This document provides a list of economics textbooks published by Pearson. It includes the authors and titles of textbooks covering various topics in microeconomics, macroeconomics, international economics, public economics, industrial organization, and other areas of economics. The list contains over 100 economics textbooks and is organized alphabetically by author.
- Employed primary research, secondary research, and marketing skills to come up with the most effective way to generate awareness about the Impossible Foods burger to college students
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
"Förpackningsguide för dagligvaror. Från producent till konsument" (uppdaterad 2008-09-01), är avsedd att ge riktlinjer som underlättar vid utformning och design av nya förpackningar eller justering av existerande. Detta utifrån en bred helhetssyn för samtliga förpackningstyper i flödet av varor och information från producent till konsument.
Förpackningsguiden består av två delar där Del 1 förklarar de grundläggande principerna vid framtagning eller ändring av förpackningar. I Del 1 finns också en ordlista som förklarar några av de ord och förkortningar som används i samband med förpackningar i dagligvarubranschen. Del 2 innehåller checklistor som är ett arbetsverktyg för att uppnå bästa möjliga hantering i varu- och informationsflödet. För att få helheten är det viktigt att stämma av med samtliga checklistor oavsett vilken förpackningstyp som är aktuell.
roger blair mark rushTHE ECONOMICS OF MANAGERIAL DECI.docxhealdkathaleen
roger blair
mark rush
THE ECONOMICS OF
MANAGERIAL DECISIONS
M
R
=
M
C
THE ECONOMICS OF
MANAGERIAL DECISIONS
A01_BLAI8235_01_SE_FM_ppi-xxxiv.indd 1 15/09/17 11:33 AM
The Pearson Series in Economics
Abel/Bernanke/Croushore
Macroeconomics*
Acemoglu/Laibson/List
Economics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the Environment
Bierman/Fernandez
Game Theory with Economic Applications
Blair/Rush
The Economics of Managerial Decisions*
Blanchard
Macroeconomics*
Boyer
Principles of Transportation Economics
Branson
Macroeconomic Theory and Policy
Bruce
Public Finance and the American Economy
Carlton/Perloff
Modern Industrial Organization
Case/Fair/Oster
Principles of Economics*
Chapman
Environmental Economics: Theory, Application, and Policy
Daniels/VanHoose
International Monetary & Financial Economics
Downs
An Economic Theory of Democracy
Farnham
Economics for Managers
Froyen
Macroeconomics: Theories and Policies
Fusfeld
The Age of the Economist
Gerber
International Economics*
Gordon
Macroeconomics*
Greene
Econometric Analysis
Gregory/Stuart
Russian and Soviet Economic Performance and Structure
Hartwick/Olewiler
The Economics of Natural Resource Use
Heilbroner/Milberg
The Making of the Economic Society
Heyne/Boettke/Prychitko
The Economic Way of Thinking
Hubbard/O’Brien
Economics*
InEcon
Money, Banking, and the Financial System*
Hubbard/O’Brien/Rafferty
Macroeconomics*
Hughes/Cain
American Economic History
Husted/Melvin
International Economics
Jehle/Reny
Advanced Microeconomic Theory
Keat/Young/Erfle
Managerial Economics
Klein
Mathematical Methods for Economics
Krugman/Obstfeld/Melitz
International Economics: Theory & Policy*
Laidler
The Demand for Money
Lynn
Economic Development: Theory and Practice for a Divided World
Miller
Economics Today*
Miller/Benjamin
The Economics of Macro Issues
Miller/Benjamin/North
The Economics of Public Issues
Mishkin
The Economics of Money, Banking, and Financial Markets*
The Economics of Money, Banking, and Financial Markets, Business
School Edition*
Macroeconomics: Policy and Practice*
Murray
Econometrics: A Modern Introduction
O’Sullivan/Sheffrin/Perez
Economics: Principles, Applications and Tools*
Parkin
Economics*
Perloff
Microeconomics*
Microeconomics: Theory and Applications with Calculus*
Perloff/Brander
Managerial Economics and Strategy*
Pindyck/Rubinfeld
Microeconomics*
Riddell/Shackelford/Stamos/Schneider
Economics: A Tool for Critically Understanding Society
Roberts
The Choice: A Fable of Free Trade and Protection
Scherer
Industry Structure, Strategy, and Public Policy
Schiller
The Economics of Poverty and Discrimination
Sherman
Market Regulation
Stock/Watson
Introduction to Econometrics
Studenmund
Using Econometrics: A Practical Guide
Todaro/Smith
Economic Development
Walters/Walters/Appel/Callahan/Centanni/Maex/O’Neill
Econversations: Today’s Students Discuss Today’s Issues
Williamson
Macroeconomics
*denotes MyLab™ Economics titles. Visit www.pearson.c ...
International EconomicsThe Pearson Series in Econo.docxvrickens
International Economics
The Pearson Series in Economics
Abel/Bernanke/Croushore
Macroeconomics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the Environment
Bierman/Fernandez
Game Theory with
Economic Applications
Blanchard
Macroeconomics*
Blau/Ferber/Winkler
The Economics of Women, Men and Work
Boardman/Greenberg/Vining/
Weimer
Cost/Benefit Analysis
Boyer
Principles of Transportation
Economics
Branson
Macroeconomic Theory and
Policy
Brock/Adams
The Structure of American Industry
Bruce
Public Finance and the American Economy
Carlton/Perloff
Modern Industrial Organization
Case/Fair/Oster
Principles of Economics*
Caves/Frankel/Jones
World Trade and Payments:
An Introduction
Chapman
Environmental Economics:
Theory, Application, and Policy
Cooter/Ulen
Law & Economics
Downs
An Economic Theory of
Democracy
Ehrenberg/Smith
Modern Labor Economics
Farnham
Economics for Managers
Folland/Goodman/Stano
The Economics of Health and Health Care
Fort
Sports Economics
Froyen
Macroeconomics
Fusfeld
The Age of the Economist
Gerber
International Economics*
González-Rivera
Forecasting for Economics and Business
Gordon
Macroeconomics*
Greene
Econometric Analysis
Gregory
Essentials of Economics
Gregory/Stuart
Russian and Soviet Economic
Performance and Structure
Hartwick/Olewiler
The Economics of Natural
Resource Use
Heilbroner/Milberg
The Making of the Economic Society
Heyne/Boettke/Prychitko
The Economic Way of Thinking
Hoffman/Averett
Women and the Economy:
Family, Work, and Pay
Holt
Markets, Games and Strategic
Behavior
Hubbard/O’Brien
Economics*
Money, Banking, and the Financial
System*
Hubbard/O’Brien/Rafferty
Macroeconomics*
Hughes/Cain
American Economic History
Husted/Melvin
International Economics
Jehle/Reny
Advanced Microeconomic
Theory
Johnson-Lans
A Health Economics Primer
Keat/Young
Managerial Economics
Klein
Mathematical Methods
for Economics
Krugman/Obstfeld/Melitz
International Economics:
Theory & Policy*
Laidler
The Demand for Money
Leeds/von Allmen
The Economics of Sports
Leeds/von Allmen/Schiming
Economics*
Lipsey/Ragan/Storer
Economics*
Lynn
Economic Development: Theory and
Practice for a Divided World
Miller
Economics Today*
Understanding Modern Economics
Miller/Benjamin
The Economics of Macro Issues
Miller/Benjamin/North
The Economics of Public Issues
Mills/Hamilton
Urban Economics
Mishkin
The Economics of Money, Banking,
and Financial Markets*
The Economics of Money, Banking,
and Financial Markets, Business
School Edition*
Macroeconomics: Policy and Practice*
Murray
Econometrics: A Modern Introduction
Nafziger
The Economics of Developing Countries
O’Sullivan/Sheffrin/Perez
Economics: Principles, Applications and Tools*
Parkin
Economics*
Perloff
Microeconomics*
Microeconomics: Theory and Applications
with Calculus*
Perman/Common/
McGilvray/Ma
Natural Resources and Environmental
Economics
Phelps
Health Economics
Pindyck/Rubinfeld
Microeconomic ...
- Employed primary research, secondary research, and marketing skills to come up with the most effective way to generate awareness about the Impossible Foods burger to college students
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
"Förpackningsguide för dagligvaror. Från producent till konsument" (uppdaterad 2008-09-01), är avsedd att ge riktlinjer som underlättar vid utformning och design av nya förpackningar eller justering av existerande. Detta utifrån en bred helhetssyn för samtliga förpackningstyper i flödet av varor och information från producent till konsument.
Förpackningsguiden består av två delar där Del 1 förklarar de grundläggande principerna vid framtagning eller ändring av förpackningar. I Del 1 finns också en ordlista som förklarar några av de ord och förkortningar som används i samband med förpackningar i dagligvarubranschen. Del 2 innehåller checklistor som är ett arbetsverktyg för att uppnå bästa möjliga hantering i varu- och informationsflödet. För att få helheten är det viktigt att stämma av med samtliga checklistor oavsett vilken förpackningstyp som är aktuell.
roger blair mark rushTHE ECONOMICS OF MANAGERIAL DECI.docxhealdkathaleen
roger blair
mark rush
THE ECONOMICS OF
MANAGERIAL DECISIONS
M
R
=
M
C
THE ECONOMICS OF
MANAGERIAL DECISIONS
A01_BLAI8235_01_SE_FM_ppi-xxxiv.indd 1 15/09/17 11:33 AM
The Pearson Series in Economics
Abel/Bernanke/Croushore
Macroeconomics*
Acemoglu/Laibson/List
Economics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the Environment
Bierman/Fernandez
Game Theory with Economic Applications
Blair/Rush
The Economics of Managerial Decisions*
Blanchard
Macroeconomics*
Boyer
Principles of Transportation Economics
Branson
Macroeconomic Theory and Policy
Bruce
Public Finance and the American Economy
Carlton/Perloff
Modern Industrial Organization
Case/Fair/Oster
Principles of Economics*
Chapman
Environmental Economics: Theory, Application, and Policy
Daniels/VanHoose
International Monetary & Financial Economics
Downs
An Economic Theory of Democracy
Farnham
Economics for Managers
Froyen
Macroeconomics: Theories and Policies
Fusfeld
The Age of the Economist
Gerber
International Economics*
Gordon
Macroeconomics*
Greene
Econometric Analysis
Gregory/Stuart
Russian and Soviet Economic Performance and Structure
Hartwick/Olewiler
The Economics of Natural Resource Use
Heilbroner/Milberg
The Making of the Economic Society
Heyne/Boettke/Prychitko
The Economic Way of Thinking
Hubbard/O’Brien
Economics*
InEcon
Money, Banking, and the Financial System*
Hubbard/O’Brien/Rafferty
Macroeconomics*
Hughes/Cain
American Economic History
Husted/Melvin
International Economics
Jehle/Reny
Advanced Microeconomic Theory
Keat/Young/Erfle
Managerial Economics
Klein
Mathematical Methods for Economics
Krugman/Obstfeld/Melitz
International Economics: Theory & Policy*
Laidler
The Demand for Money
Lynn
Economic Development: Theory and Practice for a Divided World
Miller
Economics Today*
Miller/Benjamin
The Economics of Macro Issues
Miller/Benjamin/North
The Economics of Public Issues
Mishkin
The Economics of Money, Banking, and Financial Markets*
The Economics of Money, Banking, and Financial Markets, Business
School Edition*
Macroeconomics: Policy and Practice*
Murray
Econometrics: A Modern Introduction
O’Sullivan/Sheffrin/Perez
Economics: Principles, Applications and Tools*
Parkin
Economics*
Perloff
Microeconomics*
Microeconomics: Theory and Applications with Calculus*
Perloff/Brander
Managerial Economics and Strategy*
Pindyck/Rubinfeld
Microeconomics*
Riddell/Shackelford/Stamos/Schneider
Economics: A Tool for Critically Understanding Society
Roberts
The Choice: A Fable of Free Trade and Protection
Scherer
Industry Structure, Strategy, and Public Policy
Schiller
The Economics of Poverty and Discrimination
Sherman
Market Regulation
Stock/Watson
Introduction to Econometrics
Studenmund
Using Econometrics: A Practical Guide
Todaro/Smith
Economic Development
Walters/Walters/Appel/Callahan/Centanni/Maex/O’Neill
Econversations: Today’s Students Discuss Today’s Issues
Williamson
Macroeconomics
*denotes MyLab™ Economics titles. Visit www.pearson.c ...
International EconomicsThe Pearson Series in Econo.docxvrickens
International Economics
The Pearson Series in Economics
Abel/Bernanke/Croushore
Macroeconomics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the Environment
Bierman/Fernandez
Game Theory with
Economic Applications
Blanchard
Macroeconomics*
Blau/Ferber/Winkler
The Economics of Women, Men and Work
Boardman/Greenberg/Vining/
Weimer
Cost/Benefit Analysis
Boyer
Principles of Transportation
Economics
Branson
Macroeconomic Theory and
Policy
Brock/Adams
The Structure of American Industry
Bruce
Public Finance and the American Economy
Carlton/Perloff
Modern Industrial Organization
Case/Fair/Oster
Principles of Economics*
Caves/Frankel/Jones
World Trade and Payments:
An Introduction
Chapman
Environmental Economics:
Theory, Application, and Policy
Cooter/Ulen
Law & Economics
Downs
An Economic Theory of
Democracy
Ehrenberg/Smith
Modern Labor Economics
Farnham
Economics for Managers
Folland/Goodman/Stano
The Economics of Health and Health Care
Fort
Sports Economics
Froyen
Macroeconomics
Fusfeld
The Age of the Economist
Gerber
International Economics*
González-Rivera
Forecasting for Economics and Business
Gordon
Macroeconomics*
Greene
Econometric Analysis
Gregory
Essentials of Economics
Gregory/Stuart
Russian and Soviet Economic
Performance and Structure
Hartwick/Olewiler
The Economics of Natural
Resource Use
Heilbroner/Milberg
The Making of the Economic Society
Heyne/Boettke/Prychitko
The Economic Way of Thinking
Hoffman/Averett
Women and the Economy:
Family, Work, and Pay
Holt
Markets, Games and Strategic
Behavior
Hubbard/O’Brien
Economics*
Money, Banking, and the Financial
System*
Hubbard/O’Brien/Rafferty
Macroeconomics*
Hughes/Cain
American Economic History
Husted/Melvin
International Economics
Jehle/Reny
Advanced Microeconomic
Theory
Johnson-Lans
A Health Economics Primer
Keat/Young
Managerial Economics
Klein
Mathematical Methods
for Economics
Krugman/Obstfeld/Melitz
International Economics:
Theory & Policy*
Laidler
The Demand for Money
Leeds/von Allmen
The Economics of Sports
Leeds/von Allmen/Schiming
Economics*
Lipsey/Ragan/Storer
Economics*
Lynn
Economic Development: Theory and
Practice for a Divided World
Miller
Economics Today*
Understanding Modern Economics
Miller/Benjamin
The Economics of Macro Issues
Miller/Benjamin/North
The Economics of Public Issues
Mills/Hamilton
Urban Economics
Mishkin
The Economics of Money, Banking,
and Financial Markets*
The Economics of Money, Banking,
and Financial Markets, Business
School Edition*
Macroeconomics: Policy and Practice*
Murray
Econometrics: A Modern Introduction
Nafziger
The Economics of Developing Countries
O’Sullivan/Sheffrin/Perez
Economics: Principles, Applications and Tools*
Parkin
Economics*
Perloff
Microeconomics*
Microeconomics: Theory and Applications
with Calculus*
Perman/Common/
McGilvray/Ma
Natural Resources and Environmental
Economics
Phelps
Health Economics
Pindyck/Rubinfeld
Microeconomic ...
Part 1 Think an example speak up anythingPart 2 exampleInte.docxkarlhennesey
Part 1 Think an example speak up anything
Part 2 example
Intern at the accounting company, my manager was absence during her work time, but the partner didn’t know and manager didn’t report that she was going out. I didn’t speak up anything
The Logic and Practice of Financial Management
Ninth Edition
Foundations of Finance
The Pearson Series in Finance
Berk/DeMarzo
Corporate Finance*
Corporate Finance: The Core*
Berk/DeMarzo/Harford
Fundamentals of Corporate Finance*
Brooks
Financial Management: Core Concepts*
Copeland/Weston/Shastri
Financial Theory and Corporate Policy
Dorfman/Cather
Introduction to Risk Management and
Insurance
Eakins/McNally
Corporate Finance Online*
Eiteman/Stonehill/Moffett
Multinational Business Finance*
Fabozzi
Bond Markets: Analysis and Strategies
Foerster
Financial Management: Concepts and
Applications*
Frasca
Personal Finance
Gitman/Zutter
Principles of Managerial Finance*
Principles of Managerial Finance—Brief
Edition*
Haugen
The Inefficient Stock Market: What Pays Off
and Why
Modern Investment Theory
Holden
Excel Modeling in Corporate Finance
Excel Modeling in Investments
Hughes/MacDonald
International Banking: Text and Cases
Hull
Fundamentals of Futures and Options Markets
Options, Futures, and Other Derivatives
Keown
Personal Finance: Turning Money into
Wealth*
Keown/Martin/Petty
Foundations of Finance: The Logic and
Practice of Financial Management*
Madura
Personal Finance*
Marthinsen
Risk Takers: Uses and Abuses of Financial
Derivatives
McDonald
Derivatives Markets
Fundamentals of Derivatives Markets
Mishkin/Eakins
Financial Markets and Institutions
Moffett/Stonehill/Eiteman
Fundamentals of Multinational Finance
Nofsinger
Psychology of Investing
Pennacchi
Theory of Asset Pricing
Rejda/McNamara
Principles of Risk Management and Insurance
Smart/Gitman/Joehnk
Fundamentals of Investing*
Solnik/McLeavey
Global Investments
Titman/Keown/Martin
Financial Management: Principles and
Applications*
Titman/Martin
Valuation: The Art and Science of Corporate
Investment Decisions
Weston/Mitchel/Mulherin
Takeovers, Restructuring, and Corporate
Governance
*Denotes MyFinanceLab titles. Log onto www.myfinancelab.com to learn more.
http://www.myfinancelab.com
The Logic and Practice of Financial Management
Ninth Edition
Boston Columbus Indianapolis New York San Francisco
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto
Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Foundations of Finance
Arthur J. Keown
Virginia Polytechnic Institute and State University
R. B. Pamplin Professor of Finance
John D. Martin
Baylor University
Professor of Finance
Carr P. Collins Chair in Finance
J. William Petty
Baylor University
Professor of Finance
W. W. Caruth Chair in Entrepreneurship
Vice President, Business Publishing: Donna Battista
Editor-in-Chief: Adrienne D’Ambrosio
Acquisitions Editor: Kate Fernandes
Editorial Assis ...
Part 1 Think an example speak up anythingPart 2 exampleInte.docxsherni1
Part 1 Think an example speak up anything
Part 2 example
Intern at the accounting company, my manager was absence during her work time, but the partner didn’t know and manager didn’t report that she was going out. I didn’t speak up anything
The Logic and Practice of Financial Management
Ninth Edition
Foundations of Finance
The Pearson Series in Finance
Berk/DeMarzo
Corporate Finance*
Corporate Finance: The Core*
Berk/DeMarzo/Harford
Fundamentals of Corporate Finance*
Brooks
Financial Management: Core Concepts*
Copeland/Weston/Shastri
Financial Theory and Corporate Policy
Dorfman/Cather
Introduction to Risk Management and
Insurance
Eakins/McNally
Corporate Finance Online*
Eiteman/Stonehill/Moffett
Multinational Business Finance*
Fabozzi
Bond Markets: Analysis and Strategies
Foerster
Financial Management: Concepts and
Applications*
Frasca
Personal Finance
Gitman/Zutter
Principles of Managerial Finance*
Principles of Managerial Finance—Brief
Edition*
Haugen
The Inefficient Stock Market: What Pays Off
and Why
Modern Investment Theory
Holden
Excel Modeling in Corporate Finance
Excel Modeling in Investments
Hughes/MacDonald
International Banking: Text and Cases
Hull
Fundamentals of Futures and Options Markets
Options, Futures, and Other Derivatives
Keown
Personal Finance: Turning Money into
Wealth*
Keown/Martin/Petty
Foundations of Finance: The Logic and
Practice of Financial Management*
Madura
Personal Finance*
Marthinsen
Risk Takers: Uses and Abuses of Financial
Derivatives
McDonald
Derivatives Markets
Fundamentals of Derivatives Markets
Mishkin/Eakins
Financial Markets and Institutions
Moffett/Stonehill/Eiteman
Fundamentals of Multinational Finance
Nofsinger
Psychology of Investing
Pennacchi
Theory of Asset Pricing
Rejda/McNamara
Principles of Risk Management and Insurance
Smart/Gitman/Joehnk
Fundamentals of Investing*
Solnik/McLeavey
Global Investments
Titman/Keown/Martin
Financial Management: Principles and
Applications*
Titman/Martin
Valuation: The Art and Science of Corporate
Investment Decisions
Weston/Mitchel/Mulherin
Takeovers, Restructuring, and Corporate
Governance
*Denotes MyFinanceLab titles. Log onto www.myfinancelab.com to learn more.
http://www.myfinancelab.com
The Logic and Practice of Financial Management
Ninth Edition
Boston Columbus Indianapolis New York San Francisco
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto
Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Foundations of Finance
Arthur J. Keown
Virginia Polytechnic Institute and State University
R. B. Pamplin Professor of Finance
John D. Martin
Baylor University
Professor of Finance
Carr P. Collins Chair in Finance
J. William Petty
Baylor University
Professor of Finance
W. W. Caruth Chair in Entrepreneurship
Vice President, Business Publishing: Donna Battista
Editor-in-Chief: Adrienne D’Ambrosio
Acquisitions Editor: Kate Fernandes
Editorial Assis.
Part 1 Think an example speak up anythingPart 2 exampleInte.docxsmile790243
Part 1 Think an example speak up anything
Part 2 example
Intern at the accounting company, my manager was absence during her work time, but the partner didn’t know and manager didn’t report that she was going out. I didn’t speak up anything
The Logic and Practice of Financial Management
Ninth Edition
Foundations of Finance
The Pearson Series in Finance
Berk/DeMarzo
Corporate Finance*
Corporate Finance: The Core*
Berk/DeMarzo/Harford
Fundamentals of Corporate Finance*
Brooks
Financial Management: Core Concepts*
Copeland/Weston/Shastri
Financial Theory and Corporate Policy
Dorfman/Cather
Introduction to Risk Management and
Insurance
Eakins/McNally
Corporate Finance Online*
Eiteman/Stonehill/Moffett
Multinational Business Finance*
Fabozzi
Bond Markets: Analysis and Strategies
Foerster
Financial Management: Concepts and
Applications*
Frasca
Personal Finance
Gitman/Zutter
Principles of Managerial Finance*
Principles of Managerial Finance—Brief
Edition*
Haugen
The Inefficient Stock Market: What Pays Off
and Why
Modern Investment Theory
Holden
Excel Modeling in Corporate Finance
Excel Modeling in Investments
Hughes/MacDonald
International Banking: Text and Cases
Hull
Fundamentals of Futures and Options Markets
Options, Futures, and Other Derivatives
Keown
Personal Finance: Turning Money into
Wealth*
Keown/Martin/Petty
Foundations of Finance: The Logic and
Practice of Financial Management*
Madura
Personal Finance*
Marthinsen
Risk Takers: Uses and Abuses of Financial
Derivatives
McDonald
Derivatives Markets
Fundamentals of Derivatives Markets
Mishkin/Eakins
Financial Markets and Institutions
Moffett/Stonehill/Eiteman
Fundamentals of Multinational Finance
Nofsinger
Psychology of Investing
Pennacchi
Theory of Asset Pricing
Rejda/McNamara
Principles of Risk Management and Insurance
Smart/Gitman/Joehnk
Fundamentals of Investing*
Solnik/McLeavey
Global Investments
Titman/Keown/Martin
Financial Management: Principles and
Applications*
Titman/Martin
Valuation: The Art and Science of Corporate
Investment Decisions
Weston/Mitchel/Mulherin
Takeovers, Restructuring, and Corporate
Governance
*Denotes MyFinanceLab titles. Log onto www.myfinancelab.com to learn more.
http://www.myfinancelab.com
The Logic and Practice of Financial Management
Ninth Edition
Boston Columbus Indianapolis New York San Francisco
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto
Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Foundations of Finance
Arthur J. Keown
Virginia Polytechnic Institute and State University
R. B. Pamplin Professor of Finance
John D. Martin
Baylor University
Professor of Finance
Carr P. Collins Chair in Finance
J. William Petty
Baylor University
Professor of Finance
W. W. Caruth Chair in Entrepreneurship
Vice President, Business Publishing: Donna Battista
Editor-in-Chief: Adrienne D’Ambrosio
Acquisitions Editor: Kate Fernandes
Editorial Assis.
* http://www.ann.ece.ufl.edu/courses/eel5764_10fal/project.html
CSCI 450 Computer Architecture Report
Topics
1. FPGA
2. RISC-V
3. High Performance Computing (HPC) architectures
4. Security microarchitectures and related vulnerabilities
Expectations
1. Choose a topic from the above list
2. Read relevant paper(s) on the topic
3. Write a technical report demonstrating your understanding of the paper(s)
4. Submit the report by the deadline
Requirements
To help prepare you for writing technical documents in the future, you will write your project
paper in a simplified ACM format with one column, fully justified text. The simplified ACM template is
provided on myleoonline in the project module. Your report should be approximately 5-6 pages,
mimicking a research paper. Your report will basically contain the following sections (which can be
adjusted depending on what you are reporting on)*
• Abstract or executive summary: 100-200 words describing what has been done and results.
• Introduction: This section includes a longer summary of what has been done, main observations
and results. The report introduction should briefly discuss how the used techniques are different
from previous work on the topic.
• Background/Related work: This section includes summaries of previous related work including
references to the papers and other resources you needed to explore to fully understand the
topic you are reporting on. Include references to these resources in the references se ction. In
this section, you should aim to describe how the work you are reporting on is different and how
it improves and/or extends previous methods. This section could be included in the
• Methodology: Describe your understanding of the main contributions of the topic you are
reporting on: what was done, how it was done, how it works, etc. Provide architectural
diagrams, charts, and figures where necessary with proper citation.
• Experiment Results/Observations: Depending on the topic you are reporting on, you may need
to include a description of the experimental setup (if included in the original paper you are
reviewing). Aim to be concise and utilize graphs to show any improvements. Include a summary
of results analysis: what the results mean and the trends that are revealed.
• Conclusions and Future Work: Include here a summary of the work and results. Include
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• Acknowledgments (Optional): Acknowledge any person that helped with your research that is
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• References: List of papers and resources cited throughout your report.
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Introduction to EconometricsAbelBernankeCrous.docxvrickens
Introduction
to Econometrics
Abel/Bernanke/Croushore
Macroeconomics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the Environment
Bierman/Fernandez
Game Theory with Economic
Applications
Blanchard
Macroeconomics*
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The Economics of Women, Men, and
Work
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Cost-Benefit Analysis
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Principles of Transportation Economics
Branson
Macroeconomic Theory and Policy
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Principles of Economics*
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Macroeconomics: Policy and Practice*
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Econometrics: A Modern Introduction
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Tools*
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Perloff
Microeconomics*
Microeconomics: Theory and
Applications with Calculus*
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The Choice: A Fable of Free Trade and
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Introduction to Economic Reasoning
Roland
Development Ec ...
Foundations of FinanceThe Logic and Practice of Financia.docxshericehewat
Foundations of Finance
The Logic and Practice of Financial Management
Eighth Edition
Bekaert/Hodrick
International Financial Management
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Corporate Finance*
Berk/DeMarzo
Corporate Finance: The Core*
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Fundamentals of Corporate Finance*
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Financial Management: Core Concepts*
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Principles of Managerial Finance*
Gitman/Zutter
Principles of Managerial Finance—Brief Edition*
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The Inefficient Stock Market: What Pays Off and
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The New Finance: Overreaction, Complexity, and
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Excel Modeling in Corporate Finance
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Excel Modeling in Investments
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International Banking: Text and Cases
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Fundamentals of Futures and Options Markets
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Options, Futures, and Other Derivatives
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Personal Finance: Turning Money into Wealth*
Keown/Martin/Petty
Foundations of Finance: The Logic and Practice of
Financial Management*
Kim/Nofsinger
Corporate Governance
Madura
Personal Finance*
Marthinsen
Risk Takers: Uses and Abuses of Financial Derivatives
McDonald
Derivatives Markets
McDonald
Fundamentals of Derivatives Markets
Mishkin/Eakins
Financial Markets and Institutions
Moffett/Stonehill/Eiteman
Fundamentals of Multinational Finance
Nofsinger
Psychology of Investing
Ormiston/Fraser
Understanding Financial Statements
Pennacchi
Theory of Asset Pricing
Rejda
Principles of Risk Management and Insurance
Seiler
Performing Financial Studies: A Methodological
Cookbook
Smart/Gitman/Joehnk
Fundamentals of Investing*
Solnik/McLeavey
Global Investments
Stretcher/Michael
Cases in Financial Management
Titman/Keown/Martin
Financial Management: Principles and
Applications*
Titman/Martin
Valuation: The Art and Science of Corporate
Investment Decisions
Weston/Mitchel/Mulherin
Takeovers, Restructuring, and Corporate
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The Pearson Series in Finance
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Foundations of Finance
The Logic and Practice of Financial Management
Eighth Edition
Arthur J. Keown
Virginia Polytechnic Institute and State University
R. B. Pamplin Professor of Finance
John D. Martin
Baylor University
Professor of Finance
Carr P. Collins Chair in Finance
J. William Petty
Baylor University
Professor of Finance
W. W. Caruth Chair in Entrepreneurship
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Course DescriptionReading is an essential part of the writ.docxvoversbyobersby
Course Description
Reading is an essential part of the writing process. To write an effective piece, an author must first read the essential creative works that have informed the genre and delivered on similar themes. In this course students will study the craft of creative writing in close detail. Understanding and identifying the core, foundational elements of quality storytelling, regardless of genre, is crucial to the advancement of a creative writer. In preparation for the development of their own creative works and techniques, students will study the strategic use of common storytelling elements in self-selected texts, and practice applying them in their own work.
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and features new techniques such as neuromarketing
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T W E L F T H E D I T I O N
O P E R A T I O N S
MANAGEMENT
Sustainability and Supply Chain Management
HEIZER
J A Y
RENDER
B A R R Y
Jesse H. Jones Professor of Business Administration
Texas Lutheran University
Charles Harwood Professor of Operations Management
Graduate School of Business
Rollins College
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MUNSON
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Carson College of Business
Washington State University
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Program Practical Connection AssignmentAt University of the Cumb.docxstilliegeorgiana
Program Practical Connection Assignment
At University of the Cumberland, it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their disciplines and communities, linking research with practice and knowledge with ethical decision-making. This assignment is a written assignment where students will demonstrate how this course content and research have connected and put into practice within their own career.
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Provide a reflection of at least 500 words (or 2 pages double spaced) of how the knowledge, skills, or theories of this course have been applied, or could be applied, in a practical manner to your current work environment. If you are not currently working, share times when you have or could observe these theories and knowledge could be applied to an employment opportunity in your field of study.
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Use of proper APA formatting and citations. If supporting evidence from outside resources is used those must be properly cited.
Share a personal connection that identifies specific knowledge and theories from this course.
Demonstrate a connection to your current work environment. If you are not employed, demonstrate a connection to your desired work environment.
You should NOT, provide an overview of the assignments assigned in the course. The assignment asks that you reflect how the knowledge and skills obtained through meeting course objectives were applied or could be applied in the workplace.
bgloss.indd 312 11/26/2015 7:40:39 PM
Managing and Using
Information Systems
A STRATEGIC APPROACH
Sixth Edition
Keri E. Pearlson
KP Partners
Carol S. Saunders
W.A. Franke College of Business
Northern Arizona University
Dr. Theo and Friedl Schoeller Research Center for Business and Society
Dennis F. Galletta
Katz Graduate School of Business
University of Pittsburgh, Pittsburgh, PA
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VICE PRESIDENT & DIRECTOR George Hoffman
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1. Choose a productgoodcommoditybrand you are familiar with onTatianaMajor22
1. Choose a product/good/commodity/brand you are familiar with: one your company sells or one you personally consume. NOTE: Do not choose one of the goods discussed in the textbook’s Chapter 3 section Elasticities Estimates: Economics Literature and listed in Table 3.7.
2. Consider the possible determinants of your chosen good’s price elasticity of demand.
3. Review Business Brief Guidelines and Critical Thinking Process.
4. Write a 1- to 2-page business brief that includes the following sections. Include 1 to 2 sources in addition to your textbook.
· Opening: Discussion of the chosen product/good/commodity/brand and the reasons you chose it.
· Discussion on what you consider the major determinants of the chosen good’s price elasticity of demand.
· Recommendation: Choose its one or two most significant determinants and comment on the good’s relative price elasticity of demand as compared to sample products in the textbook’s Table 3.7
Business Brief.
Price elasticity of demand is a measure used to reveal the change in the demand of the goods/products/when the price increases or decreases. (Tutor2u.net) Keeping a check on the responsiveness of the price elasticity of demand curve is very important in economics. This shows if the goods are moving or not, also helps businesses and economist to understand if there has been a shift in the wage gaps and buying interest. The subject this business brief is based on is Mazaya Oman LLC’s chartering services of private aircrafts to high profile clients. In Oman, it is a one of a kind product. So far the goods/products/services have no competition from any other firm and which makes the product unique and one of a kind. The amount of charters we receive per year dictates if the aircraft chartering business will boom or not. We do face competitive challenges regarding pricing from the European Markets who had started to charter private aircrafts in the middle east.
Few major determinants are; Nature of goods such as a chartering private aircrafts is highly luxurious, hence making it exceedingly elastic compared to normal flight tickets, which are necessities and priced very lowly. These products are highly flexible and can be used or postponed on demand if the client shift their departure date due urgency or weather factor. Also, the amount of price spent on such luxurious services is not negligible, the price not only dictates the mere transportation requirement for the client from point A to drops to point B, it also the experience of luxury, feel of importance, safety and security. The desire for expensive goods or services is elastic, only elite members of the society are able to afford it who have enough disposable income, these are definitely not common households goods which can be bought anywhere or make a habitual thing. Again chartering private aircrafts are always not feasible even for the most elite members of the society depending on the demands, routes, weather etc. (PreserveArticles.com)
...
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
3. THE PEARSON SERIES IN ECONOMICS
Abel/Bernanke/Croushore
Macroeconomics*
Bade/Parkin
Foundations of Economics*
Berck/Helfand
The Economics of the
Environment
Bierman/Fernandez
Game Theory with Economic
Applications
Blanchard
Macroeconomics*
Blau/Ferber/Winkler
The Economics of Women,
Men and Work
Boardman/Greenberg/
Vining/Weimer
Cost-Benefit Analysis
Boyer
Principles of Transportation
Economics
Branson
Macroeconomic Theory and
Policy
Brock/Adams
The Structure of American
Industry
Bruce
Public Finance and the
American Economy
Carlton/Perloff
Modern Industrial
Organization
Case/Fair/Oster
Principles of Economics*
Caves/Frankel/Jones
World Trade and Payments:
An Introduction
Chapman
Environmental Economics:
Theory, Application, and
Policy
Cooter/Ulen
Law & Economics
Downs
An Economic Theory of
Democracy
Ehrenberg/Smith
Modern Labor Economics
Ekelund/Ressler/Tollison
Economics*
Farnham
Economics for Managers
Folland/Goodman/Stano
The Economics of Health and
Health Care
Fort
Sports Economics
Froyen
Macroeconomics
Fusfeld
The Age of the Economist
Gerber
International Economics*
González-Rivera
Forecasting for Economics
and Business
Gordon
Macroeconomics*
Greene
Econometric Analysis
Gregory
Essentials of Economics
Gregory/Stuart
Russian and Soviet Economic
Performance and Structure
Hartwick/Olewiler
The Economics of Natural
Resource Use
Heilbroner/Milberg
The Making of the Economic
Society
Heyne/Boettke/Prychitko
The Economic Way of
Thinking
Hoffman/Averett
Women and the Economy:
Family, Work, and Pay
Holt
Markets, Games and Strategic
Behavior
Hubbard/O’Brien
Economics*
Money, Banking, and the
Financial System*
Hubbard/O’Brien/Rafferty
Macroeconomics*
Hughes/Cain
American Economic History
Husted/Melvin
International Economics
Jehle/Reny
Advanced Microeconomic
Theory
Johnson-Lans
A Health Economics Primer
Keat/Young
Managerial Economics
Klein
Mathematical Methods for
Economics
Krugman/Obstfeld/Melitz
International Economics:
Theory & Policy*
Laidler
The Demand for Money
Leeds/von Allmen
The Economics of Sports
Leeds/von Allmen/Schiming
Economics*
Lipsey/Ragan/Storer
Economics*
Lynn
Economic Development:
Theory and Practice for a
Divided World
Miller
Economics Today*
Understanding Modern
Economics
Miller/Benjamin
The Economics of Macro
Issues
Miller/Benjamin/North
The Economics of Public Issues
Mills/Hamilton
Urban Economics
Mishkin
The Economics of Money,
Banking, and Financial
Markets*
The Economics of Money,
Banking, and Financial Markets,
Business School Edition*
Macroeconomics: Policy and
Practice*
Murray
Econometrics: A Modern
Introduction
Nafziger
The Economics of Developing
Countries
O’Sullivan/Sheffrin/Perez
Economics: Principles,
Applications and Tools*
Parkin
Economics*
Perloff
Microeconomics*
Microeconomics: Theory and
Applications with Calculus*
Perman/Common/
McGilvray/Ma
Natural Resources and
Environmental Economics
Phelps
Health Economics
Pindyck/Rubinfeld
Microeconomics*
Riddell/Shackelford/Stamos/
Schneider
Economics: A Tool for Critically
Understanding Society
Ritter/Silber/Udell
Principles of Money, Banking &
Financial Markets*
Roberts
The Choice: A Fable of Free
Trade and Protection
Rohlf
Introduction to Economic
Reasoning
Ruffin/Gregory
Principles of Economics
Sargent
Rational Expectations and
Inflation
Sawyer/Sprinkle
International Economics
Scherer
Industry Structure, Strategy,
and Public Policy
Schiller
The Economics of Poverty
and Discrimination
Sherman
Market Regulation
Silberberg
Principles of Microeconomics
Stock/Watson
Introduction to Econometrics
Introduction to Econometrics,
Brief Edition
Studenmund
Using Econometrics: A
Practical Guide
Tietenberg/Lewis
Environmental and Natural
Resource Economics
Environmental Economics
and Policy
Todaro/Smith
Economic Development
Waldman
Microeconomics
Waldman/Jensen
Industrial Organization:
Theory and Practice
Weil
Economic Growth
Williamson
Macroeconomics
* denotes MyEconLab titles Visit www.myeconlab.com to learn more
4. MICROECONOMICS
E I G H T H E D I T I O N
Robert S. Pindyck
Massachusetts Institute of Technology
Daniel L. Rubinfeld
University of California, Berkeley
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto
Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
7. vi
R
evising a textbook every three or four years is hard work, and the last
edition was well-liked by students. “So why is our publisher pushing
for a new edition?” the authors wondered. “Were some of the examples
becoming stale? Or might it have something to do with the used book market?”
Could be both. In any case, here they are again, with a new edition that has sub-
stantial improvements and lots of new examples.
Robert S. Pindyck is the Bank of Tokyo-Mitsubishi Ltd. Professor of Economics
and Finance in the Sloan School of Management at M.I.T. Daniel L. Rubinfeld
is the Robert L. Bridges Professor of Law and Professor of Economics Emeritus
at the University of California, Berkeley, and Professor of Law at NYU. Both
received their Ph.Ds from M.I.T., Pindyck in 1971 and Rubinfeld in 1972. Professor
Pindyck’s research and writing have covered a variety of topics in microeconom-
ics, including the effects of uncertainty on firm behavior and market structure;
the behavior of natural resource, commodity, and financial markets; environmen-
tal economics; and criteria for investment decisions. Professor Rubinfeld, who
served as chief economist at the Department of Justice in 1997 and 1998, is the
author of a variety of articles relating to antitrust, competition policy, law and
economics, law and statistics, and public economics.
Pindyck and Rubinfeld are also co-authors of Econometric Models and Economic
Forecasts, another best-selling textbook that makes a perfect gift (birthdays,
weddings, bar mitzvahs, you name it) for the man or woman who has every-
thing. (Buy several—bulk pricing is available.) These two authors are always
looking for ways to earn some extra spending money, so they enrolled as human
subjects in a double-blind test of a new hair restoration medication. Rubinfeld
strongly suspects that he is being given the placebo.
This is probably more than you want to know about these authors, but for
further information, see their Web sites: http://web.mit.edu/rpindyck/www
and http://www.law.berkeley.edu/faculty/rubinfeldd.
ABOUT THE AUTHORS
The authors, back again for a
new edition, reflect on their
years of successful textbook
collaboration. Pindyck is on the
right and Rubinfeld on the left.
8. vii
• P A R T O N E
Introduction: Markets and Prices 1
1 Preliminaries 3
2 The Basics of Supply and Demand 21
• P A R T T W O
Producers, Consumers, and Competitive Markets 65
3 Consumer Behavior 67
4 Individual and Market Demand 111
5 Uncertainty and Consumer Behavior 159
6 Production 201
7 The Cost of Production 229
8 Profit Maximization and Competitive Supply 279
9 The Analysis of Competitive Markets 317
• P A R T T H R E E
Market Structure and Competitive Strategy 355
10 Market Power: Monopoly and Monopsony 357
11 Pricing with Market Power 399
12 Monopolistic Competition and Oligopoly 451
13 Game Theory and Competitive Strategy 487
14 Markets for Factor Inputs 529
15 Investment, Time, and Capital Markets 559
• P A R T F O U R
Information, Market Failure, and the Role
of Government 593
16 General Equilibrium and Economic Efficiency 595
17 Markets with Asymmetric Information 631
18 Externalities and Public Goods 661
Appendix: The Basics of Regression 700
Glossary 708
Answers to Selected Exercises 718
Photo Credits 731
Index 732
BRIEF CONTENTS
10. ix
CONTENTS
• PART ONE
Introduction: Markets and Prices 1
1 Preliminaries 3
1.1 The Themes of Microeconomics 4
Trade-Offs 4
Prices and Markets 5
Theories and Models 5
Positive versus Normative Analysis 6
1.2 What Is a Market? 7
Competitive versus Noncompetitive Markets 8
Market Price 8
Market Definition—The Extent of a Market 9
1.3 Real versus Nominal Prices 12
1.4 Why Study Microeconomics? 16
Corporate Decision Making: The Toyota Prius 16
Public Policy Design: Fuel Efficiency Standards for
the Twenty-First Century 17
Summary 18
Questions for Review 19
Exercises 19
2 The Basics of Supply and
Demand 21
2.1 Supply and Demand 22
The Supply Curve 22
The Demand Curve 23
2.2 The Market Mechanism 25
2.3 Changes in Market Equilibrium 26
2.4 Elasticities of Supply and Demand 33
Point versus Arc Elasticities 36
2.5 Short-Run versus Long-Run Elasticities 39
Demand 40
Supply 45
*2.6 Understanding and Predicting the Effects of
Changing Market Conditions 48
2.7 Effects of Government Intervention—Price
Controls 58
Summary 60
Questions for Review 61
Exercises 62
• PART TWO
Producers, Consumers, and
Competitive Markets 65
3 Consumer Behavior 67
Consumer Behavior 67
3.1 Consumer Preferences 69
Market Baskets 69
Some Basic Assumptions about Preferences 70
Indifference Curves 71
Indifference Maps 72
The Shape of Indifference Curves 73
The Marginal Rate of Substitution 74
Perfect Substitutes and Perfect
Complements 75
3.2 Budget Constraints 82
The Budget Line 82
The Effects of Changes in Income
and Prices 84
3.3 Consumer Choice 86
Corner Solutions 89
3.4 Revealed Preference 92
3.5 Marginal Utility and Consumer Choice 95
Rationing 98
*3.6 Cost-of-Living Indexes 100
Ideal Cost-of-Living Index 101
Laspeyres Index 102
Paasche Index 103
Price Indexes in the United Statics: Chain
Weighting 104
Summary 105
Questions for Review 106
Exercises 107
Preface xvii
11. x • CONTENTS
5 Uncertainty and Consumer
Behavior 159
5.1 Describing Risk 160
Probability 160
Expected Value 161
Variability 161
Decision Making 163
5.2 Preferences Toward Risk 165
Different Preferences Toward Risk 166
5.3 Reducing Risk 170
Diversification 170
Insurance 171
The Value of Information 174
*5.4 The Demand for Risky Assets 176
Assets 176
Risky and Riskless Assets 177
Asset Returns 177
The Trade-Off Between Risk and Return 179
The Investor’s Choice Problem 180
5.5 Bubbles 185
Informational Cascades 187
5.6 Behavioral Economics 189
Reference Points and Consumer Preferences 190
Fairness 192
Rules of Thumb and Biases in Decision Making 194
Summing Up 196
Summary 197
Questions for Review 197
Exercises 198
6 Production 201
The Production Decisions of a Firm 201
6.1 Firms and Their Production Decisions 202
Why Do Firms Exist? 203
The Technology of Production 204
The Production Function 204
The Short Run versus the Long Run 205
6.2 Production with One Variable Input (Labor) 206
Average and Marginal Products 206
The Slopes of the Product Curve 207
The Average Product of Labor Curve 209
The Marginal Product of Labor Curve 209
The Law of Diminishing Marginal Returns 209
Labor Productivity 214
6.3 Production with Two Variable Inputs 216
Isoquants 216
4 Individual and Market
Demand 111
4.1 Individual Demand 112
Price Changes 112
The Individual Demand Curve 112
Income Changes 114
Normal versus Inferior Goods 115
Engel Curves 116
Substitutes and Complements 118
4.2 Income and Substitution Effects 119
Substitution Effect 120
Income Effect 121
A Special Case: The Giffen Good 122
4.3 Market Demand 124
From Individual to Market Demand 124
Elasticity of Demand 126
Speculative Demand 129
4.4 Consumer Surplus 132
Consumer Surplus and Demand 132
4.5 Network Externalities 135
Positive Network Externalities 135
Negative Network Externalities 137
*4.6 Empirical Estimation of
Demand 139
The Statistical Approach to Demand Estimation 139
The Form of the Demand Relationship 140
Interview and Experimental Approaches to
Demand Determination 143
Summary 143
Questions for Review 144
Exercises 145
APPENDIX TO CHAPTER 4:
Demand Theory—A Mathematical
Treatment 149
Utility Maximization 149
The Method of Lagrange Multipliers 150
The Equal Marginal Principle 151
Marginal Rate of Substitution 151
Marginal Utility of Income 152
An Example 153
Duality in Consumer Theory 154
Income and Substitution
Effects 155
Exercises 157
12. CONTENTS • xi
APPENDIX TO CHAPTER 7:
Production and Cost Theory—A
Mathematical Treatment 273
Cost Minimization 273
Marginal Rate of Technical Substitution 274
Duality in Production and Cost Theory 275
The Cobb-Douglas Cost and Production
Functions 276
Exercises 278
8 Profit Maximization and
Competitive Supply 279
8.1 Perfectly Competitive Markets 279
When Is a Market Highly Competitive? 281
8.2 Profit Maximization 282
Do Firms Maximize Profit? 282
Alternative Forms of Organization 283
8.3 Marginal Revenue, Marginal Cost, and Profit
Maximization 284
Demand and Marginal Revenue for a Competitive
Firm 285
Profit Maximization by a Competitive Firm 287
8.4 Choosing Output in the Short Run 287
Short-Run Profit Maximization by a Competitive
Firm 287
When Should the Firm Shut Down? 289
8.5 The Competitive Firm’s Short-Run Supply
Curve 292
The Firm’s Response to an Input Price
Change 293
8.6 The Short-Run Market Supply Curve 295
Elasticity of Market Supply 296
Producer Surplus in the Short Run 298
8.7 Choosing Output in the Long Run 300
Long-Run Profit Maximization 300
Long-Run Competitive Equilibrium 301
Economic Rent 304
Producer Surplus in the Long Run 305
8.8 The Industry’s Long-Run Supply
Curve 306
Constant-Cost Industry 307
Increasing-Cost Industry 308
Decreasing-Cost Industry 309
The Effects of a Tax 310
Long-Run Elasticity of Supply 311
Summary 314
Questions for Review 314
Exercises 315
Input Flexibility 217
Diminishing Marginal Returns 217
Substitution Among Inputs 218
Production Functions—Two Special Cases 219
6.4 Returns to Scale 223
Describing Returns to Scale 224
Summary 226
Questions for Review 226
Exercises 227
7 The Cost of Production 229
7.1 Measuring Cost: Which Costs Matter? 229
Economic Cost versus Accounting Cost 230
Opportunity Cost 230
Sunk Costs 231
Fixed Costs and Variable Costs 233
Fixed versus Sunk Costs 234
Marginal and Average Cost 236
7.2 Cost in the Short Run 237
The Determinants of Short-Run Cost 237
The Shapes of the Cost Curves 238
7.3 Cost in the Long Run 243
The User Cost of Capital 243
The Cost-Minimizing Input Choice 244
The Isocost Line 245
Choosing Inputs 245
Cost Minimization with Varying Output Levels 249
The Expansion Path and Long-Run Costs 250
7.4 Long-Run versus Short-Run Cost Curves 253
The Inflexibility of Short-Run Production 253
Long-Run Average Cost 254
Economies and Diseconomies of Scale 255
The Relationship between Short-Run
and Long-Run Cost 257
7.5 Production with Two Outputs—Economies of
Scope 258
Product Transformation Curves 258
Economies and Diseconomies of Scope 259
The Degree of Economies of Scope 259
*7.6 Dynamic Changes in Costs—The Learning
Curve 261
Graphing the Learning Curve 261
Learning versus Economies of Scale 262
*7.7 Estimating and Predicting Cost 265
Cost Functions and the Measurement of Scale
Economies 267
Summary 269
Questions for Review 270
Exercises 271
13. xii • CONTENTS
10.5 Monopsony 382
Monopsony and Monopoly Compared 385
10.6 Monopsony Power 385
Sources of Monopsony Power 386
The Social Costs of Monopsony Power 387
Bilateral Monopoly 388
10.7 Limiting Market Power: The Antitrust
Laws 389
Restricting What Firms Can Do 390
Enforcement of the Antitrust Laws 391
Antitrust in Europe 392
Summary 395
Questions for Review 395
Exercises 396
11 Pricing with Market Power 399
11.1 Capturing Consumer Surplus 400
11.2 Price Discrimination 401
First-Degree Price Discrimination 401
Second-Degree Price Discrimination 404
Third-Degree Price Discrimination 404
11.3 Intertemporal Price Discrimination and
Peak-Load Pricing 410
Intertemporal Price Discrimination 411
Peak-Load Pricing 412
11.4 The Two-Part Tariff 414
*11.5 Bundling 419
Relative Valuations 420
Mixed Bundling 423
Bundling in Practice 426
Tying 428
*11.6 Advertising 429
A Rule of Thumb for Advertising 431
Summary 434
Questions for Review 434
Exercises 435
APPENDIX TO CHAPTER 11:
The Vertically Integrated Firm 439
Why Vertically Integrate? 439
Market Power and Double
Marginalization 439
Transfer Pricing in the Integrated
Firm 443
Transfer Pricing When There Is No
Outside Market 443
Transfer Pricing with a Competitive
Outside Market 446
9 The Analysis of Competitive
Markets 317
9.1 Evaluating the Gains and Losses from
Government Policies—Consumer and Producer
Surplus 317
Review of Consumer and Producer Surplus 318
Application of Consumer and Producer
Surplus 319
9.2 The Efficiency of a Competitive Market 323
9.3 Minimum Prices 328
9.4 Price Supports and Production Quotas 332
Price Supports 332
Production Quotas 333
9.5 Import Quotas and Tariffs 340
9.6 The Impact of a Tax or Subsidy 345
The Effects of a Subsidy 348
Summary 351
Questions for Review 352
Exercises 352
• PART THREE
Market Structure and Competitive
Strategy 355
10 Market Power: Monopoly
and Monopsony 357
10.1 Monopoly 358
Average Revenue and Marginal Revenue 358
The Monopolist’s Output Decision 359
An Example 361
A Rule of Thumb for Pricing 363
Shifts in Demand 365
The Effect of a Tax 366
*The Multiplant Firm 367
10.2 Monopoly Power 368
Production, Price, and Monopoly Power 371
Measuring Monopoly Power 371
The Rule of Thumb for Pricing 372
10.3 Sources of Monopoly Power 375
The Elasticity of Market Demand 376
The Number of Firms 376
The Interaction Among Firms 377
10.4 The Social Costs of Monopoly Power 377
Rent Seeking 378
Price Regulation 379
Natural Monopoly 380
Regulation in Practice 381
14. CONTENTS • xiii
13.6 Threats, Commitments, and Credibility 505
Empty Threats 506
Commitment and Credibility 506
Bargaining Strategy 508
13.7 Entry Deterrence 510
Strategic Trade Policy and International
Competition 512
*13.8 Auctions 516
Auction Formats 517
Valuation and Information 517
Private-Value Auctions 518
Common-Value Auctions 519
Maximizing Auction Revenue 520
Bidding and Collusion 521
Summary 524
Questions for Review 525
Exercises 525
14 Markets for Factor Inputs 529
14.1 Competitive Factor Markets 529
Demand for a Factor Input When Only One Input
Is Variable 530
Demand for a Factor Input When Several Inputs
Are Variable 533
The Market Demand Curve 534
The Supply of Inputs to a Firm 537
The Market Supply of Inputs 539
14.2 Equilibrium in a Competitive Factor
Market 542
Economic Rent 542
14.3 Factor Markets with Monopsony Power 546
Monopsony Power: Marginal and Average
Expenditure 546
Purchasing Decisions with Monopsony
Power 547
Bargaining Power 548
14.4 Factor Markets with Monopoly Power 550
Monopoly Power over the Wage Rate 551
Unionized and Nonunionized Workers 552
Summary 555
Questions for Review 556
Exercises 556
15 Investment, Time, and Capital
Markets 559
15.1 Stocks versus Flows 560
15.2 Present Discounted Value 561
Valuing Payment Streams 562
Transfer Pricing with a Noncompetitive Outside
Market 448
Taxes and Transfer Pricing 448
A Numerical Example 449
Exercises 450
12 Monopolistic Competition and
Oligopoly 451
12.1 Monopolistic Competition 452
The Makings of Monopolistic Competition 452
Equilibrium in the Short Run and the Long Run 453
Monopolistic Competition and Economic
Efficiency 454
12.2 Oligopoly 456
Equilibrium in an Oligopolistic Market 457
The Cournot Model 458
The Linear Demand Curve—An Example 461
First Mover Advantage—The Stackelberg
Model 463
12.3 Price Competition 464
Price Competition with Homogeneous Products—
The Bertrand Model 464
Price Competition with Differentiated Products 465
12.4 Competition versus Collusion: The Prisoners’
Dilemma 469
12.5 Implications of the Prisoners’ Dilemma for
Oligopolistic Pricing 472
Price Rigidity 473
Price Signaling and Price Leadership 474
The Dominant Firm Model 476
12.6 Cartels 477
Analysis of Cartel Pricing 478
Summary 482
Questions for Review 482
Exercises 483
13 Game Theory and Competitive
Strategy 487
13.1 Gaming and Strategic Decisions 487
Noncooperative versus Cooperative Games 488
13.2 Dominant Strategies 490
13.3 The Nash Equilibrium Revisited 492
Maximin Strategies 494
*Mixed Strategies 496
13.4 Repeated Games 498
13.5 Sequential Games 502
The Extensive Form of a Game 503
The Advantage of Moving First 504
15. xiv • CONTENTS
16.4 Efficiency in Production 613
Input Efficiency 613
The Production Possibilities Frontier 614
Output Efficiency 615
Efficiency in Output Markets 617
16.5 The Gains from Free Trade 618
Comparative Advantage 618
An Expanded Production Possibilities
Frontier 619
16.6 An Overview—The Efficiency of Competitive
Markets 623
16.7 Why Markets Fail 625
Market Power 625
Incomplete Information 625
Externalities 626
Public Goods 626
Summary 627
Questions for Review 628
Exercises 628
17 Markets with Asymmetric
Information 631
17.1 Quality Uncertainty and the Market for
Lemons 632
The Market for Used Cars 632
Implications of Asymmetric Information 634
The Importance of Reputation and
Standardization 636
17.2 Market Signaling 638
A Simple Model of Job Market Signaling 639
Guarantees and Warranties 642
17.3 Moral Hazard 643
17.4 The Principal–Agent Problem 645
The Principal–Agent Problem in Private
Enterprises 646
The Principal–Agent Problem in Public
Enterprises 648
Incentives in the Principal–Agent Framework 650
*17.5 Managerial Incentives in an Integrated
Firm 651
Asymmetric Information and Incentive
Design in the Integrated Firm 652
Applications 654
17.6 Asymmetric Information in Labor Markets:
Efficiency Wage Theory 654
Summary 656
Questions for Review 657
Exercises 657
15.3 The Value of a Bond 564
Perpetuities 565
The Effective Yield on a Bond 566
15.4 The Net Present Value Criterion for Capital
Investment Decisions 569
The Electric Motor Factory 570
Real versus Nominal Discount Rates 571
Negative Future Cash Flows 572
15.5 Adjustments for Risk 573
Diversifiable versus Nondiversifiable Risk 574
The Capital Asset Pricing Model 575
15.6 Investment Decisions by Consumers 578
15.7 Investments in Human Capital 580
*15.8 Intertemporal Production Decisions—
Depletable Resources 584
The Production Decision of an Individual Resource
Producer 584
The Behavior of Market Price 585
User Cost 585
Resource Production by a Monopolist 586
15.9 How Are Interest Rates Determined? 588
A Variety of Interest Rates 589
Summary 590
Questions for Review 591
Exercises 591
• PART FOUR
Information, Market Failure, and
the Role of Government 593
16 General Equilibrium and Economic
Efficiency 595
16.1 General Equilibrium Analysis 595
Two Interdependent Markets—Moving to General
Equilibrium 596
Reaching General Equilibrium 597
Economic Efficiency 601
16.2 Efficiency in Exchange 602
The Advantages of Trade 602
The Edgeworth Box Diagram 603
Efficient Allocations 604
The Contract Curve 606
Consumer Equilibrium in a Competitive Market 607
The Economic Efficiency of Competitive
Markets 609
16.3 Equity and Efficiency 610
The Utility Possibilities Frontier 610
Equity and Perfect Competition 612
16. CONTENTS • xv
18.7 Private Preferences for Public Goods 694
Summary 696
Questions for Review 696
Exercises 697
APPENDIX:
The Basics of Regression 700
An Example 700
Estimation 701
Statistical Tests 702
Goodness of Fit 704
Economic Forecasting 704
Summary 707
Glossary 708
Answers to Selected Exercises 718
Photo Credits 731
Index 732
18 Externalities and Public
Goods 661
18.1 Externalities 661
Negative Externalities and Inefficiency 662
Positive Externalities and Inefficiency 664
18.2 Ways of Correcting Market Failure 667
An Emissions Standard 668
An Emissions Fee 668
Standards versus Fees 669
Tradeable Emissions Permits 671
Recycling 675
18.3 Stock Externalities 678
Stock Buildup and Its Impact 679
18.4 Externalities and Property Rights 684
Property Rights 684
Bargaining and Economic Efficiency 685
Costly Bargaining—The Role of Strategic
Behavior 686
A Legal Solution—Suing for Damages 686
18.5 Common Property Resources 687
18.6 Public Goods 690
Efficiency and Public Goods 691
Public Goods and Market Failure 692
18. xvii
PREFACE
F
or students who care about how the world works, microeconomics is
probably the most relevant, interesting, and important subject they can
study. (Macroeconomics is the second-most important subject.) A good
grasp of microeconomics is vital for managerial decision making, for design-
ing and understanding public policy, and more generally, for appreciating how
a modern economy functions. In fact, even understanding the news each day
often requires knowledge of microeconomics.
We wrote this book, Microeconomics, because we believe that students need to
be exposed to the new topics that have come to play a central role in microeco-
nomics over the years—topics such as game theory and competitive strategy,
the roles of uncertainty and information, and the analysis of pricing by firms
with market power. We also felt that students need to be shown how microeco-
nomics can help us to understand what goes on in the world and how it can be
used as a practical tool for decision making. Microeconomics is an exciting and
dynamic subject, but students need to be given an appreciation of its relevance
and usefulness. They want and need a good understanding of how microeco-
nomics can actually be used outside the classroom.
To respond to these needs, the eighth edition of Microeconomics provides a
treatment of microeconomic theory that stresses its relevance and application
to both managerial and public policy decision making. This applied emphasis
is accomplished by including examples that cover such topics as the analysis of
demand, cost, and market efficiency; the design of pricing strategies; investment
and production decisions; and public policy analysis. Because of the importance
that we attach to these examples, they are included in the flow of the text. (A
complete list is included on the endpapers inside the front cover.)
The coverage in this edition of Microeconomics incorporates the dramatic
changes that have occurred in the field in recent years. There has been grow-
ing interest in game theory and the strategic interactions of firms (Chapters 12
and 13), in the role and implications of uncertainty and asymmetric informa-
tion (Chapters 5 and 17), in the pricing strategies of firms with market power
(Chapters 10 and 11), and in the design of policies to deal efficiently with exter-
nalities such as environmental pollution (Chapter 18).
That the coverage in Microeconomics is comprehensive and up to date does
not mean that it is “advanced” or difficult. We have worked hard to make the
exposition clear and accessible as well as lively and engaging. We believe that
the study of microeconomics should be enjoyable and stimulating. We hope that
our book reflects this belief. Except for appendices and footnotes, Microeconomics
uses no calculus. As a result, it should be suitable for students with a broad
range of backgrounds. (Those sections that are more demanding are marked
with an asterisk and can be easily omitted.)
19. xviii • PREFACE
Changes in the Eighth Edition
E
ach new edition of this book has built on the success of prior editions by
adding a number of new topics, by adding and updating examples, and
by improving the exposition of existing materials.
The eighth edition continues that tradition with a number of new and modern
topics.
• We have introduced new material on speculative demand and have
expanded our discussion of network externalities to include social networks
(Chapter 4).
• In Chapter 5 we added a new section on bubbles and informational cas-
cades, along with examples showing applications to housing markets and
the financial crisis. We also expanded and updated the material on behav-
ioral economics.
• We expanded the Appendix to Chapter 11 so that it now covers the vertically
integrated firm more broadly, including the problem of double marginaliza-
tion and the advantages of vertical integration, along with the analysis of
transfer pricing.
We added a number of new examples and updated most of the existing ones.
• We introduced a series of examples relating to the economics of health care,
including the demand for and production of health care (Chapters 3, 6, 16,
and 17).
• We also added a series of examples on taxicab markets that illustrate the
effects of government policies that restrict output (Chapters 8, 9, and 15).
• We added examples on energy demand and energy efficiency (Chapters 4
and 7), and “contagion” in global financial markets (Chapter 16).
• We have even added an example that explains the pricing of this textbook
(Chapter 12).
As in each new addition, we worked hard to improve the exposition wher-
ever possible. For this edition, we revised and improved the treatment of some
of the core material on production and cost (Chapters 7 and 8), as well as the
treatment of general equilibrium and economic efficiency (Chapter 16). We
made a variety of other changes, including revisions of some of the figures, to
make the exposition as clear and readable as possible.
The layout of this edition is similar to that of the prior edition. This has
allowed us to continue to define key terms in the margins (as well as in the
Glossary at the end of the book) and to use the margins to include Concept
Links that relate newly developed ideas to concepts introduced previously in
the text.
Alternative Course Designs
T
his new edition of Microeconomics offers instructors considerable flexibility
in course design. For a one-quarter or one-semester course stressing the
basic core material, we would suggest using the following chapters and
sections of chapters: 1 through 6, 7.1–7.4, 8 through 10, 11.1–11.3, 12, 14, 15.1–15.4,
18.1–18.2, and 18.5. A somewhat more ambitious course might also include parts
20. PREFACE • xix
of Chapters 5 and 16 and additional sections in Chapters 7 and 9. To emphasize
uncertainty and market failure, an instructor should also include substantial
parts of Chapters 5 and 17.
Depending on one’s interests and the goals of the course, other sections could
be added or used to replace the materials listed above. A course emphasizing
modern pricing theory and business strategy would include all of Chapters 11,
12, and 13 and the remaining sections of Chapter 15. A course in managerial
economics might also include the appendices to Chapters 4, 7, and 11, as well as
the appendix on regression analysis at the end of the book. A course stressing
welfare economics and public policy should include Chapter 16 and additional
sections of Chapter 18.
Finally, we want to stress that those sections or subsections that are more
demanding and/or peripheral to the core material have been marked with an
asterisk. These sections can easily be omitted without detracting from the flow
of the book.
Supplementary Materials
A
ncillaries of an exceptionally high quality are available to instructors
and students using this book. The Instructor’s Manual, prepared by
Duncan M. Holthausen of North Carolina State University, provides
detailed solutions to all end-of-chapter Questions for Review and Exercises.
The eighth edition contains many entirely new review questions and exercises,
and a number of exercises have been revised and updated. The new instructor’s
manual has been revised accordingly. Each chapter also contains Teaching Tips
to summarize key points.
The Test Item File, prepared by Douglas J. Miller of the University of Missouri,
contains approximately 2,000 multiple-choice and short-answer questions with
solutions. All of this material has been thoroughly reviewed, accuracy checked,
and revised for this edition. The Test Item File is designed for use with TestGen
test-generating software. TestGen’s graphical interface enables instructors to
view, edit, and add questions; transfer questions to tests; and print different
forms of tests. Search and sort features let the instructor quickly locate ques-
tions and arrange them in a preferred order. QuizMaster, working with your
school’s computer network, automatically grades the exams, stores the results
on disk, and allows the instructor to view and print a variety of reports.
The PowerPoint Presentation has been revised for this edition by Fernando
Quijano of Dickinson State University with editorial consultants Shelly Tefft
and Michael Brener. Instructors can edit the detailed outlines to create their own
full-color, professional-looking presentations and customized handouts for stu-
dents. The PowerPoint Presentation also contains lecture notes and a complete
set of animated textbook figures.
The Study Guide, prepared by Valerie Suslow of the University of Michigan
and Jonathan Hamilton of the University of Florida, provides a wide variety
of review materials and exercises for students. Each chapter contains a list of
important concepts, chapter highlights, a concept review, problem sets, and a
self-test quiz. Worked-out answers and solutions are provided for all exercises,
problem sets, and self-test questions.
For your convenience, all instructor resources are available online via our
centralized supplements Web site, the Instructor Resource Center (www.
pearsonhighered.com/irc). For access or more information, contact your local
Pearson representative or request access online at the Instructor Resource Center.
21. xx • PREFACE
MyEconLab is a content-rich Web site with homework, quiz, test, and tutorial
options related to the eighth edition of Microeconomics. MyEconLab offers stu-
dents an opportunity to sharpen their problem-solving skills and to assess their
understanding of text material in one program. Similarly, instructors can man-
age all assessment needs in one program.
MyEconLab contains:
• End-of-chapter exercises available for practice or auto-graded assignment.
These exercises include algorithmic, numerical, and draw-graph exercises.
• Additional exercises for assignment that draws upon material in the text.
• Instant tutorial feedback on a student’s problem and graphing responses.
• Interactive Learning Aids including Help Me Solve This step-by-step tutori-
als and graph animations.
• Auto Graded Problems and Graphs for all assignments.
• Test Item File questions for homework assignment.
• A Custom Exercise Builder that allows instructors to create their own
problems.
• A Gradebook that records student performance and generates reports by
student or chapter.
• Experiments in two versions, Single Player (for easy, asynchronous, interac-
tive homework assignments) and Multiplayer (for a fast paced, instructor-
led, synchronous, interactive experience). Available experiments include
Public Goods and the Lemons Market. For a complete list of available
experiments, visit www.myeconlab.com.
• An enhanced eText, available within the online course materials and offline
via an iPad app, that allows instructors and students to highlight, book-
mark, and take notes.
• Communication tools that enable students and instructors to communicate
through email, discussion board, chat, and ClassLive.
• Customization options that provide additional ways to share documents
and add content.
• Prebuilt courses offer a turn-key way for instructors to create a course that
includes pre-built assignments distributed by chapter.
• A seventeen-day grace period that offers students temporary access as they
wait for financial aid.
The MyEconLab exercises for Microeconomics were created by Duncan M.
Holthausen at North Carolina State University. For additional information and a
demonstration, visit www.myeconlab.com.
22. PREFACE • xxi
Acknowledgments
A
s the saying goes, it takes a village to revise a textbook. Because the eighth
edition of Microeconomics has been the outgrowth of years of experience
in the classroom, we owe a debt of gratitude to our students and to the
colleagues with whom we often discuss microeconomics and its presentation. We
have also had the help of capable research assistants. For the first seven editions
of the book, these included Peter Adams, Walter Athier, Smita Brunnerneier,
Phillip Gibbs, Matt Hartman, Salar Jahedi, Jamie Jue, Rashmi Khare, Jay Kim,
Maciej Kotowski, Tammy McGavock, Masaya Okoshi, Kathy O’Regan, Shira
Pindyck, Karen Randig, Subi Rangan, Deborah Senior, Ashesh Shah, Nicola
Stafford, and Wilson Tai. Kathy Hill helped with the art, while Assunta Kent,
Mary Knott, and Dawn Elliott Linahan provided secretarial assistance with the
first edition. We especially want to thank Lynn Steele and Jay Tharp, who pro-
vided considerable editorial support for the second edition. Mark Glickman and
Steve Wiggins assisted with the examples in the third edition, while Andrew
Guest, Jeanette Sayre, and Lynn Steele provided valuable editorial support for
the third, fourth, and fifth editions, as did Brandi Henson and Jeanette Sayre
for the sixth edition, and as did Ida Ng for the seventh edition and Ida Ng and
Dagmar Trantinova for the eighth. In addition, Carola Conces and Catherine
Martin provided superb research assistance on this eighth edition.
Writing this book has been both a painstaking and enjoyable process. At each
stage we received exceptionally fine guidance from teachers of microeconomics
throughout the country. After the first draft of the first edition of the book had
been edited and reviewed, it was discussed at a two-day focus group meeting
in New York. This provided an opportunity to get ideas from instructors with
a variety of backgrounds and perspectives. We would like to thank the follow-
ing focus group members for advice and criticism: Carl Davidson of Michigan
State University; Richard Eastin of the University of Southern California; Judith
Roberts of California State University, Long Beach; and Charles Strein of the
University of Northern Iowa.
We would like to thank the reviewers who provided comments and ideas
that have contributed significantly to the eighth edition of Microeconomics:
Anita Alves Pena, Colorado State University
Donald L. Bumpass, Sam Houston State University
Joni Charles, Texas State University–San Marcos
Ben Collier, Northwest Missouri State University
Lee Endress, University of Hawaii
Tammy R. Feldman, University of Michigan
Todd Matthew Fitch, University of San Francisco
Thomas J. Grennes, North Carolina State University
Philip Grossman, Saint Cloud State University
Nader Habibi, Brandeis University
Robert G. Hansen, Dartmouth College
Donald Holley, Boise State University
Folke Kafka, University of Pittsburgh
Anthony M. Marino, University of Southern California
Laudo M. Ogura, Grand Valley State University
June Ellenoff O’Neill, Baruch College
Lourenço Paz, Syracuse University
Philip Young, University of Maryland
We would also like to thank all those who reviewed
the first seven editions at various stages of their evo-
lution:
Nii Adote Abrahams, Missouri Southern State College
Jack Adams, University of Arkansas, Little Rock
Sheri Aggarwal, Dartmouth College
Anca Alecsandru, Louisiana State University
Ted Amato, University of North Carolina, Charlotte
John J. Antel, University of Houston
Albert Assibey-Mensah, Kentucky State University
Kerry Back, Northwestern University
Dale Ballou, University of Massachusetts, Amherst
William Baxter, Stanford University
Charles A. Bennett, Gannon University
Gregory Besharov, Duke University
Maharukh Bhiladwalla, Rutgers University
Victor Brajer, California State University, Fullerton
23. xxii • PREFACE
James A. Brander, University of British Columbia
David S. Bullock, University of Illinois
Jeremy Bulow, Stanford University
Raymonda Burgman, DePauw University
H. Stuart Burness, University of New Mexico
Peter Calcagno, College of Charleston
Winston Chang, State University of New York, Buffalo
Henry Chappel, University of South Carolina
Larry A. Chenault, Miami University
Harrison Cheng, University of Southern California
Eric Chiang, Florida Atlantic University
Kwan Choi, Iowa State University
Charles Clotfelter, Duke University
Kathryn Combs, California State University, Los Angeles
Tom Cooper, Georgetown College
Richard Corwall, Middlebury College
John Coupe, University of Maine at Orono
Robert Crawford, Marriott School, Brigham Young
University
Jacques Cremer, Virginia Polytechnic Institute and
State University
Julie Cullen, University of California, San Diego
Carl Davidson, Michigan State University
Gilbert Davis, University of Michigan
Arthur T. Denzau, Washington University
Tran Dung, Wright State University
Richard V. Eastin, University of Southern California
Maxim Engers, University of Virginia
Carl E. Enomoto, New Mexico State University
Michael Enz, Western New England College
Ray Farrow, Seattle University
Gary Ferrier, Southern Methodist University
John Francis, Auburn University, Montgomery
Roger Frantz, San Diego State University
Delia Furtado, University of Connecticut
Craig Gallet, California State University, Sacramento
Patricia Gladden, University of Missouri
Michele Glower, Lehigh University
Otis Gilley, Louisiana Tech University
Tiffani Gottschall, Washington & Jefferson College
William H. Greene, New York University
Thomas A. Gresik, Notre Dame University
John Gross, University of Wisconsin at Milwaukee
Adam Grossberg, Trinity College
Jonathan Hamilton, University of Florida
Claire Hammond, Wake Forest University
Bruce Hartman, California State University, The
California Maritime Academy
James Hartigan, University of Oklahoma
Daniel Henderson, Binghamton University
George Heitman, Pennsylvania State University
Wayne Hickenbottom, University of Texas at Austin
George E. Hoffer, Virginia Commonwealth University
Stella Hofrenning, Augsburg College
Duncan M. Holthausen, North Carolina State
University
Robert Inman, The Wharton School, University of
Pennsylvania
Brian Jacobsen, Wisconsin Lutheran College
Joyce Jacobsen, Rhodes College
Jonatan Jelen, New York University
Changik Jo, Anderson University
B. Patrick Joyce, Michigan Technological University
Mahbubul Kabir, Lyon College
David Kaserman, Auburn University
Brian Kench, University of Tampa
Michael Kende, INSEAD, France
Philip G. King, San Francisco State University
Paul Koch, Olivet Nazarene University
Tetteh A. Kofi, University of San Francisco
Dennis Kovach, Community College of Allegheny
County
Anthony Krautman, DePaul University
Leonard Lardaro, University of Rhode Island
Sang Lee, Southeastern Louisiana University
Robert Lemke, Florida International University
Peter Linneman, University of Pennsylvania
Leonard Loyd, University of Houston
R. Ashley Lyman, University of Idaho
James MacDonald, Rensselaer Polytechnical Institute
Wesley A. Magat, Duke University
Peter Marks, Rhode Island College
Anthony M. Marino, University of Southern Florida
Lawrence Martin, Michigan State University
John Makum Mbaku, Weber State University
Richard D. McGrath, College of William and Mary
Douglas J. Miller, University of Missouri–Columbia
David Mills, University of Virginia, Charlottesville
Richard Mills, University of New Hampshire
Jennifer Moll, Fairfield University
Michael J. Moore, Duke University
W. D. Morgan, University of California at Santa Barbara
Julianne Nelson, Stern School of Business, New York
University
George Norman, Tufts University
Laudo Ogura, Grand Valley State University
Daniel Orr, Virginia Polytechnic Institute and State
University
Ozge Ozay, University of Utah
Christos Paphristodoulou, Mälardalen University
Sharon J. Pearson, University of Alberta, Edmonton
Ivan P’ng, University of California, Los Angeles
Michael Podgursky, University of Massachusetts,
Amherst
Jonathan Powers, Knox College
Lucia Quesada, Universidad Torcuato Di Telia
24. PREFACE • xxiii
Benjamin Rashford, Oregon State University
Charles Ratliff, Davidson College
Judith Roberts, California State University, Long Beach
Fred Rodgers, Medaille College
William Rogers, University of Missouri–Saint Louis
Geoffrey Rothwell, Stanford University
Nestor Ruiz, University of California, Davis
Edward L. Sattler, Bradley University
Roger Sherman, University of Virginia
Nachum Sicherman, Columbia University
Sigbjørn Sødal, Agder University College
Menahem Spiegel, Rutgers University
Houston H. Stokes, University of Illinois, Chicago
Richard W. Stratton, University of Akron
Houston Stokes, University of Illinois at Chicago
Charles T. Strein, University of Northern Iowa
Charles Stuart, University of California, Santa Barbara
Valerie Suslow, University of Michigan
Theofanis Tsoulouhas, North Carolina State
Mira Tsymuk, Hunter College, CUNY
Abdul Turay, Radford University
Sevin Ugural, Eastern Mediterranean University
Nora A. Underwood, University of California, Davis
Nikolaos Vettas, Duke University
David Vrooman, St. Lawrence University
Michael Wasylenko, Syracuse University
Thomas Watkins, Eastern Kentucky University
Robert Whaples, Wake Forest University
David Wharton, Washington College
Lawrence J. White, New York University
Michael F. Williams, University of St. Thomas
Beth Wilson, Humboldt State University
Arthur Woolf, University of Vermont
Chiou-nan Yeh, Alabama State University
Peter Zaleski, Villanova University
Joseph Ziegler, University of Arkansas, Fayetteville
Apart from the formal review process, we are especially grateful to Jean
Andrews, Paul Anglin, J. C. K. Ash, Ernst Berndt, George Bittlingmayer, Severin
Borenstein, Paul Carlin, Whewon Cho, Setio Angarro Dewo, Avinash Dixit,
Frank Fabozzi, Joseph Farrell, Frank Fisher, Jonathan Hamilton, Robert Inman,
Joyce Jacobsen, Paul Joskow, Stacey Kole, Preston McAfee, Jeannette Mortensen,
John Mullahy, Krishna Pendakur, Jeffrey Perloff, Ivan P’ng, A. Mitchell Polinsky,
Judith Roberts, Geoffrey Rothwell, Garth Saloner, Joel Schrag, Daniel Siegel,
Thomas Stoker, David Storey, James Walker, and Michael Williams, who were
kind enough to provide comments, criticisms, and suggestions as the various
editions of this book developed.
There were a number of people who offered helpful comments, corrections,
and suggestions for the eighth edition. We wish to thank the following people
for their comments, suggestions, and corrections: Ernst Berndt, David Colander,
Kurt von dem Hagen, Chris Knittel, Thomas Stoker, and Lawrence White.
Chapter 5 of this eighth edition contains new and updated material on
behavioral economics, whose genesis owes much to the thoughtful comments
of George Akerlof. We also want to thank Ida Ng for her outstanding editorial
assistance, and for carefully reviewing the page proofs of this edition.
We also wish to express our sincere thanks for the extraordinary effort those
at Macmillan, Prentice Hall, and Pearson made in the development of the vari-
ous editions of our book. Throughout the writing of the first edition, Bonnie
Lieberman provided invaluable guidance and encouragement; Ken MacLeod
kept the progress of the book on an even keel; Gerald Lombardi provided
masterful editorial assistance and advice; and John Molyneux ably oversaw the
book’s production.
In the development of the second edition, we were fortunate to have the
encouragement and support of David Boelio, and the organizational and edito-
rial help of two Macmillan editors, Caroline Carney and Jill Lectka. The second
edition also benefited greatly from the superb development editing of Gerald
Lombardi, and from John Travis, who managed the book’s production.
Jill Lectka and Denise Abbott were our editors for the third edition, and
we benefited greatly from their input. Leah Jewell was our editor for the
fourth edition; her patience, thoughtfulness, and perseverance were greatly
25. xxiv • PREFACE
appreciated. Chris Rogers provided continual and loyal guidance through
editions five through seven. With respect to this eighth edition, we are grate-
ful to our economics editor Adrienne D’Ambrosio who has worked diligently
through this major revision. We also appreciate the efforts of our Development
Editor, Deepa Chungi; Senior Production Project Manager Kathryn Dinovo;
Art Director Jonathan Boylan; Project Manager with Integra, Angela
Norris; Editor in Chief, Donna Battista; Editorial Project Manager, Sarah
Dumouchelle; Executive Marketing Manager, Lori DeShazo; MyEconLab
Content Lead, Noel Lotz; Executive Media Producer, Melissa Honig; and
Supplements Editor, Alison Eusden.
We owe a special debt of thanks to Catherine Lynn Steele, whose superb
editorial work carried us through five editions of this book. Lynn passed
away on December 10, 2002. We miss her very much.
R.S.P.
D.L.R.
26. 1
1
Part 1 surveys the scope of microeconomics
and introduces some basic concepts and tools.
Chapter 1 discusses the range of problems that microeconomics
addresses, and the kinds of answers it can provide. It also explains
what a market is, how we determine the boundaries of a market,
and how we measure market price.
Chapter 2 covers one of the most important tools of microeco-
nomics: supply-demand analysis. We explain how a competitive
market works and how supply and demand determine the prices
and quantities of goods and services. We also show how supply-
demand analysis can be used to determine the effects of changing
market conditions, including government intervention.
Introduction: Markets
and Prices
1
Part One
C H A P T E R S
Preliminaries
3
2
The Basics of Supply and
Demand
21
28. 3
E
conomics is divided into two main branches: microeconomics
and macroeconomics. Microeconomics deals with the behavior
of individual economic units. These units include consumers,
workers, investors, owners of land, business firms—in fact, any indi-
vidual or entity that plays a role in the functioning of our economy.1
Microeconomics explains how and why these units make economic
decisions. For example, it explains how consumers make purchasing
decisions and how their choices are affected by changing prices and
incomes. It also explains how firms decide how many workers to hire
and how workers decide where to work and how much work to do.
Anotherimportantconcernofmicroeconomicsishoweconomicunits
interact to form larger units—markets and industries. Microeconomics
helps us to understand, for example, why the American automobile
industry developed the way it did and how producers and consum-
ers interact in the market for automobiles. It explains how automobile
prices are determined, how much automobile companies invest in new
factories, and how many cars are produced each year. By studying the
behavior and interaction of individual firms and consumers, microeco-
nomics reveals how industries and markets operate and evolve, why
they differ from one another, and how they are affected by government
policies and global economic conditions.
By contrast, macroeconomics deals with aggregate economic quan-
tities, such as the level and growth rate of national output, interest
rates, unemployment, and inflation. But the boundary between mac-
roeconomics and microeconomics has become less and less distinct
in recent years. The reason is that macroeconomics also involves the
analysis of markets—for example, the aggregate markets for goods
and services, labor, and corporate bonds. To understand how these
aggregate markets operate, we must first understand the behavior of
the firms, consumers, workers, and investors who constitute them.
Thus macroeconomists have become increasingly concerned with the
microeconomic foundations of aggregate economic phenomena, and
much of macroeconomics is actually an extension of microeconomic
analysis.
Preliminaries
C H A P T E R 1
1.1 The Themes of
Microeconomics
4
1.2 What Is a Market?
7
1.3 Real versus Nominal Prices
12
1.4 Why Study Microeconomics?
16
L I S T O F E X A M P L E S
C H A P T E R O U T L I N E
1.1 The Market for Sweeteners
10
1.2 A Bicycle Is a Bicycle. Or Is It?
11
1.3 The Price of Eggs and the
Price of a College Education
13
1.4 The Minimum Wage
15
1
The prefix micro- is derived from the Greek word meaning “small.” However, many of
the individual economic units that we will study are small only in relation to the U.S.
economy as a whole. For example, the annual sales of General Motors, IBM, or Microsoft
are larger than the gross national products of many countries.
29. 4 PART 1 • Introduction: Markets and Prices
1.1 The Themes of Microeconomics
The Rolling Stones once said: “You can’t always get what you want.” This is
true. For most people (even Mick Jagger), that there are limits to what you can
have or do is a simple fact of life learned in early childhood. For economists,
however, it can be an obsession.
Much of microeconomics is about limits—the limited incomes that consumers
can spend on goods and services, the limited budgets and technical know-how
that firms can use to produce things, and the limited number of hours in a week
that workers can allocate to labor or leisure. But microeconomics is also about
ways to make the most of these limits. More precisely, it is about the allocation of
scarce resources. For example, microeconomics explains how consumers can best
allocate their limited incomes to the various goods and services available for
purchase. It explains how workers can best allocate their time to labor instead
of leisure, or to one job instead of another. And it explains how firms can best
allocate limited financial resources to hiring additional workers versus buying
new machinery, and to producing one set of products versus another.
In a planned economy such as that of Cuba, North Korea, or the former Soviet
Union, these allocation decisions are made mostly by the government. Firms are
told what and how much to produce, and how to produce it; workers have little
flexibility in choice of jobs, hours worked, or even where they live; and consum-
ers typically have a very limited set of goods to choose from. As a result, many
of the tools and concepts of microeconomics are of limited relevance in those
countries.
Trade-Offs
In modern market economies, consumers, workers, and firms have much
more flexibility and choice when it comes to allocating scarce resources.
Microeconomics describes the trade-offs that consumers, workers, and firms face,
and shows how these trade-offs are best made.
The idea of making optimal trade-offs is an important theme in micro-
economics—one that you will encounter throughout this book. Let’s look at it in
more detail.
CONSUMERS Consumers have limited incomes, which can be spent on a wide
variety of goods and services, or saved for the future. Consumer theory, the sub-
ject matter of Chapters 3, 4, and 5 of this book, describes how consumers, based
on their preferences, maximize their well-being by trading off the purchase of
more of some goods for the purchase of less of others. We will also see how con-
sumers decide how much of their incomes to save, thereby trading off current
consumption for future consumption.
WORKERS Workers also face constraints and make trade-offs. First, people
must decide whether and when to enter the workforce. Because the kinds of
jobs—and corresponding pay scales—available to a worker depend in part
on educational attainment and accumulated skills, one must trade off work-
ing now (and earning an immediate income) for continued education (and the
hope of earning a higher future income). Second, workers face trade-offs in their
choice of employment. For example, while some people choose to work for
large corporations that offer job security but limited potential for advancement,
others prefer to work for small companies where there is more opportunity for
• microeconomics Branch of
economics that deals with the
behavior of individual economic
units—consumers, firms,
workers, and investors—as well
as the markets that these units
comprise.
• macroeconomics Branch
of economics that deals with
aggregate economic variables,
such as the level and growth rate
of national output, interest rates,
unemployment, and inflation.
30. CHAPTER 1 • Preliminaries 5
advancement but less security. Finally, workers must sometimes decide how
many hours per week they wish to work, thereby trading off labor for leisure.
FIRMS Firms also face limits in terms of the kinds of products that they can pro-
duce, and the resources available to produce them. General Motors, for exam-
ple, is very good at producing cars and trucks, but it does not have the ability
to produce airplanes, computers, or pharmaceuticals. It is also constrained in
terms of financial resources and the current production capacity of its factories.
Given these constraints, GM must decide how many of each type of vehicle to
produce. If it wants to produce a larger total number of cars and trucks next
year or the year after, it must decide whether to hire more workers, build new
factories, or do both. The theory of the firm, the subject matter of Chapters 6 and
7, describes how these trade-offs can best be made.
Prices and Markets
A second important theme of microeconomics is the role of prices. All of the
trade-offs described above are based on the prices faced by consumers, workers,
or firms. For example, a consumer trades off beef for chicken based partly on
his or her preferences for each one, but also on their prices. Likewise, workers
trade off labor for leisure based in part on the “price” that they can get for their
labor—i.e., the wage. And firms decide whether to hire more workers or pur-
chase more machines based in part on wage rates and machine prices.
Microeconomics also describes how prices are determined. In a centrally
planned economy, prices are set by the government. In a market economy, prices
are determined by the interactions of consumers, workers, and firms. These
interactions occur in markets—collections of buyers and sellers that together
determine the price of a good. In the automobile market, for example, car
prices are affected by competition among Ford, General Motors, Toyota, and
other manufacturers, and also by the demands of consumers. The central role
of markets is the third important theme of microeconomics. We will say more
about the nature and operation of markets shortly.
Theories and Models
Like any science, economics is concerned with the explanations of observed
phenomena. Why, for example, do firms tend to hire or lay off workers when the
prices of their raw materials change? How many workers are likely to be hired
or laid off by a firm or an industry if the price of raw materials increases by, say,
10 percent?
In economics, as in other sciences, explanation and prediction are based on
theories. Theories are developed to explain observed phenomena in terms of a set
of basic rules and assumptions. The theory of the firm, for example, begins with
a simple assumption—firms try to maximize their profits. The theory uses this
assumption to explain how firms choose the amounts of labor, capital, and raw
materials that they use for production and the amount of output they produce.
It also explains how these choices depend on the prices of inputs, such as labor,
capital, and raw materials, and the prices that firms can receive for their outputs.
Economic theories are also the basis for making predictions. Thus the theory
of the firm tells us whether a firm’s output level will increase or decrease in
response to an increase in wage rates or a decrease in the price of raw materi-
als. With the application of statistical and econometric techniques, theories can
be used to construct models from which quantitative predictions can be made.
31. 6 PART 1 • Introduction: Markets and Prices
A model is a mathematical representation, based on economic theory, of a firm, a
market, or some other entity. For example, we might develop a model of a par-
ticular firm and use it to predict by how much the firm’s output level will change
as a result of, say, a 10-percent drop in the price of raw materials.
Statistics and econometrics also let us measure the accuracy of our predictions.
For example, suppose we predict that a 10-percent drop in the price of raw materi-
als will lead to a 5-percent increase in output. Are we sure that the increase in out-
put will be exactly 5 percent, or might it be somewhere between 3 and 7 percent?
Quantifying the accuracy of a prediction can be as important as the prediction itself.
No theory, whether in economics, physics, or any other science, is perfectly
correct. The usefulness and validity of a theory depend on whether it succeeds
in explaining and predicting the set of phenomena that it is intended to explain
and predict. Theories, therefore, are continually tested against observation. As
a result of this testing, they are often modified or refined and occasionally even
discarded. The process of testing and refining theories is central to the develop-
ment of economics as a science.
When evaluating a theory, it is important to keep in mind that it is invariably
imperfect. This is the case in every branch of science. In physics, for example,
Boyle’s law relates the volume, temperature, and pressure of a gas.2
The law is
based on the assumption that individual molecules of a gas behave as though
they were tiny, elastic billiard balls. Physicists today know that gas molecules do
not, in fact, always behave like billiard balls, which is why Boyle’s law breaks
down under extremes of pressure and temperature. Under most conditions,
however, it does an excellent job of predicting how the temperature of a gas will
change when the pressure and volume change, and it is therefore an essential
tool for engineers and scientists.
The situation is much the same in economics. For example, because firms do
not maximize their profits all the time, the theory of the firm has had only limited
success in explaining certain aspects of firms’ behavior, such as the timing of
capital investment decisions. Nonetheless, the theory does explain a broad range
of phenomena regarding the behavior, growth, and evolution of firms and indus-
tries, and has thus become an important tool for managers and policymakers.
Positive versus Normative Analysis
Microeconomics is concerned with both positive and normative questions. Positive
questions deal with explanation and prediction, normative questions with what
ought to be. Suppose the U.S. government imposes a quota on the import of
foreign cars. What will happen to the price, production, and sales of cars? What
impact will this policy change have on American consumers? On workers in the
automobile industry? These questions belong to the realm of positive analysis:
statements that describe relationships of cause and effect.
Positive analysis is central to microeconomics. As we explained above,
theories are developed to explain phenomena, tested against observations, and
used to construct models from which predictions are made. The use of eco-
nomic theory for prediction is important both for the managers of firms and for
public policy. Suppose the federal government is considering raising the tax on
gasoline. The change would affect the price of gasoline, consumers’ purchasing
• positive analysis Analysis
describing relationships of
cause and effect.
2
Robert Boyle (1627–1691) was a British chemist and physicist who discovered experimentally that
pressure (P), volume (V), and temperature (T) were related in the following way: PV = RT, where
R is a constant. Later, physicists derived this relationship as a consequence of the kinetic theory of
gases, which describes the movement of gas molecules in statistical terms.
32. CHAPTER 1 • Preliminaries 7
choices for small or large cars, the amount of driving that people do, and so
on. To plan sensibly, oil companies, automobile companies, producers of auto-
mobile parts, and firms in the tourist industry would all need to estimate the
impact of the change. Government policymakers would also need quantitative
estimates of the effects. They would want to determine the costs imposed on
consumers (perhaps broken down by income categories); the effects on profits
and employment in the oil, automobile, and tourist industries; and the amount
of tax revenue likely to be collected each year.
Sometimes we want to go beyond explanation and prediction to ask such
questions as “What is best?” This involves normative analysis, which is also
important for both managers of firms and those making public policy. Again,
consider a new tax on gasoline. Automobile companies would want to deter-
mine the best (profit-maximizing) mix of large and small cars to produce once
the tax is in place. Specifically, how much money should be invested to make
cars more fuel-efficient? For policymakers, the primary issue is likely to be
whether the tax is in the public interest. The same policy objectives (say, an
increase in tax revenues and a decrease in dependence on imported oil) might
be met more cheaply with a different kind of tax, such as a tariff on imported oil.
Normative analysis is not only concerned with alternative policy options; it
also involves the design of particular policy choices. For example, suppose it has
been decided that a gasoline tax is desirable. Balancing costs and benefits, we
then ask what is the optimal size of the tax.
Normative analysis is often supplemented by value judgments. For example,
a comparison between a gasoline tax and an oil import tariff might conclude that
the gasoline tax will be easier to administer but will have a greater impact on
lower-income consumers. At that point, society must make a value judgment,
weighing equity against economic efficiency. When value judgments are involved,
microeconomics cannot tell us what the best policy is. However, it can clarify the
trade-offs and thereby help to illuminate the issues and sharpen the debate.
1.2 What Is a Market?
Business people, journalists, politicians, and ordinary consumers talk about
markets all the time—for example, oil markets, housing markets, bond markets,
labor markets, and markets for all kinds of goods and services. But often what
they mean by the word “market” is vague or misleading. In economics, markets
are a central focus of analysis, so economists try to be as clear as possible about
what they mean when they refer to a market.
It is easiest to understand what a market is and how it works by dividing
individual economic units into two broad groups according to function—buyers
and sellers. Buyers include consumers, who purchase goods and services, and
firms, which buy labor, capital, and raw materials that they use to produce
goods and services. Sellers include firms, which sell their goods and services;
workers, who sell their labor services; and resource owners, who rent land or
sell mineral resources to firms. Clearly, most people and most firms act as both
buyers and sellers, but we will find it helpful to think of them as simply buyers
when they are buying something and sellers when they are selling something.
Together, buyers and sellers interact to form markets. A market is the collection
of buyers and sellers that, through their actual or potential interactions, determine
the price of a product or set of products. In the market for personal computers, for
example, the buyers are business firms, households, and students; the sellers are
• normative analysis Analysis
examining questions of what
ought to be.
• market Collection of buyers
and sellers that, through their
actual or potential interactions,
determine the price of a product
or set of products.
33. 8 PART 1 • Introduction: Markets and Prices
Hewlett-Packard, Lenovo, Dell, Apple, and a number of other firms. Note that a
market includes more than an industry. An industry is a collection of firms that sell the
same or closely related products. In effect, an industry is the supply side of the market.
Economists are often concerned with market definition—with determining
which buyers and sellers should be included in a particular market. When defin-
ing a market, potential interactions of buyers and sellers can be just as important
as actual ones. An example of this is the market for gold. A New Yorker who
wants to buy gold is unlikely to travel to Zurich to do so. Most buyers of gold
in New York will interact only with sellers in New York. But because the cost of
transporting gold is small relative to its value, buyers of gold in New York could
purchase their gold in Zurich if the prices there were significantly lower.
Significant differences in the price of a commodity create a potential for
arbitrage: buying at a low price in one location and selling at a higher price
somewhere else. The possibility of arbitrage prevents the prices of gold in New
York and Zurich from differing significantly and creates a world market for gold.
Markets are at the center of economic activity, and many of the most interest-
ing issues in economics concern the functioning of markets. For example, why
do only a few firms compete with one another in some markets, while in others
a great many firms compete? Are consumers necessarily better off if there are
many firms? If so, should the government intervene in markets with only a few
firms? Why have prices in some markets risen or fallen rapidly, while in other
markets prices have hardly changed at all? And which markets offer the best
opportunities for an entrepreneur thinking of going into business?
Competitive versus Noncompetitive Markets
In this book, we study the behavior of both competitive and noncompetitive
markets. A perfectly competitive market has many buyers and sellers, so that
no single buyer or seller has any impact on price. Most agricultural markets are
close to being perfectly competitive. For example, thousands of farmers produce
wheat, which thousands of buyers purchase to produce flour and other prod-
ucts. As a result, no single farmer and no single buyer can significantly affect the
price of wheat.
Many other markets are competitive enough to be treated as if they were per-
fectly competitive. The world market for copper, for example, contains a few
dozen major producers. That number is enough for the impact on price to be
small if any one producer goes out of business. The same is true for many other
natural resource markets, such as those for coal, iron, tin, or lumber.
Other markets containing a small number of producers may still be treated
as competitive for purposes of analysis. For example, the U.S. airline industry
contains several dozen firms, but most routes are served by only a few firms.
Nonetheless, because competition among those firms is often fierce, for some
purposes airline markets can be treated as competitive. Finally, some markets
contain many producers but are noncompetitive; that is, individual firms can
jointly affect the price. The world oil market is one example. Since the early
1970s, that market has been dominated by the OPEC cartel. (A cartel is a group
of producers that acts collectively.)
Market Price
Markets make possible transactions between buyers and sellers. Quantities of
a good are sold at specific prices. In a perfectly competitive market, a single
price—the market price—will usually prevail. The price of wheat in Kansas
• market definition
Determination of the buyers,
sellers, and range of products
that should be included in a
particular market.
• arbitrage Practice of buying
at a low price at one location
and selling at a higher price in
another.
• perfectly competitive
market Market with many
buyers and sellers, so that no
single buyer or seller has a
significant impact on price.
• market price Price
prevailing in a competitive
market.
34. CHAPTER 1 • Preliminaries 9
City and the price of gold in New York are two examples. These prices are usu-
ally easy to measure. For example, you can find the price of corn, wheat, or gold
each day in the business section of a newspaper.
In markets that are not perfectly competitive, different firms might charge
different prices for the same product. This might happen because one firm is
trying to win customers from its competitors, or because customers have brand
loyalties that allow some firms to charge higher prices than others. For exam-
ple, two brands of laundry detergent might be sold in the same supermarket
at different prices. Or two supermarkets in the same town might sell the same
brand of laundry detergent at different prices. In cases such as this, when we
refer to the market price, we will mean the price averaged across brands or
supermarkets.
The market prices of most goods will fluctuate over time, and for many goods
the fluctuations can be rapid. This is particularly true for goods sold in competi-
tive markets. The stock market, for example, is highly competitive because there
are typically many buyers and sellers for any one stock. As anyone who has
invested in the stock market knows, the price of any particular stock fluctuates
from minute to minute and can rise or fall substantially during a single day.
Likewise, the prices of commodities such as wheat, soybeans, coffee, oil, gold,
silver, and lumber can rise or fall dramatically in a day or a week.
Market Definition—The Extent of a Market
As we saw, market definition identifies which buyers and sellers should be
included in a given market. However, to determine which buyers and sellers
to include, we must first determine the extent of a market—its boundaries, both
geographically and in terms of the range of products to be included in it.
When we refer to the market for gasoline, for example, we must be clear about
its geographic boundaries. Are we referring to downtown Los Angeles, south-
ern California, or the entire United States? We must also be clear about the range
of products to which we are referring. Should regular-octane and high-octane
premium gasoline be included in the same market? Gasoline and diesel fuel?
For some goods, it makes sense to talk about a market only in terms of very
restrictive geographic boundaries. Housing is a good example. Most people
who work in downtown Chicago will look for housing within commuting dis-
tance. They will not look at homes 200 or 300 miles away, even though those
homes might be much cheaper. And homes (together with the land they are
sitting on) 200 miles away cannot be easily moved closer to Chicago. Thus the
housing market in Chicago is separate and distinct from, say, that in Cleveland,
Houston, Atlanta, or Philadelphia. Likewise, retail gasoline markets, though
less limited geographically, are still regional because of the expense of ship-
ping gasoline over long distances. Thus the market for gasoline in southern
California is distinct from that in northern Illinois. On the other hand, as we
mentioned earlier, gold is bought and sold in a world market; the possibility
of arbitrage prevents the price from differing significantly from one location
to another.
We must also think carefully about the range of products to include in
a market. For example, there is a market for single-lens reflex (SLR) digital
cameras, and many brands compete in that market. But what about compact
“point-and-shoot” digital cameras? Should they be considered part of the same
market? Probably not, because they are typically used for different purposes and
so do not compete with SLR cameras. Gasoline is another example. Regular- and
premium-octane gasolines might be considered part of the same market because
• extent of a market
Boundaries of a market, both
geographical and in terms of
range of products produced and
sold within it.
35. 10 PART 1 • Introduction: Markets and Prices
most consumers can use either. Diesel fuel, however, is not part of this market
because cars that use regular gasoline cannot use diesel fuel, and vice versa.3
Market definition is important for two reasons:
• A company must understand who its actual and potential competitors are for
the various products that it sells or might sell in the future. It must also know the
product boundaries and geographical boundaries of its market in order to set
price, determine advertising budgets, and make capital investment decisions.
• Market definition can be important for public policy decisions. Should the
government allow a merger or acquisition involving companies that produce
similar products, or should it challenge it? The answer depends on the impact
of that merger or acquisition on future competition and prices; often this can
be evaluated only by defining a market.
3
How can we determine the extent of a market? Since the market is where the price of a good is
established, one approach focuses on market prices. We ask whether product prices in different
geographic regions (or for different product types) are approximately the same, or whether they
tend to move together. If either is the case, we place them in the same market. For a more detailed
discussion, see George J. Stigler and Robert A. Sherwin, “The Extent of the Market,” Journal of Law
and Economics 27 (October 1985): 555–85.
4
This example is based on F. M. Scherer, “Archer-Daniels-Midland Corn Processing,” Case C16-92-1126,
John F. Kennedy School of Government, Harvard University, 1992.
EXAMPLE 1.1 THE MARKET FOR SWEETENERS
In 1990, the Archer-Daniels-Midland Company (ADM)
acquiredtheClintonCornProcessingCompany(CCP).4
ADM was a large company that produced many agri-
cultural products, one of which was high-fructose corn
syrup (HFCS). CCP was another major U.S. corn syrup
producer. The U.S. Department of Justice (DOJ) chal-
lenged the acquisition on the grounds that it would
lead to a dominant producer of corn syrup with the
power to push prices above competitive levels.
Indeed, ADM and CCP together accounted for over
70 percent of U.S. corn syrup production.
ADM fought the DOJ decision, and the case
went to court. The basic issue was whether corn
syrup represented a distinct market. If it did, the
combined market share of ADM and CCP would
have been about 40 percent, and the DOJ’s concern
might have been warranted. ADM, however,
argued that the correct market definition was much
broader—a market for sweeteners which included
sugar as well as corn syrup. Because the ADM–CCP
combined share of a sweetener market would have
been quite small, there would be no concern about
the company’s power to raise prices.
ADM argued that sugar and corn syrup should be
considered part of the same market because they
are used interchangeably to sweeten a vast array of
food products, such as soft drinks, spaghetti sauce,
and pancake syrup. ADM also showed that as the
level of prices for corn syrup and sugar fluctuated,
industrial food producers would change the propor-
tions of each sweetener that they used in their prod-
ucts. In October 1990, a federal judge agreed with
ADM’s argument that sugar and corn syrup were
both part of a broad market for sweeteners. The
acquisition was allowed to go through.
Sugar and corn syrup continue to be used almost
interchangeably to satisfy Americans’ strong taste
for sweetened foods. The use of all sweeteners rose
steadily through the 1990s, reaching 150 pounds
per person in 1999. But starting in 2000, sweetener
use began to decline as health concerns led people
to find substitute snacks with less added sugar. By
2010, American per-capita consumption of sweet-
eners had dropped to 130 pounds per person.
In addition, for the first time since 1985, people
consumed more sugar (66 pounds per person) than
corn syrup (64.5 pounds per person). Part of the
shift from corn syrup to sugar was due to a growing
belief that sugar is somehow more “natural”—and
therefore healthier—than corn syrup.
36. CHAPTER 1 • Preliminaries 11
EXAMPLE 1.2 A BICYCLE IS A BICYCLE. OR IS IT?
Where did you buy your last bicy-
cle? You might have bought a used
bike from a friend or from a posting
on Craigslist. But if it was new, you
probably bought it from either of two
types of stores.
If you were looking for something
inexpensive, just a functional bicycle
to get you from A to B, you would
have done well by going to a mass
merchandiser such as Target, Wal-
Mart, or Sears. There you could easily
find a decent bike costing around
$100 to $200. On the other hand, if
you are a serious cyclist (or at least
like to think of yourself as one), you
would probably go to a bicycle dealer—a store that
specializes in bicycles and bicycle equipment. There
it would be difficult to find a bike costing less than
$400, and you could easily spend far more. But of
course you would have been happy to spend more,
because you are serious cyclist.
What does a $1000 Trek bike give you that a
$120 Huffy bike doesn’t? Both might have 21-speed
gear shifts (3 in front and 7 in back), but the shift-
ing mechanisms on the Trek will be higher quality
and probably shift more smoothly and evenly. Both
bikes will have front and rear hand brakes, but the
brakes on the Trek will likely be stronger and more
durable. And the Trek is likely to have a lighter
frame than the Huffy, which could be
important if you are a competitive
cyclist.
So there are actually two differ-
ent markets for bicycles, markets
that can be identified by the type
of store in which the bicycle is sold.
This is illustrated in Table 1.1. “Mass
market” bicycles, the ones that are
sold in Target and Wal-Mart, are
made by companies such as Huffy,
Schwinn, and Mantis, are priced as
low as $90 and rarely cost more than
$250. These companies are focused
on producing functional bicycles as
cheaply as possible, and typically do
their manufacturing in China. “Dealer” bicycles,
the ones sold in your local bicycle store, include
such brands as Trek, Cannondale, Giant, Gary
Fisher, and Ridley, and are priced from $400 and
up—way up. For these companies the emphasis
is on performance, as measured by weight and
the quality of the brakes, gears, tires, and other
hardware.
Companies like Huffy and Schwinn would never
try to produce a $1000 bicycle, because that is
simply not their forte (or competitive advantage,
as economists like to say). Likewise, Trek and
Ridley have developed a reputation for quality,
and they have neither the skills nor the factories
TABLE 1.1 MARKETS FOR BICYCLES
TYPE OF BICYCLE COMPANIES AND PRICES (2011)
Mass Market Bicycles: Sold by mass
merchandisers such as Target, Wal-Mart,
Kmart, and Sears.
Huffy: $90—$140
Schwinn: $140—$240
Mantis: $129—$140
Mongoose: $120—$280
Dealer Bicycles: Sold by bicycle dealers
– stores that sell only (or mostly) bicycles and
bicycle equipment.
Trek: $400—$2500
Cannondale: $500—$2000
Giant: $500—$2500
Gary Fisher: $600—$2000
Mongoose: $700—$2000
Ridley: $1300—$2500
Scott: $1000—$3000
Ibis: $2000 and up
37. 12 PART 1 • Introduction: Markets and Prices
1.3 Real versus Nominal Prices
We often want to compare the price of a good today with what it was in the past
or is likely to be in the future. To make such a comparison meaningful, we need
to measure prices relative to an overall price level. In absolute terms, the price of
a dozen eggs is many times higher today than it was 50 years ago. Relative to
prices overall, however, it is actually lower. Therefore, we must be careful to
correct for inflation when comparing prices across time. This means measuring
prices in real rather than nominal terms.
The nominal price of a good (sometimes called its “current-dollar” price) is
its absolute price. For example, the nominal price of a pound of butter was about
$0.87 in 1970, $1.88 in 1980, about $1.99 in 1990, and about $3.42 in 2010. These
are the prices you would have seen in supermarkets in those years. The real price
of a good (sometimes called its “constant-dollar” price) is the price relative to an
aggregate measure of prices. In other words, it is the price adjusted for inflation.
For consumer goods, the aggregate measure of prices most often used is the
Consumer Price Index (CPI). The CPI is calculated by the U.S. Bureau of Labor
Statistics by surveying retail prices, and is published monthly. It records how the cost
of a large market basket of goods purchased by a “typical” consumer changes over
time. Percentage changes in the CPI measure the rate of inflation in the economy.
Sometimes we are interested in the prices of raw materials and other interme-
diate products bought by firms, as well as in finished products sold at wholesale
to retail stores. In this case, the aggregate measure of prices often used is the
Producer Price Index (PPI). The PPI is also calculated by the U.S. Bureau of
Labor Statistics and published monthly, and records how, on average, prices at
the wholesale level change over time. Percentage changes in the PPI measure
cost inflation and predict future changes in the CPI.
So which price index should you use to convert nominal prices to real prices?
It depends on the type of product you are examining. If it is a product or service
normally purchased by consumers, use the CPI. If instead it is a product nor-
mally purchased by businesses, use the PPI.
Because we are examining the price of butter in supermarkets, the relevant
price index is the CPI. After correcting for inflation, do we find that the price of
butter was more expensive in 2010 than in 1970? To find out, let’s calculate the
2010 price of butter in terms of 1970 dollars. The CPI was 38.8 in 1970 and rose
to about 218.1 in 2010. (There was considerable inflation in the United States
during the 1970s and early 1980s.) In 1970 dollars, the price of butter was
38.8
218.1
* $3.42 = $0.61
• nominal price Absolute
price of a good, unadjusted for
inflation.
• real price Price of a good
relative to an aggregate measure
of prices; price adjusted for
inflation.
• Consumer Price Index
Measure of the aggregate price
level.
• Producer Price Index
Measure of the aggregate price
level for intermediate products
and wholesale goods.
to produce $100 bicycles. Mongoose, on the
other hand, straddles both markets. They produce
mass market bicycles costing as little as $120, but
also high-quality dealer bicycles costing $700 to
$2000.
After you buy your bike, you will need to lock
it up carefully due to the unfortunate reality of yet
another market—the black market for used bikes
and their parts. We hope that you—and your bike—
stay out of that market!
38. CHAPTER 1 • Preliminaries 13
EXAMPLE 1.3 THE PRICE OF EGGS AND THE PRICE
OF A COLLEGE EDUCATION
In 1970, Grade A large eggs cost about 61 cents a dozen. In the same year,
the average annual cost of a college education at a private four-year college,
including room and board, was about $2112. By 2010, the price of eggs
had risen to $1.54 a dozen, and the average cost of a college education was
$21,550. In real terms, were eggs more expensive in 2010 than in 1970? Had
a college education become more expensive?
Table 1.2 shows the nominal price of eggs, the nominal cost of a college
education, and the CPI for 1970–2010. (The CPI is based on 1983 = 100.)
TABLE 1.2 THE REAL PRICES OF EGGS AND OF A COLLEGE
EDUCATION6
1970 1980 1990 2000 2010
Consumer Price Index 38.8 82.4 130.7 172.2 218.1
Nominal Prices
Grade A Large Eggs $0.61 $0.84 $1.01 $0.91 $1.54
College Education $2,112 $3,502 $7,619 $12,976 $21,550
Real Prices ($1970)
Grade A Large Eggs $0.61 $0.40 $0.30 $0.21 $0.27
College Education $2,112 $1,649 $2,262 $2,924 $3,835
5
Two good sources of data on the national economy are the Economic Report of the President and the
Statistical Abstract of the United States. Both are published annually and are available from the U.S.
Government Printing Office.
In real terms, therefore, the price of butter was lower in 2010 than it was in 1970.5
Put another way, the nominal price of butter went up by about 293 percent,
while the CPI went up 462 percent. Relative to the aggregate price level, butter
prices fell.
In this book, we will usually be concerned with real rather than nominal prices
because consumer choices involve analyses of price comparisons. These relative
prices can most easily be evaluated if there is a common basis of comparison.
Stating all prices in real terms achieves this objective. Thus, even though we will
often measure prices in dollars, we will be thinking in terms of the real purchas-
ing power of those dollars.
6
You can get data on the cost of a college education by visiting the National Center for Education
Statistics and download the Digest of Education Statistics at http://nces.ed.gov. Historical and cur-
rent data on the average retail price of eggs can be obtained from the Bureau of Labor Statistics (BLS)
at http://www.bls.gov, by selecting CPI—Average Price Data.
39. 14 PART 1 • Introduction: Markets and Prices
Also shown are the real prices of eggs and college education in 1970 dollars,
calculated as follows:
Real price of eggs in 1980 =
CPI1970
CPI1980
* nominal price in 1980
Real price of eggs in 1990 =
CPI1970
CPI1990
* nominal price in 1990
and so forth.
The table shows clearly that the real cost of a college education rose (by
82 percent) during this period, while the real cost of eggs fell (by 55 percent).
It is these relative changes in prices that are important for the choices that
consumers make, not the fact that both eggs and college cost more in nomi-
nal dollars today than they did in 1970.
In the table, we calculated real prices in terms of 1970 dollars, but we
could just as easily have calculated them in terms of dollars of some other
base year. For example, suppose we want to calculate the real price of eggs
in 1990 dollars. Then:
Real price of eggs in 1970 =
CPI1990
CPI1970
* nominal price in 1970
=
130.7
38.8
* 0.61 = 2.05
Real price of eggs in 2010 =
CPI1990
CPI2010
* nominal price in 2010
=
130.7
218.1
* 1.54 = 0.92
Percentage change in real price =
real price in 2010 - real price in 1970
real price in1970
=
0.92 - 2.05
2.05
= -0.55
Notice that the percentage decline in real price is the same whether we use
1970 dollars or 1990 dollars as the base year.
40. CHAPTER 1 • Preliminaries 15
7
Some states also have minimum wages that are higher than the federal minimum wage. For exam-
ple, in 2011 the minimum wage in Massachusetts was $8.00 per hour, in New York it was $7.25, and
in California it was $8.00 and scheduled to increase to $8.00 in 2008. You can learn more about the
minimum wage at http://www.dol.gov.
EXAMPLE 1.4 THE MINIMUM WAGE
The federal minimum wage—first instituted in 1938
at a level of 25 cents per hour—has been increased
periodically over the years. From 1991 through
1995, for example, it was $4.25 an hour. Congress
voted to raise it to $4.75 in 1996 and then to $5.15
in 1997. Legislation in 2007 to increase the minimum
wage yet again would raise it to $6.55 an hour in
2008 and $7.25 in 2009.7
Figure 1.1 shows the minimum wage from 1938
through 2015, both in nominal terms and in 2000
constant dollars. Note that although the legislated
minimum wage has steadily increased, in real terms
the minimum wage today is not much different from
what is was in the 1950s.
Nonetheless, the 2007 decision to increase the
minimum wage was a difficult one. Although the
higher minimum wage would provide a better
standard of living for those workers who had been
paid below the minimum, some analysts feared
that it would also lead to increased unemployment
among young and unskilled workers. The decision
to increase the minimum wage, therefore, raises
both normative and positive issues. The normative
issue is whether any loss of teenage and low-skilled
jobs is outweighed by two factors: (1) the direct
benefits to those workers who now earn more
as a result; and (2) any indirect benefits to other
workers whose wages might be increased along
0
2
4
6
8
1940 1945 1950 1955 1960
Year
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Dollars
per
Hour
Real Wage (2000$)
Nominal Wage
FIGURE 1.1
THE MINIMUM WAGE
In nominal terms, the minimum wage has increased steadily over the past 70 years. However, in real terms
its 2010 level is below that of the 1970s.
41. 16 PART 1 • Introduction: Markets and Prices
1.4 Why Study Microeconomics?
We think that after reading this book you will have no doubt about the impor-
tance and broad applicability of microeconomics. In fact, one of our major goals
is to show you how to apply microeconomic principles to actual decision-making
problems. Nonetheless, some extra motivation early on never hurts. Here are
two examples that not only show the use of microeconomics in practice, but also
provide a preview of this book.
Corporate Decision Making: The Toyota Prius
In 1997, Toyota Motor Corporation introduced the Prius in Japan, and started
selling it worldwide in 2001. The Prius, the first hybrid car to be sold in the
United States, can run off both a gasoline engine and a battery, and the momen-
tum of the car charges the battery. Hybrid cars are more energy efficient than
cars with just a gasoline engine; the Prius, for example, can get 45 to 55 miles per
gallon. The Prius was a big success, and within a few years other manufacturers
began introducing hybrid versions of some of their cars.
The design and efficient production of the Prius involved not only some
impressive engineering, but a lot of economics as well. First, Toyota had to think
carefully about how the public would react to the design and performance of this
new product. How strong would demand be initially, and how fast would it grow?
How would demand depend on the prices that Toyota charged? Understanding
consumer preferences and trade-offs and predicting demand and its responsive-
ness to price are essential to Toyota and every other automobile manufacturer.
(We discuss consumer preferences and demand in Chapters 3, 4, and 5.)
Next, Toyota had to be concerned with the cost of manufacturing these cars —
whether produced in Japan or, starting in 2010, in the United States. How high
would production costs be? How would the cost of each car depend on the total
number of cars produced each year? How would the cost of labor and the prices
of steel and other raw materials affect costs? How much and how fast would
costs decline as managers and workers gained experience with the production
with the wages of those at the bottom of the pay
scale.
An important positive issue is how many fewer
workers (if any) would be able to get jobs with a
higher minimum wage. As we will see in Chapter 14,
this issue is still hotly debated. Statistical studies
have suggested that an increase in the minimum
wage of about 10 percent would increase teen-
age unemployment by 1 to 2 percent. (The actual
increase from $5.15 to $7.25 represents a 41-percent
increase.) However, one review of the evidence
questions whether there are any significant unem-
ployment effects.8
8
The first study is David Neumark and William Wascher, “Employment Effects of Minimum and
Subminimum Wages: Panel Data on State Minimum Wage Laws,” Industrial and Labor Relations
Review 46 (October 1992): 55–81. A review of the literature appears in David Card and Alan Krueger,
Myth and Measurement: The New Economics of the Minimum Wage (Princeton: Princeton University
Press, 1995).