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vBrief ContentsPreface xxPART I Introduction1 The Nature of Economics 12 Scarcity and the World of Trade-Offs 263 Demand and Supply 484 Extensions of Demand and Supply Analysis 745 Public Spending and Public Choice 986 Funding the Public Sector 121PART 2 Introduction to Macroeconomics and Economic Growth7 The Macroeconomy: Unemployment, Inflation, and Deflation 1398 Measuring the Economy’s Performance 1619 Global Economic Growth and Development 187PART 3 Real GDP Determination and Fiscal Policy10 Real GDP and the Price Level in the Long Run 20911 Classical and Keynesian Macro Analyses 22912 Consumption, Real GDP, and the Multiplier 25013 Fiscal Policy 27714 Deficit Spending and the Public Debt 298PART 4 Money, Stabilization, and Growth15 Money, Banking, and Central Banking 31716 Domestic and International Dimensions of Monetary Policy 34517 Stabilization in an Integrated World Economy 37318 Policies and Prospects for Global Economic Growth 397PART 5 Dimensions of Microeconomics19 Demand and Supply Elasticity 41520 Consumer Choice 43521 Rents, Profits, and the Financial Environment of Business 462PART 6 Market Structure, Resource Allocation, and Regulation22 The Firm: Cost and Output Determination 48323 Perfect Competition 50724 Monopoly 53225 Monopolistic Competition 55526 Oligopoly and Strategic Behavior 57327 Regulation and Antitrust Policy in a Globalized Economy 594PART 7 Labor Resources and the Environment28 The Labor Market: Demand, Supply, and Outsourcing 61829 Unions and Labor Market Monopoly Power 64230 Income, Poverty, and Health Care 66331 Environmental Economics 688PART 8 Global Economics32 Comparative Advantage and the Open Economy 70533 Exchange Rates and the Balance of Payments 726Preface xxPART 1 Introduction1 The Nature of Economics1The Power of Economic Analysis 2Defining Economics 2The Three Basic Economic Questions and Two Opposing Answers 3The Economic Approach: Systematic Decisions 5Economics as a Science 7Why Not… Tr y t o I n c r e a s e B l o o d D o n a t i o n s b y O f f e r i n g S m a l l P a y m e n t sto Donors? 9Positive Versus Normative Economics 10You Are There A Movie Producer Responds to Incentives 11Issues & Applications In Many U.S. Industries, Command and Control Rules 12Summary: What You Should Know/Key Terms and Key Figures/Where to Go to Practice 13Problems 14Economics on the Net 16Answers to Quick Quizzes 16Appendix A Reading and Working with Graphs 17Direct and Inverse Relationships 17Constructing a Graph 17Graphing Numbers in a Table 19The Slope of a Line (A Linear Curve) 21Summary: What You Should Know/Key Terms and Key Figures/Where to Go to Practice 24Problems 24viContents2 Scarcity and the World of Trade-Offs 26Scarcity 27Wants and Needs 28Scarcity, Choice, and Opportunity Cost 29The World of Trade-Offs 30The Choices Society Faces 32Why Not… Provide “Free” Health Care to Everyone in the United States? 33Economic Growth and the Production Possibilities Curve 35The Trade-Off Between the Present and the Future 36Specialization and Greater Productivity 38Comparative Advantage and Trade Among Nations 40You Are There Stopping Students’ Thursday Night Parties with Friday Classes 41Issues & Applications Is Daylight Saving Time Efficient? 42Summary: What You Should Know/Key Terms and Key Figures/Where to Go to Practice 43Problems 44Economics on the Net 46Answers to Quick Quizzes 47ExampleThe Perceived Value of Gifts 7Getting Directions 8International ExampleIndian Men Living in the United StatesBecome Ineligible Bachelors 5Policy ExampleThe Government Gives Everyone anIncentive to Own a Golf Cart 6ExampleAirlines Confront the Opportunity Cost of Legroom on Planes 31International ExampleFrance Is the Sleeping Giant 30Time as a Determinant of ComparativeAdvantage 40CONTENTS vii3 Demand and Supply 48Demand 49The Demand Schedule 51Shifts in Demand 54The Law of Supply 58The Supply Schedule 59Why Not… Help College Students by Requiring Publishers to Reduce Prices for All of the Textbooks They Currently Supply? 61Shifts in Supply 62Putting Demand and Supply Together 64You Are There Adjusting to a Lower Market Clearing Price of Solar Cells 68Issues & Applications How the Great Recession Identified Inferior Goods 68Summary: What You Should Know/Key Terms and Key Figures/Where to Go to Practice 69Problems 71Economics on the Net 73Answers to Quick Quizzes 734 Extensions of Demand and Supply Analysis 74The Price System and Markets 75Changes in Demand and Supply 76The Rationing Function of Prices 79The Policy of Government-Imposed Price Controls 80The Policy of Controlling Rents 82Why Not… Require Owners of Residential Buildings to Provide Low-Cost Housing So That All U.S. Residents Can “Afford” Roofs over Their Heads? 83Price Floors in Agriculture 84Price Floors in the Labor Market 85Quantity Restrictions 87You Are There “Cash for Clunkers” Subsidies and the Market for “Liquid Glass” 88Issues & Applications Contemplating Two Ways to Tackle Water Shortages 88Summary: What You Should Know/Key Terms and Key Figures/Where to Go to Practice 90Problems 91Economics on the Net 93Answers to Quick Quizzes 93Appendix B Consumer Surplus, Producer Surplus, and Gains from Trade within a Price System 94Consumer Surplus 94Producer Surplus 95Gains from Trade Within a Price System 96Price Controls and Gains from Trade 97ExampleA Mistaken Price Change Confirms the Lawof Demand 50Why Even Low-Income Households AreRushing to Buy iPhones 51An Income Drop Reveals That DivorceServices Are a Normal Good 55Computer Hardware Consumers Substitutein Favor of “Clouds” 56How “Fracking” for Natural Gas HasAffected Its Supply 63How the Housing Bust Created a SawdustShortage 66International ExampleWhy the Quantity of Brides Supplied IsRising in China 59Policy ExampleShould Shortages in the Ticket Market BeSolved by Scalpers? 67International Policy ExampleThe Rice Must Be White! 81International ExampleAssisting Scattered Emigrants Who Want toHelp Kin at Home 76What Accounts for Rising Pork Prices inChina? 78Policy ExampleBad Timing for Increasing the MinimumWage 87viii CONTENTS5 Public Spending and Public Choice 98What a Price System Can and Cannot Do 99Correcting for Externalities 99The Other Economic Functions of Government 103The Political Functions of Government 105Why Not… Classify Broadband Internet Access as a Government-Sponsored Good and Provide It to All U.S. Residents? 106Public Spending and Transfer Programs


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PSU ECON 102 - Economics Today

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