Introductory Microeconomics

Introductory Microeconomics explains the basic principles of microeconomics, producer and consumer choices, resource markets, and government policies. The book describes the economics of exchange, such as the role of economic growth, factors that determine the amount and types of exchange, the supply and demand model of market operations, price setting, price changes, and the impact of one market on other markets. The text also explains market failures in terms of free market choice, externalities of failures, monopolies, as well as scarcity and choices leading to poverty. When economic policies are considered by the state, there are trade-offs that are necessary in the exchange. Before the government should make decisions, it always has to consider two opportunity costs, namely, 1) budget constraints, and 2) the opportunity cost of the funds spent in the private sector. For example (no. 1), if more money is spent on transfer payments, less will be left for education, national defense, infrastructure. Another example (no. 2) is when the government collects taxes, a direct loss in real income and utility among consumers will result. The book also presents real world economics in terms of the social security tax in the United States. The book can prove valuable for students of economics or business, sociologists, general readers interested in real-world economics, and policy makers involved in national economic development.

Preface

Introduction

Part 1 The Economics of Exchange

Chapter 1 Scarcity and Choice

The Problem of Scarcity

Changing Trade-Offs

Scarcity and Choice for the Individual

Scarcity and Choice for the Business Firm

Scarcity and Choice for Society

Economic Growth

Real World Economics: Jim Daniels Has a Hangover?

Summary

Discussion Questions

Test Yourself

Chapter 2 Specialization and Exchange

A Barter Economy

The Theory of Comparative Advantage

Mutually Advantageous Exchange

The Gains from Trade

Specialization in the Real World

Comparative Advantage in the Real World

The Role of Money

Limits to Exchange

Distribution of the Gain

Other Reasons for Exchange

Real World Economics: Bullish on Wall Street

Summary

Discussion Questions

Test Yourself

Chapter 3 Demand and Supply. The Micro Side

The Role of the Market

How the Market Works

The Concept of Demand

The Demand Curve

The Concept of Supply

The Supply Curve

Changes in Supply

The Market at Work

Changing Markets

Summary of Market Actions

The Market's Verdict

Real World Economics: Apartment House Rents

Summary

Discussion Questions

Test Yourself

Chapter 4 Markets at Work

Real World Economics: Falling Calculator Prices

Real World Economics: Coffee and Tea

Real World Economics: Cut-Rate Air Fares

Real World Economics: Cigarette Taxes

Real World Economics: Rent Controls

Real World Economics: Price Floors

Appendix: More About Elasticity

Summary

Discussion Questions

Test Yourself

Part 2 Consumer and Producer Choice

Chapter 5 Consumer Choice

How Much To Buy?

Consumer Benefits: Utility

Maximizing Utility

Opportunity Cost

Consumer Equilibrium

Changing Consumer Choice

Changing Prices: Demand Curves

Substitutes, Complements, and Income Effects

Changing Preferences

Real World Economics: Gas Lines Grow Longer in Nation's Capital

Appendix: Indifference Curve Analysis

Summary

Discussion Questions

Test Yourself

Chapter 6 Production and Cost

Who Are the Producers?

Motives of the Firm

Production and Costs

Different Views of Production Costs

Costs in the Long Run

Real World Economics: Toys and Games

Appendix: Production Theory

Summary

Discussion Questions

Test Yourself

Chapter 7 Producer Choice: Monopoly

What Is a Monopoly?

Monopoly Revenues

The Monopoly Production Decision

Monopoly Pricing

Changing Costs

Technological Advances

Monopoly in the Real World

Real World Economics: A Money-Losing Monopoly

Summary

Discussion Questions

Test Yourself

Chapter 8 Producers in competitive Markets

Perfect Competition

Price Takers

Maximizing Profits

Supply Curves

Equilibrium for the Industry

Changing Costs for the Firm

Supply in the Long Run

Real World Economics: A Monopoly Versus a Competitive Market

Summary

Discussion Questions

Test Yourself

Chapter 9 Imperfect Competition

Product Differentiation

Price Discrimination

Benefits of Price Discrimination

Cartels

Oligopolies

Government Regulation

Real World Economics: Automotive Oligopoly

Summary

Discussion Questions

Test Yourself

Part 3 Resource Markets

Chapter 10 Labor Markets

The Supply of Labor

The Demand for Labor

Changes in Labor Demand

The Labor Demand Curve

Wage Rate Differentials

Labor Unions

Government Labor Policies

Real World Economics: Cost-of-Living Clauses

Summary

Discussion Questions

Test Yourself

Chapter 11 Capital and Natural Resource Markets

The Demand for Inputs

Investment: The Demand for Capital

Input Supplies: Natural Resources

The Impact of Price Expectations

The Problem of Property Rights

Unstable Prices

Real World Economics: Training and Education Programs

Summary

Discussion Questions

Test Yourself

Chapter 12 Energy Markets

Energy and Economic Development

Price, Quantity, and Substitution Effects

Energy Supplies

Energy Price Controls

OPEC and the Supply of Oil

Managing the Energy Problem

The Paradox of Net Energy

Energy and the Environment

Real World Economics: The Price of Energy

Summary

Discussion Questions

Test Yourself

Part 4 Market Failures

Chapter 13 Free Market Choice

The Free Market Economy

The Invisible Hand

Bureaucratic Choice

Self-Interest and the Invisible Hand

The Economic Properties of Demand

Total Benefits and Consumers' Surplus

The Economic Properties of Supply

Market Equilibrium: Net Benefits

Taxes and Net Benefits

Government Subsidies

Democratic Choice

Voting: What Does the Public Want?

The Role of Government: Market Failures

Real World Economics: Ticket Scalping

Summary

Discussion Questions

Test Yourself

Chapter 14 Market Failures: Externalities

Private Versus Social Costs and Benefits

External Benefits

External Costs

Optimal Pollution

Externality Policy Options

Limits to Government Actions

Public Goods

Real World Economics: Free Market or Democratic Choice

Summary

Discussion Questions

Test Yourself

Chapter 15 Market Failures: Monopolies

Monopoly Problems

Government Monopoly Policy

Antitrust Regulation

Trade-Off: Patent Monopolies

Cost and Benefits of Monopoly Regulation

Natural Monopolies

Pricing of Natural Monopolies

Real World Economics: U.S. Postal Service

Summary

Discussion Questions

Test Yourself

Chapter 16 Scarcity and Choice: The Poverty Problem

Fighting Poverty: The Record

Who Are the Poor?

Causes of Poverty

Transfer Payments

What Kind of Transfers?

Minimum Wages

Job Training and Education

Public Employment Programs

Costs of Government Action

Real World Economics: The Social Security Tax

Summary

Discussion Questions

Test Yourself

Suggestions for Further Reading

Glossary

Answers to "Test Yourself"

Index