Microeconomics for Today , Seventh Edition

Cover Page......Page 1
Title Page......Page 4
Copyright Page......Page 6
About the Author......Page 7
Preface......Page 20
Brief Contents......Page 8
Contents......Page 10
PART 1: Introduction to Economics\n......Page 37
CHAPTER 1: Introducing the Economic Way of Thinking\n......Page 38
Scarce Resources and Production......Page 39
Economics: The Study of Scarcity and Choice......Page 41
The Methodology of Economics......Page 42
Hazards of the Economic Way of Thinking......Page 45
CHECKPOINT Should Nebraska State Join a Big-Time Athletic Conference?......Page 46
YOU’RE THE ECONOMIST Mops and Brooms, the Boston Snow Index, the Super Bowl, and Other Economic Indicators......Page 47
Why Do Economists Disagree?......Page 48
Careers in Economics......Page 49
YOU’RE THE ECONOMIST Does Raising the Minimum Wage Help the Working Poor?......Page 50
A Direct Relationship......Page 57
An Inverse Relationship......Page 59
The Slope of a Straight Line......Page 60
The Slope of a Curve......Page 62
A Three-Variable Relationship in One Graph......Page 63
A Helpful Study Hint for Using Graphs......Page 65
CHAPTER 2: Production Possibilities, Opportunity Cost, and Economic Growth\n......Page 70
Three Fundamental Economic Questions......Page 71
Opportunity Cost......Page 72
Marginal Analysis......Page 73
The Production Possibilities Curve......Page 74
The Law of Increasing Opportunity Costs......Page 76
Sources of Economic Growth......Page 78
CHECKPOINT What Does a War on Terrorism Really Mean?......Page 81
Present Investment and the Future Production Possibilities Curve......Page 82
GLOBAL ECONOMICS How Does Public Capital Affect a Nation’s Curve?......Page 83
PART 1 ROAD MAP\n......Page 90
PART 2: Microeconomic Fundamentals\n......Page 93
CHAPTER 3: Market Demand and Supply\n......Page 94
The Law of Demand......Page 95
The Distinction Between Changes in Quantity Demanded and Changes in Demand......Page 97
Nonprice Determinants of Demand......Page 99
CHECKPOINT Can Gasoline Become an Exception to the Law of Demand?......Page 102
The Law of Supply......Page 104
The Distinction Between Changes in Quantity Supplied and Changes in Supply......Page 106
Nonprice Determinants of Supply......Page 110
YOU’RE THE ECONOMIST PC Prices: How Low Can They Go?......Page 111
A Market Supply and Demand Analysis......Page 114
CHECKPOINT Can the Price System Eliminate Scarcity?......Page 118
Consumer Surplus......Page 127
Producer Surplus......Page 128
Market Efficiency......Page 130
CHAPTER 4: Markets in Action\n......Page 136
Changes in Market Equilibrium......Page 137
CHECKPOINT Why the Higher Price for Ethanol Fuel?......Page 140
Can the Laws of Supply and Demand Be Repealed?......Page 141
YOU’RE THE ECONOMIST Rigging the Market for Milk......Page 146
CHECKPOINT Is There Price-Fixing at the Ticket Window?......Page 147
YOU’RE THE ECONOMIST Can Vouchers Fix Our Schools?......Page 152
CHECKPOINT Should There Be a War on Drugs?......Page 154
The Impact of Health Insurance......Page 161
Shifts in the Demand for Health Care......Page 163
Shifts in the Supply of Health Care......Page 164
CHAPTER 5: Price Elasticity of Demand and Supply\n......Page 165
Price Elasticity of Demand......Page 166
Price Elasticity of Demand Variations Along a Demand Curve......Page 171
Determinants of Price Elasticity of Demand......Page 174
CHECKPOINT Can Trade Sanctions Affect Elasticity of Demand for Cars?......Page 175
YOU’RE THE ECONOMIST Cigarette Smoking Price Elasticity of Demand......Page 176
Other Elasticity Measures......Page 177
CHECKPOINT Can Honda Compete with Itself?......Page 182
CHAPTER 6: Consumer Choice Theory\n......Page 189
From Utility to the Law of Demand......Page 190
YOU’RE THE ECONOMIST Why is Water Less Expensive than Diamonds?......Page 192
CHECKPOINT When Dining Out, Do You Eat Smart?......Page 195
Income and Substitution Effects and the Law of Demand......Page 196
YOU’RE THE ECONOMIST Testing the Law of Demand with White Rats......Page 197
CHECKPOINT Does the Substitution Effect Apply to Buying a Car?......Page 198
Why Indifference Curves Are Downward-Sloping and Convex......Page 204
The Indifference Map......Page 206
The Budget Line......Page 207
A Consumer Equilibrium Graph......Page 209
Derivation of the Demand Curve......Page 210
CHAPTER 7: Production Costs\n......Page 217
Costs and Profit......Page 218
Short-Run Production Costs......Page 220
Short-Run Cost Formulas......Page 223
Marginal Cost Relationships......Page 227
CHECKPOINT Did Michael Jordan Beat the Marginal-Average Rule?......Page 229
Long-Run Production Costs......Page 231
Different Scales of Production......Page 232
YOU’RE THE ECONOMIST Why is That Web Site You’re Using Free?......Page 235
PART 2 ROAD MAP\n......Page 243
PART 3: Market Structures\n......Page 247
CHAPTER 8: Perfect Competition\n......Page 248
Perfect Competition......Page 249
Short-Run Profit Maximization for a Perfectly Competitive Firm......Page 251
Short-Run Loss Minimization for a Perfectly Competitive Firm......Page 256
CHECKPOINT Should Motels Offer Rooms at the Beach for Only $50 a Night?......Page 258
Short-Run Supply Curves Under Perfect Competition......Page 259
Long-Run Supply Curves Under Perfect Competition......Page 262
CHECKPOINT Are You in Business for the Long Run?......Page 263
Three Types of Long-Run Supply Curves......Page 264
YOU’RE THE ECONOMIST Gators Snapping Up Profits......Page 268
CHAPTER 9: Monopoly\n......Page 276
The Monopoly Market Structure......Page 277
GLOBAL ECONOMICS Monopolies Around the World......Page 280
Price and Output Decisions for a Monopolist......Page 281
YOU’RE THE ECONOMIST The Standard Oil Monopoly......Page 289
Price Discrimination......Page 290
Comparing Monopoly and Perfect Competition......Page 292
The Case Against and for Monopoly......Page 295
CHAPTER 10: Monopolistic Competition and Oligopoly\n......Page 303
The Monopolistic Competition Market Structure......Page 304
The Monopolistically Competitive Firm as a Price Maker......Page 305
YOU’RE THE ECONOMIST Social Networking Sites: The New Advertising Game......Page 308
Price and Output Decisions for a Monopolistically Competitive Firm......Page 309
Comparing Monopolistic Competition and Perfect Competition......Page 310
The Oligopoly Market Structure......Page 313
Price and Output Decisions for an Oligopolist......Page 315
GLOBAL ECONOMICS Major Cartels in Global Markets......Page 318
YOU’RE THE ECONOMIST How Oligopolists Compete at the Final Four......Page 321
CHECKPOINT Which Model Fits the Cereal Aisle?......Page 322
Review of the Four Market Structures......Page 323
CHAPTER 11: Labor Markets\n......Page 330
The Labor Market Under Perfect Competition......Page 331
Labor Unions: Employee Power......Page 337
Union Membership Around the World......Page 341
Employer Power......Page 342
YOU’RE THE ECONOMIST Should College Athletes Be Paid?......Page 346
CHECKPOINT If You Don’t Like It, Mickey, Take Your Bat and Go Home......Page 347
PART 3 ROAD MAP\n......Page 353
PART 4: Microeconomic Policy Issues\n......Page 357
CHAPTER 12: Income Distribution, Poverty, and Discrimination\n......Page 358
The Distribution of Income......Page 359
Global Comparisons of Income Distribution......Page 365
Poverty......Page 366
Antipoverty Programs......Page 369
Social Security: Past, Present, and Future......Page 370
Reform Proposals......Page 372
CHECKPOINT Does a Negative Income Tax Discourage Work?......Page 374
Discrimination......Page 376
CHECKPOINT Should the Law Protect Women?......Page 377
YOU’RE THE ECONOMIST Is Pay for Females Fair?......Page 378
CHAPTER 13: Antitrust and Regulation\n......Page 384
Antitrust......Page 385
Key Antitrust Cases......Page 389
CHECKPOINT Does Price-Fixing Improve Your Education?......Page 392
Mergers and Global Antitrust Policy......Page 394
Regulation......Page 395
Three Cases for Government Regulation......Page 396
YOU’RE THE ECONOMIST Who Turned Out the Lights in California?......Page 399
CHECKPOINT Why Doesn’t the Water Company Compete?......Page 400
YOU’RE THE ECONOMIST Does Airline Deregulation Mean Friendlier Skies?......Page 401
CHAPTER 14: Environmental Economics\n......Page 409
Competitive Markets and Environmental Efficiency......Page 410
Achieving Environmental Efficiency......Page 415
GLOBAL ECONOMICS How Should Carbon Emissions Be Reduced: Cap and Trade or Carbon Taxes?......Page 424
GLOBAL ECONOMICS Why Is the Climate Change Problem So Hard to Solve?......Page 426
CHECKPOINT Is It Efficient to Buy Odor-Reducing Technology If You Live Next to a Hog Farm?......Page 429
PART 4 ROAD MAP\n......Page 435
PART 5: The International Economy\n......Page 437
CHAPTER 15: International Trade and Finance\n......Page 438
Why Nations Need Trade......Page 439
Comparative and Absolute Advantage......Page 442
Free Trade versus Protectionism......Page 444
Arguments for Protection......Page 446
Free Trade Agreements......Page 447
GLOBAL ECONOMICS World Trade Slips on Banana Peel......Page 448
The Balance of Payments......Page 449
Birth of the Euro......Page 450
Exchange Rates......Page 455
GLOBAL ECONOMICS Return to the Yellow Brick Road?\n......Page 462
CHAPTER 16: Economies in Transition\n......Page 470
Basic Types of Economic Systems\n......Page 471
The “ISMS”......Page 477
GLOBAL ECONOMICS Choosing an Economic System on Another Planet......Page 478
CHECKPOINT To Plan or Not to Plan—That Is the Question......Page 482
Comparing Economic Systems......Page 483
Economies in Transition......Page 484
GLOBAL ECONOMICS China’s Quest for Free Market Reform......Page 486
Privatization versus Nationalization\n......Page 488
CHAPTER 17: Growth and the Less-Developed Countries\n......Page 493
Comparing Developed and Less-Developed Countries\n......Page 494
Economic Growth and Development Around the World\n......Page 498
CHECKPOINT Does Rapid Growth Mean a Country Is Catching Up?\n......Page 500
The Helping Hand of Advanced Countries\n......Page 504
GLOBAL ECONOMICS Hong Kong: A Crouching Pacific Rim Tiger\n......Page 507
CHECKPOINT Is the Minimum Wage an Antipoverty Solution for Poor Countries?\n......Page 508
PART 5 ROAD MAP\n......Page 514
APPENDIX A: Answers to Odd-Numbered Questions and Problems\n......Page 517
APPENDIX B: Answers to Practice Quizzes\n......Page 531
APPENDIX C: Answers to Road Map Questions\n......Page 533
GLOSSARY\n......Page 534
INDEX\n......Page 547