economist
		Why Maps (and Economists) Are Useful
		The Circular Flow of Economic Life
		Models as the Economist’s Laboratory
	Economics Out There Do You Want to Be an Online Gamer Economist?
	1.5 Where and How to Look: Models for Microeconomics and Macroeconomics
		It’s All Greek to Me: Microeconomics or Macroeconomics?
		Three Keys to Smart Choices: Weigh Marginal Benefits and Marginal Costs
		Moving On
	Study Guide: Chapter 1
		Chapter Summary
		True/False
		Multiple Choice
Chapter 2 Making Smart Choices The Law of Demand
	2.1 Put Your Money Where Your Mouth Is: Weighing Benefits, Costs, and Substitutes
		How Badly Do You Want It?
		What Will You Give Up?
	2.2 Living on the Edge: Smart Choices Are Marginal Choices
		Marginal Benefits Change with Circumstances
		Marginal Benefits Decrease with Quantity
	Economics Out There Coke’s Automatic Price Gouging
		The Diamond/Water Paradox
	2.3 Move On When the Price Isn’t Right: The Law of Demand
		Quantity Demanded
		The Law of Demand
		Two Ways to Read a Demand Curve
	2.4 Moving the Margins: What Can Change Demand?
		Why Bother Distinguishing between Quantity Demanded and Demand?
		Five Ways to Change Demand and Shift the Demand Curve
	Economics Out There Diamond Engagement Rings Were Not Forever
	Economics Out There If I Had $1 000 000 Dollars
		Saving the Law of Demand
	Study Guide: Chapter 2
		Chapter Summary
		True/False
		Multiple Choice
Chapter 3 Show Me the Money The Law of Supply
	3.1 What Does It Really Cost? Costs Are Opportunity Costs
		How Much to Work?
		What Do Inputs Really Cost?
	3.2 Forget It, It’s History: Sunk Costs Don’t Matter for Future Choices
	3.3 More for More Money: The Law of Supply
		Quantity Supplied
		Body Piercings or Nail Sets?
		Increasing Marginal Opportunity Costs
		The Law of Supply
		Two Ways to Read a Supply Curve
	3.4 Changing the Bottom Line: What Can Change Supply?
	Economics Out There Uncorking the Okanagan
		Six Ways to Change Supply and Shift the Supply Curve
	Economics Out There Army of Noodle-Shaving Robots Invades Restaurants
		Saving the Law of Supply
	Study Guide: Chapter 3
		Chapter Summary
		True/False
		Multiple Choice
Chapter 4 Coordinating Smart Choices Demand and Supply
	4.1 What’s a Market?
		Markets Mix Competition and Cooperation
		The Rules of the Game
	4.2 Where Do Prices Come From? Price Signals from Combining Demand and Supply
	Economics Out There Rules of the Game Are Necessary for All Games, Not Just Markets
		Prices in Action
	4.3 When Prices Sit Still: Market-Clearing or Equilibrium Prices
		Market-Clearing Price
		Equilibrium Price
	4.4 Moving Targets: What Happens When Demand and Supply Change?
		Changes in Demand
		Changes in Supply
	Economics Out There Lobsters Galore!
		Combining Changes in Demand and Supply
		Putting It All Together
		Economists Do It with Models
	4.5 Getting More Than You Bargained For: Consumer Surplus, Producer Surplus, and Efficiency
		Consumer Surplus
		Producer Surplus
		Economic Efficiency
	Study Guide: Chapter 4
		Chapter Summary
		True/False
		Multiple Choice
Chapter 5 Just How Badly Do You Want It? Elasticity
	5.1 Measuring Your Responsiveness: Price Elasticity of Demand
		Measuring Your Responsiveness
		Calculating Elasticity of Demand
		Why Are You (Un)Responsive? Factors Determining Elasticity
	5.2 Will You Make It Up in Volume? Elasticity and Total Revenue
		Total Revenue
		Price Cuts Are Smart Facing Elastic Demand
		Price Rises Are Smart Facing Inelastic Demand
		Smart Pricing Decisions Depend on Elasticity of Demand
		Calculating Elasticity and Total Revenue
	Economics Out There When It Comes to Reservations, Time Is Money
	5.3 How Far Will You Jump for the Money? Price Elasticity of Supply
		Measuring Business Responsiveness
		Gearing Up (Production) Can Be Hard to Do: Factors Determining Elasticity of Supply
		Why Do We Care about Elasticity of Supply?
	5.4 Can You Measure Substitutes? More Elasticities of Demand
		Cross Elasticity of Demand
		Income Elasticity of Demand
		Quick Guide to Elasticity Measures
	5.5 Who Pays the HST? Tax Incidence and Government Tax Choices
		Tax Incidence
		What’s in Taxes for Government?
		Measurement Stretches Understanding
	Study Guide: Chapter 5
		Chapter Summary
		True/False
		Multiple Choice
Chapter 6 What Gives When Prices Don’t? Government Policy Choices
	6.1 Do Prices or Quantities Adjust? Unintended Consequences of Government Policies
		When Price Is Fixed Too Low, Quantities Adjust
		When Price Is Fixed Too High, Quantities Adjust
		Fixed Prices Prevent Markets from Functioning Well
	Economics Out There Price Controls Keep Venezuelan Cupboards Bare
	6.2 Do Rent Controls Help the Homeless? Price Ceilings
		Benefits and Costs of Rent Control Policies
		Inefficiency of Rent Controls
		Unintended Consequences of Rent Controls
		Alternatives to Rent Controls
	6.3 Do Minimum Wages Help the Working Poor? Price Floors
		Minimum Wage Laws Past and Present
		Benefits and Costs of Minimum Wage Laws
		Unintended Consequences of Minimum Wages
	Economics Out There Hundreds of Economists Say Raise the Minimum Wage
		Weighing the Benefits and Costs of Minimum Wages
		Alternatives to Minimum Wage Laws
	6.4 When Markets Work Well, Are They Fair? Trade-Offs between Efficiency and Equity
		Efficient Market Outcomes
	Economics Out There Is Price Gouging During a Disaster Wrong?
		Who Is Excluded from Efficient Market Outcomes?
	6.5 Choosing between Efficiency and Equity: What Economics Can and Cannot Do for You
		Efficiency or Equity?
	Economics Out There Can We Eliminate the Trade-Off between Efficiency and Equity?
		Equal Outcomes or Equal Opportunity?
		What Economics Can and Cannot Do for You
	Study Guide: Chapter 6
		Chapter Summary
		True/False
		Multiple Choice
Chapter 7 Finding the Bottom Line Opportunity Costs, Economic Profits and Losses, and the Miracle of Markets
	7.1 What Accountants Miss: Accounting Profits and Hidden Opportunity Costs
		Obvious Costs and Accounting Profits
		Your Time’s Opportunity Cost
		Your Money’s Opportunity Cost
	Economics Out There Which Mortgage Is Right for You?
	7.2 What Economists Find: Normal Profits and Economic Profits
		Normal Profits
		Economic Profits
	7.3 Red Light, Green Light: How Economic Profits Direct the Invisible Hand
		Economic Profits Signal the Way
		Market Equilibrium
	Study Guide: Chapter 7
		Chapter Summary
		True/False
		Multiple Choice
Chapter 8 Pricing Power Monopoly to Competition and In Between
	8.1 Dreams of Monopoly and Nightmares of Competition: Price Makers and Price Takers
		Monopoly
		Perfect Competition
	8.2 How Much Competition Is Going On? Market Structure
		“What’s a Market” Depends on “What’s a Substitute”
		Counting Competitors: How Many Competing Businesses?
	Economics Out There What’s Your Favourite Beer — and Why?
		Keeping Competitors Out and Profits In: Barriers to Entry
	Economics Out There Pricing Headaches and Sex
		How Do You Spell Competition? E-L-A-S-T-I-C-I-T-Y of Demand
	8.3 Mash-Ups of Market Structure: Oligopoly and Monopolistic Competition
	8.4 To Compete Is a Verb: How Do Businesses Compete?
		What Do Businesses Do to Compete?
	Economics Out There Where’s the Real Competition ?
		The Invisible Hand, Like Gravity, Is Unforgiving: Freedom Meets Competition
	Economics Out There Higher Wages = Lower Costs?
		Competition as Creative Destruction: Breaking Free of Equilibrium
	Study Guide: Chapter 8
		Chapter Summary
		True/False
		Multiple Choice
Chapter 9 Pricing for Profits Marginal Revenue and Marginal Cost
	9.1 Is the Price You See the Revenue You Get? Marginal Revenue
		Basic Ingredients
		One Price Rules When Buyers Can Resell
	Economics Out There iResentment
		Marginal Revenue
		When Marginal Revenue Equals Price
		When Marginal Revenue Is Less Than Price
	9.2 Increasing or Constant? Marginal Cost
		Increasing Marginal Cost
		Constant Marginal Cost
	9.3 Recipe for Profits: Marginal Revenue Greater Than Marginal Cost
		Recipe for Profits in Numbers
		Recipe for Profits in Graphs
		Why Is This Recipe the Best? Pricing for Maximum Economic Profits
		Back to the Three Keys to Smart Choices
	9.4 Divide and Conquer: Price Discrimination Recipes for Higher Profits
		Breaking the One-Price Rule
		Discriminate (Cleverly) by Elasticity
		Doubling Up the Recipe for Profits
	Economics Out There Are You a Coupon Clipper?
		Putting It All Together
	Economics Out There Squeezing More Profits with Dynamic Pricing
	9.5 Are Maximum Profits Good for All? Market Structure and Efficiency
		Efficiency of Perfect Competition and Price Takers
		Inefficiency of Market Structures with Price Makers
		Are Inefficient Price Makers All Bad?
	Study Guide: Chapter 9
		Chapter Summary
		True/False
		Multiple Choice
Chapter 9 Appendix Exploring Perfect Competition Productivity, Costs, Quantities, and Profits
	9A.1 All Equal! Marginal Revenue and Price
	9A.2 More Gets You Less: Costs and Diminishing Marginal Productivity
		Fixed Costs and Variable Costs
		Diminishing Marginal Productivity
		From Diminishing Marginal Productivity to Increasing Marginal Costs
		From Marginal Costs to Average Total Costs
	9A.3 Prices and the Recipe for Profits: Marginal Cost Curve Determines the Supply Curve
		Maximum Economic Profits Where MR = MC
	9A.4 Go or Stay? Short-Run and Long-Run Equilibrium
		Three Short-Run Economic Profit Scenarios
		Long-Run Economic Profit Adjustments
		The Invisible Hand Again
	Study Guide: Chapter 9 Appendix
		Chapter Summary
		True/False
		Multiple Choice
Chapter 10 When Markets Fail Natural Monopoly, Gaming, Competition, and Government
	10.1 Size Matters: Market Failure and Natural Monopoly
		Market Failure
		The Government Policy Challenge
		What’s So Natural about Natural Monopoly?
	10.2 Cooperate or Cheat? Prisoners’ Dilemma and Conspiracies
		Gasoline Price Wars and Conspiracies
		The Prisoners’ Dilemma: Game Theory and Strategic Behaviour
	10.3 C-Words Everywhere: Cartels, Collusion, Cheating, Competition Law, Caveat Emptor
		Well-Dressed Thieves
		Competition Law
	Economics Out There Hershey Guilty of Price-Fixing in Canadian Chocolate Cartel
		Should the Buyer Alone Beware? Regulatory Agencies in Canada
	10.4 Pick Your Poison: Market Failure or Government Failure?
		Should Governments Regulate? Public-Interest View or Capture View
		Evidence and Explanations
	Economics Out There Cheese Smuggling? Only in Canada
		Trade-Offs: Market Failure or Government Failure?
	Study Guide: Chapter 10
		Chapter Summary
		True/False
		Multiple Choice
Chapter 11 Acid Rain on Others’ Parades Externalities, Carbon Taxes, Free Riders, and Public Goods
	11.1 Handcuffing the Invisible Hand: Market Failure with Externalities
		How Much Does That Honda Civic Really Cost?
		Was It Good Just for You?
		No Ownership, No Incentives, No Coordinated Choices
	11.2 Why Radical Environmentalists Dislike Economists: Efficient Pollution
		The Price (Opportunity Cost) of Pollution
	Economics Out There A Useful Poison?
		Efficient Combinations of Output and Pollution
	11.3 Liberating the Invisible Hand: Policies to Internalize the Externality
		Government Support for the Invisible Hand
		Carbon Taxes and Cap-and-Trade System for Emissions
	Economics Out There Make Polluters (Including You) Pay
		Green Trade-Offs of Efficiency versus Equity
	Economics Out There Carbon Taxes Make Ireland Even Greener
	11.4 Why Lighthouses Won’t Make You Rich: Free Riders and Public Goods
		The Free-Rider Problem
		Efficient Combinations of Output and External Benefits
	Economics Out There Infrastructure as Public Good
	11.5 Why Your Tuition Is Cheap (Really!): Subsidies for the Public Good
		Adam Smith’s Vote for Government
		Subsidies
	Economics Out There Should Drivers Be Taxed to Pay for Public Transit?
		Public Provision
	Study Guide: Chapter 11
		Chapter Summary
		True/False
		Multiple Choice
Chapter 12 What Are You Worth? Inputs, Incomes, and Inequality
	12.1 Switching Sides: Incomes Are Prices and Quantities in Input Markets
		Finding Your Way Around the Circle
		Inputs and Income
		Income Is a Flow, Wealth Is a Stock
		Entrepreneurs’ Income Is Different
	12.2 What Have You Done for Me Lately? Labour and Marginal Revenue Product
		Back to the Future of Wahid’s Web Wonders Business
		Show Me the Money (Again): Supply of Labour
		Why Your Boss Wants You: Derived Demand for Labour
		Smart Business Choices in Hiring Labour
		Marginal Productivity and Income
	12.3 All Present and Accounted For: Interest on Capital and Present Value
		Comparing the Present and Future
		From Present to Future
		From Future to Present: Key 3 and Implicit Costs to the Rescue
	12.4 Why Sidney Crosby Plays by Different Rules: Land, Economic Rent, and Superstars
		Economic Rent
		Is Sidney Crosby a Landlord?
		Are Superstar Salaries to Blame for High Ticket Prices?
	Economics Out There Fans Stick It to NHL Players
	12.5 What Should You Be Worth? Inequality and Poverty
		What Do We Earn and Own? Measuring (In)Equality of Income and Wealth
		Why Are You (Not) Rich?
		What Can Be Done to Help the Poor?
		What Should Be Done to Help the Poor? Equity and Efficiency One More Time
	Study Guide: Chapter 12
		Chapter Summary
		True/False
		Multiple Choice
Summing Up
Glossary
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Answers to the Study Guide Questions
Index
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