Chapter 4 - The Market Forces of Supply and DemandChapter 5 - Elasticity and Its ApplicationChapter 6 - Supply, Demand, and Government PoliciesChapter 8 - Application: the Costs of TaxationChapter 9 - Application: International TradeChapter 10 - ExternalitiesChapter 11 - Public Goods and Common ResourcesChapter 12 - The Design of the Tax SystemChapter 13 - The Costs of ProductionChapter 14 - Firms in Competitive MarketsChapter 16 - OligopolyChapter 17 - Monopolistic CompetitionEconomics 201, Cal Poly Pomona, Bruce Brown, - page 1 Explanation of some of the terminology in Mankiw’s Principles of Microeconomics, 2nd ed. compiled by Bruce Brown Some of the words and expressions used in the text may be difficult to understand, even after looking them up in a dictionary. Below are alternate definitions for the expressions, as they are used in the textbook. Some explanations of general context are also provided. Preface to the Student (just before the table of contents) embark on - begin spark your curiosity - make you curious living standards so meager in - people poor in astute - better informed and smarter “sitting in the Oval Office” - you might be the U.S. president (the Oval Office is in the White House) Chapter 1 - Ten Principles of Economics: - caviar - an expensive food eaten by some rich people (sturgeon fish eggs) - the multitude of buyers and sellers - the many buyers and sellers - facets - aspects - adage - a “saying,” like a proverb - the “economic pie” analogy: Deciding how much of society’s wealth a particular individual will receive is like deciding how big a slice of a pie they will get. Note that the overall size of the economic “pie” is influenced by how it is “sliced up.” (some argue that if the proportion of the pie individuals receive is unrelated to how hard they work, then no one will work hard and the size of the pie would shrink; such people believe a tradeoff exists between equality and efficiency). Economists generally assume that a “bigger pie” is better. - room and board - basic cost of living; includes rent and food costs - to “fly standby” - to arrive at the airport without a ticket and wait for an airline to sell tickets for seats on a flight with extra seats still vacant just before that plane leaves. Although the price is lower, the passenger may have to wait a long, variable, and unknown amount of time. - (note) Many economists really do assume people are being rational when they decide how fast to drive. An alternate explanation (not usually made by economists) would be that reckless drivers are irrational. Some aspects of human behavior are difficult to explain as the result of rational behavior, but economists typically maintain this assumption of rationality as long as it is not clearly incompatible with observed facts. - jeopardy - danger - idle speculation - illogical thinking not based on facts - “invisible hand” that leads them to desirable outcomes: Adam Smith’s invisible hand causes selfish people, when interacting in markets with well defined property rights objectively enforced by a government, to benefit not only themselves but others as well. That is, in a well functioning market economy, selfish people do things that benefit others (even though they are not trying to benefit others). - unduly influence prices - to move prices away from those that would exist in a free competitive market. - staggering - surprising (makes you so surprised that you can not walk straight). - to credit labor unions or minimum wage laws for the rise in living standards: To say that labor unions and/or high minimum wages set by government were the reason for the high and increasing wages of workers. - hero of American workers - the factor that caused increasing wages - real villain - reason for slower growth in wages - flagging productivity growth - falling rate of productivity growth - profound - important - key question - most important question - boost living standards - increase wealth and income of people - adverse impact - harmful impact - much as a student might - in the same way that a student might - lower investment means... - lower investment will cause (or is associated with) ... - “public enemy number one” - the criminal that police most want to capture; in this context, the worst problem facing society - culprit - reason - sticky ... prices - prices that don't quickly move to their theoretical equilibrium values - taste of what economics is about - general introduction to what economics is about Chapter 2 - Thinking Like an Economist: - arcane - overly technical and difficult to understand. It’s ironic that the author used this term at this point in the text. It reminds me of a “bumper sticker” (on the back of a car, where some people like to make political and/or humorous statements) which stated “eschew obfuscation.” If you get the joke, you have an excellent understanding of the English language. - looking at society through the eyes of a scientist - observing society (and the social and economic interactions within it) as a disinterested, scientific, outsider rather than as a member/participant - oil prices skyrocket - oil prices increase by a large amount in a short period of time - focus our thinking - make the problem simpler by directing attention to only very important things - newsstand prices - prices charged at kiosks (newsstands) in contrast to subscription prices which may change more frequently - stylized - created to place particular emphasis on certain things (and so unrealistic) - dispenses with - leaves out, omits. - production possibilities frontier - another term for the production possibilities curve, PPCEconomics 201, Cal Poly Pomona, Bruce Brown, - page 2 - (NOTE) - I personally dislike the choice of computers and autos for the PPF. For these two goods, technology is of particular importance, more important than even the level of resources of an economy such as land and labor. Also, these industries are often used when explaining economies of scale for a single firm, whereby per unit costs fall as output of the firm increases. When we look at the PPF we are holding technology constant, and focusing on the idea that resources in an economy may differ in their ability to produce different goods. IF we allowed technology to change as we moved along the PPF (change “endogenously,” within our