Principles of Microeconomics: A Streamlined Approach

Cover
Title Page
Copyright Page
Dedication
About the Authors
Preface
Distinguishing Features
Economic Naturalist Video Series
Economic Naturalist Examples
Supplements
Brief Contents
Contents
PART 1 Introduction
	Chapter 1 Thinking Like an Economist
		Economics: Studying Choice in a World of Scarcity
		Applying the Cost-Benefit Principle
			Economic Surplus
			Opportunity Cost
			The Role of Economic Models
		Three Important Decision Pitfalls
			Pitfall 1: Measuring Costs and Benefits as Proportions Rather Than Absolute Dollar Amounts
			Pitfall 2: Ignoring Implicit Costs
			Pitfall 3: Failing to Think at the Margin
		Normative Economics versus Positive Economics
		Economics: Micro and Macro
		The Approach of This Text
		Economic Naturalism
		THE ECONOMIC NATURALIST 1.1
		THE ECONOMIC NATURALIST 1.2
		THE ECONOMIC NATURALIST 1.3
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
		Appendix: Working with Equations, Graphs, and Tables
	Chapter 2 Supply and Demand
		What, How, and for Whom? Central Planning versus the Market
		Buyers and Sellers in Markets
			The Demand Curve
			The Supply Curve
		Market Equilibrium
			Rent Controls Reconsidered
			Pizza Price Controls?
		Predicting and Explaining Changes in Prices and Quantities
			Shifts in Demand
		THE ECONOMIC NATURALIST 2.1
			Shifts in the Supply Curve
		THE ECONOMIC NATURALIST 2.2
			Four Simple Rules
		THE ECONOMIC NATURALIST 2.3
		Efficiency and Equilibrium
			Cash on the Table
			Smart for One, Dumb for All
		THE ECONOMIC NATURALIST 2.4
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
		Appendix: The Algebra of Supply and Demand
PART 2 Competition and the Invisible Hand
	Chapter 3 Demand and Elasticity
		The Law of Demand
			The Origins of Demand
			Needs versus Wants
		THE ECONOMIC NATURALIST 3.1
		Applying the Law of Demand
			Substitution at Work
		THE ECONOMIC NATURALIST 3.2
		THE ECONOMIC NATURALIST 3.3
		THE ECONOMIC NATURALIST 3.4
			The Importance of Income Differences
		THE ECONOMIC NATURALIST 3.5
		Individual and Market Demand Curves
			Horizontal Addition
		Elasticity
		Price Elasticity of Demand
			Price Elasticity Defined
			Determinants of Price Elasticity of Demand
			Some Representative Elasticity Estimates
			Using Price Elasticity of Demand
		THE ECONOMIC NATURALIST 3.6
		THE ECONOMIC NATURALIST 3.7
		A Graphical Interpretation of Price Elasticity
			Price Elasticity Changes along a Straight-Line Demand Curve
			Two Special Cases
		Elasticity and Total Expenditure
		Income Elasticity and Cross-Price Elasticity of Demand
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
	Chapter 4 Perfectly Competitive Supply
		Thinking about Supply: The Importance of Opportunity Cost
		Individual and Market Supply Curves
		Profit-Maximizing Firms in Perfectly Competitive Markets
			Profit Maximization
			The Demand Curve Facing a Perfectly Competitive Firm
			Production in the Short Run
			Choosing Output to Maximize Profit
			Price Equals Marginal Cost: The Seller’s Supply Rule
			Graphing Marginal Cost
			The “Law” of Supply
			Applying the Theory of Supply
		THE ECONOMIC NATURALIST 4.1
		Determinants of Supply Revisited
			Technology
			Input Prices
			The Number of Suppliers
			Expectations
			Changes in Prices of Other Products
		The Price Elasticity of Supply
			Determinants of Supply Elasticity
		THE ECONOMIC NATURALIST 4.2
			Unique and Essential Inputs: The Ultimate Supply Bottleneck
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
	Chapter 5 Efficiency, Exchange, and the Invisible Hand in Action
		The Central Role of Economic Profit
			Three Types of Profit
		The Invisible Hand Theory
			Two Functions of Price
			Responses to Profits and Losses
			The Effect of Market Forces on Economic Profit
			The Importance of Free Entry and Exit
			The Invisible Hand in Action
		THE ECONOMIC NATURALIST 5.1
		Economic Rent versus Economic Profit
		The Distinction between an Equilibrium and a Social Optimum
			Smart for One, Dumb for All
		THE ECONOMIC NATURALIST 5.2
			Market Equilibrium and Efficiency
		The Cost of Preventing Price Adjustments
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
PART 3 Market Imperfections
	Chapter 6 Monopoly, Oligopoly, and Monopolistic Competition
		Perfect and Imperfect Competition
			Different Forms of Imperfect Competition
			The Essential Difference between Perfectly and Imperfectly Competitive Firms
		Five Sources of Market Power
			Exclusive Control over Important Inputs
			Patents and Copyrights
			Government Licenses or Franchises
			Economies of Scale and Natural Monopolies
			Network Economies
		Economies of Scale and the Importance of Start-Up Costs
		THE ECONOMIC NATURALIST 6.1
		Profit Maximization for the Monopolist
			Marginal Revenue for the Monopolist
			The Monopolist’s Profit-Maximizing Decision Rule
			Being a Monopolist Doesn’t Guarantee an Economic Profit
		Why the Invisible Hand Breaks Down under Monopoly
		Using Discounts to Expand the Market
			Price Discrimination Defined
		THE ECONOMIC NATURALIST 6.2
			How Price Discrimination Affects Output
			The Hurdle Method of Price Discrimination
			Is Price Discrimination a Bad Thing?
			Examples of Price Discrimination
		THE ECONOMIC NATURALIST 6.3
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
	Chapter 7 Games and Strategic Behavior
		Using Game Theory to Analyze Strategic Decisions
			The Three Elements of a Game
			Nash Equilibrium
		The Prisoner’s Dilemma
			The Original Prisoner’s Dilemma
			The Economics of Cartels
		THE ECONOMIC NATURALIST 7.1
			Tit-for-Tat and the Repeated Prisoner’s Dilemma
		THE ECONOMIC NATURALIST 7.2
		THE ECONOMIC NATURALIST 7.3
		Games in Which Timing Matters
			Credible Threats and Promises
			Monopolistic Competition When Location Matters
		THE ECONOMIC NATURALIST 7.4
		Commitment Problems
			Solving Commitment Problems with Psychological Incentives
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
	Chapter 8 An Introduction to Behavioral Economics
		Judgmental Heuristics or Rules of Thumb
			Availability
			Representativeness
			Regression to the Mean
		THE ECONOMIC NATURALIST 8.1
			Anchoring and Adjustment
		Misinterpretation of Contextual Clues
			The Psychophysics of Perception
			The Difficulty of Actually Deciding
		Impulse-Control Problems
		THE ECONOMIC NATURALIST 8.2
		Loss Aversion and Status Quo Bias
		THE ECONOMIC NATURALIST 8.3
		Concerns about Relative Position
		THE ECONOMIC NATURALIST 8.4
		THE ECONOMIC NATURALIST 8.5
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
	Chapter 9 Externalities and Property Rights
		External Costs and Benefits
			How Externalities Affect Resource Allocation
		The Coase Theorem
		Remedies for Externalities
			Laws and Regulations
		THE ECONOMIC NATURALIST 9.1
			The Optimal Amount of Negative Externalities Is Not Zero
			Compensatory Taxes and Subsidies
		THE ECONOMIC NATURALIST 9.2
		Property Rights and the Tragedy of the Commons
			The Problem of Unpriced Resources
			The Effect of Private Ownership
			When Private Ownership Is Impractical
		THE ECONOMIC NATURALIST 9.3
		THE ECONOMIC NATURALIST 9.4
		Positional Externalities
			Payoffs That Depend on Relative Performance
		THE ECONOMIC NATURALIST 9.5
			Positional Arms Races and Positional Arms Control Agreements
			Social Norms as Positional Arms Control Agreements
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
PART 4 Economics of Public Policy
	Chapter 10 Using Economics to Make Better Policy Choices
		The Economics of Health Care
			The Case for Mandatory Immunization Laws
		Explaining Rising Health Care Costs
			Designing a Solution
			The HMO Revolution
		THE ECONOMIC NATURALIST 10.1
			The Problem with Health Care Provision through Private Insurance
			The Affordable Care Act of 2010
		Using Price Incentives in Environmental Regulation
			Taxing Pollution
			Auctioning Pollution Permits
			Climate Change and Carbon Taxes
		Methods of Income Redistribution
			Welfare Payments and In-Kind Transfers
			Means-Tested Benefit Programs
			The Negative Income Tax
			Minimum Wages
			The Earned-Income Tax Credit
			Public Employment for the Poor
			A Combination of Methods
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
PART 5 International Trade
	Chapter 11 International Trade and Trade Policy
		Comparative Advantage as a Basis for Trade
		A Supply and Demand Perspective on Trade
			Winners and Losers from Trade
		THE ECONOMIC NATURALIST 11.1
		Protectionist Policies: Tariffs and Quotas
			Tariffs
			Quotas
		THE ECONOMIC NATURALIST 11.2
			The Inefficiency of Protectionism
		THE ECONOMIC NATURALIST 11.3
		Summary
		Key Terms
		Review Questions
		Problems
		Answers to Self-Tests
Glossary
Index