This is completed downloadable of Test Bank for Microeconomics, 3rd Edition: Hubbard
Product Details:
- ISBN-10 : 0132479370
- ISBN-13 : 978-0132479370
- Author:
Still Keeping it Real and More Accessible Than Ever!
Hubbard & O’Brien keeps it real in the third edition with updated examples, data, and end-of-chapter problems, providing the most up-to-date discussion on the recession/financial crisis and the monetary and fiscal policy response.
Hubbard & O’Brien is the only book that motivates students to learn economics through real business examples.
The #1 question students of economics ask themselves is: “Why am I here, and will I ever use this?” Hubbard/O’Brien answer this question by demonstrating that real businesses use economics to make real decisions daily. This is motivating to all students, whether they are business majors or not. All students can relate to businesses they encounter in their everyday lives. Whether they open an art studio, do social work, trade on Wall Street, work for the government, or bartend at the local pub, students will benefit from understanding the economic forces behind their work.
The book motivates users by demonstrating how real businesses use economics to make real decisions on a daily basis. Covers the different Market Structures in an intuitive fashion so that readers of all backgrounds and fields can grasp the importance and flow of these concepts. Chapter opening cases, examples and figures motivate the economic principles covered, while Solved Problems provide models of how to solve an econommic problem – keeping readers focused on the main ideas of each chapter, and preventing them from getting bogged down due to a lack of basic math or “word problem” skills.
Table of Content:
Preface
xx
Acknowledgments
xxxvi
PART 1: Introduction
Economics: Foundations and Models
2(34)
Microsoft Versus the U.S. Congress on Worker Visas
3(1)
Three Key Economic Ideas
4(3)
People Are Rational
5(1)
People Respond to Economic Incentives
5(1)
Making the Connection: Will Women Have More Babies if the Government Pays Them To?
5(1)
Optimal Decisions Are Made at the Margin
6(1)
Solved Problem 1-1: Apple Computer Makes a Decision at the Margin
7(1)
The Economic Problem that Every Society Must Solve
7(4)
What Goods and Services Will Be Produced?
8(1)
How Will the Goods and Services Be Produced?
8(1)
Who Will Receive the Goods and Services Produced?
8(1)
Centrally Planned Economies versus Market Economies
9(1)
The Modern “Mixed” Economy
9(1)
Efficiency and Equity
10(1)
Economic Models
11(3)
The Role of Assumptions in Economic Models
11(1)
Forming and Testing Hypotheses in Economic Models
11(1)
Normative and Positive Analysis
12(1)
Don’t Let This Happen to You! Don’t Confuse Positive Analysis with Normative Analysis
13(1)
Economics as a Social Science
13(1)
Making the Connection: Should the Federal Government Have Increased Restrictions on the Immigration of Skilled Workers?
13(1)
Microeconomics and Macroeconomics
14(1)
A Preview of Important Economic Terms
15(1)
Conclusion
16(8)
An Inside Look at Policy: Do Immigrants Displace or Complement Domestic Workers?
18(2)
Key Terms, Summary, Review Questions, Problems and Applications
20(4)
Appendix: Using Graphs and Formulas
24(1)
Graphs of One Variable
25(1)
Graphs of Two Variables
26(6)
Slopes of Lines
26(2)
Taking into Account More Than Two Variables on a Graph
28(1)
Positive and Negative Relationships
29(1)
Determining Cause and Effect
29(2)
Are Graphs of Economic Relationships Always Straight Lines?
31(1)
Slopes of Nonlinear Curves
31(1)
Formulas
32(4)
Formula for a Percentage Change
32(1)
Formulas for the Areas of a Rectangle and a Triangle
33(1)
Summary of Using Formulas
34(1)
Problems and Applications
34(2)
Trade-offs, Comparative Advantage, and the Market System
36(28)
Managers Making Choices at BMW
37(1)
Production Possibilities Frontiers and Opportunity Costs
38(6)
Graphing the Production Possibilities Frontier
38(2)
Solved Problem 2-1: Drawing a Production Possibilities Frontier for Rosie’s Boston Bakery
40(1)
Making the Connection: Facing the Trade-offs in Health Care Spending
41(1)
Increasing Marginal Opportunity Costs
42(1)
Economic Growth
43(1)
Comparative Advantage and Trade
44(5)
Specialization and Gains from Trade
44(2)
Absolute Advantage versus Comparative Advantage
46(1)
Comparative Advantage and the Gains from Trade
47(1)
Don’t Let This Happen to You! Don’t Confuse Absolute Advantage and Comparative Advantage
47(1)
Solved Problem 2-2: Comparative Advantage and the Gains from Trade
48(1)
The Market System
49(6)
The Circular Flow of Income
50(1)
The Gains from Free Markets
50(2)
The Market Mechanism
52(1)
Making the Connection: A Story of the Market System in Action: How Do You Make an iPod?
52(1)
The Role of the Entrepreneur
53(1)
The Legal Basis of a Successful Market System
53(1)
Making the Connection: Property Rights in Cyberspace: YouTube, Facebook, and MySpace
54(1)
Conclusion
55(9)
An Inside Look: Detroit Challenges Hybrids with New Technology
56(2)
Key Terms, Summary, Review Questions, Problems and Applications
58(6)
Where Prices Come From: The Interaction of Demand and Supply
64(32)
Red Bull and the Market for Energy Drinks
65(1)
The Demand Side of the Market
66(8)
Demand Schedules and Demand Curves
66(1)
The Law of Demand
67(1)
What Explains the Law of Demand?
67(1)
Holding Everything Else Constant: The Ceteris Paribus Condition
68(1)
Variables That Shift Market Demand
68(1)
Making the Connection: Are Big Macs an Inferior Good?
69(1)
Making the Connection: The Aging of the Baby Boom Generation
70(1)
A Change in Demand versus a Change in Quantity Demanded
71(2)
Making the Connection: Red Bull and the Future Demand for Energy Drinks
73(1)
The Supply Side of the Market
74(4)
Supply Schedules and Supply Curves
74(1)
The Law of Supply
75(1)
Variables That Shift Market Supply
75(1)
A Change in Supply versus a Change in Quantity Supplied
76(2)
Market Equilibrium: Putting Demand and Supply Together
78(3)
How Markets Eliminate Surpluses and Shortages
78(1)
Demand and Supply Both Count
79(1)
Solved Problem 3-3: Demand and Supply Both Count: A Tale of Two Letters
80(1)
The Effect of Demand and Supply Shifts on Equilibrium
81(6)
The Effect of Shifts in Supply on Equilibrium
81(1)
Making the Connection: The Falling Price of LCD Televisions
81(2)
The Effect of Shifts in Demand on Equilibrium
83(1)
The Effect of Shifts in Demand and Supply over Time
83(1)
Solved Problem 3-4: High Demand and Low Prices in the Lobster Market?
84(2)
Don’t Let This Happen to You! Remember: A Change in a Good’s Price Does Not Cause the Demand or Supply Curve to Shift
86(1)
Shifts in a Curve versus Movements along a Curve
87(1)
Conclusion
87(9)
An Inside Look: How Does Advertising Help Red Bull Increase Demand for Its Energy Drink?
88(2)
Key Terms, Summary, Review Questions, Problems and Applications
90(6)
Economic Efficiency, Government Price Setting, and Taxes
96(36)
Should the Government Control Apartment Rents?
97(1)
Consumer Surplus and Producer Surplus
98(4)
Consumer Surplus
98(2)
Making the Connection: The Consumer Surplus from Broadband Internet Service
100(1)
Producer Surplus
101(1)
What Consumer Surplus and Producer Surplus Measure
102(1)
The Efficiency of Competitive Markets
102(3)
Marginal Benefit Equals Marginal Cost in Competitive Equilibrium
103(1)
Economic Surplus
103(1)
Deadweight Loss
104(1)
Economic Surplus and Economic Efficiency
105(1)
Government Intervention in the Market: Price Floors and Price Ceilings
105(7)
Price Floors: Government Policy in Agricultural Markets
105(1)
Making the Connection: Price Floors in Labor Markets: The Debate over Minimum Wage Policy
106(2)
Price Ceilings: Government Rent Control Policy in Housing Markets
108(1)
Don’t Let This Happen to You! Don’t Confuse “Scarcity” with a “Shortage”
109(1)
Black Markets
109(1)
Solved Problem 4-3: What’s the Economic Effect of a Black Market for Apartments?
109(1)
Making the Connection: Does Holiday Gift Giving Have a Deadweight Loss?
110(1)
The Results of Government Price Controls: Winners, Losers, and Inefficiency
111(1)
Positive and Normative Analysis of Price Ceilings and Price Floors
111(1)
The Economic Impact of Taxes
112(5)
The Effect of Taxes on Economic Efficiency
112(1)
Tax Incidence: Who Actually Pays a Tax?
113(1)
Solved Problem 4-4: When Do Consumers Pay All of a Sales Tax Increase?
114(1)
Making the Connection: Is the Burden of the Social Security Tax Really Shared Equally between Workers and Firms?
115(2)
Conclusion
117(10)
An Inside Look at Policy: Is Rent Control a Lifeline or Stranglehold?
118(2)
Key Terms, Summary, Review Questions, Problems and Applications
120(7)
Appendix: Quantitative Demand and Supply Analysis
127(1)
Demand and Supply Equations
127(1)
Calculating Consumer Surplus and Producer Surplus
128(4)
Review Questions
130(1)
Problems and Applications
130(2)
PART 2: Markets in Action
Externalities, Environmental Policy, and Public Goods
132(34)
Economic Policy and the Environment
133(1)
Externalities and Economic Efficiency
134(3)
The Effect of Externalities
134(2)
Externalities and Market Failure
136(1)
What Causes Externalities?
136(1)
Private Solutions to Externalities: The Coase Theorem
137(1)
The Economically Efficient Level of Pollution Reduction
137(6)
Making the Connection: The Clean Air Act: How a Government Policy Reduced Infant Mortality
138(2)
The Basis for Private Solutions to Externalities
140(1)
Don’t Let This Happen to You! Remember That It’s the Net Benefit That Counts
141(1)
Making the Connection: The Fable of the Bees
141(1)
Do Property Rights Matter?
142(1)
The Problem of Transactions Costs
142(1)
The Coase Theorem
142(1)
Government Policies to Deal with Externalities
143(5)
Solved Problem 5-3: Using a Tax to Deal with a Negative Externality
144(1)
Command and Control versus Market-Based Approaches
145(1)
Are Tradable Emissions Allowances Licenses to Pollute?
146(1)
Making the Connection: Can a Cap-and-Trade System Reduce Global Warming?
146(2)
Four Categories of Goods
148(9)
Making the Connection: Should the Government Run the Health Care System?
149(2)
The Demand for a Public Good
151(1)
The Optimal Quantity of a Public Good
152(1)
Solved Problem 5-4: Determining the Optimal Level of Public Goods
153(2)
Common Resources
155(2)
Conclusion
157(9)
An Inside Look at Policy: The Carbon Cap Dilemma
158(2)
Key Terms, Summary, Review Questions, Problems and Applications
160(6)
Elasticity: The Responsiveness of Demand and Supply
166(36)
Do People Respond to Changes in the Price of Gasoline?
167(1)
The Price Elasticity of Demand and its Measurement
168(6)
Measuring the Price Elasticity of Demand
168(1)
Elastic Demand and Inelastic Demand
169(1)
An Example of Computing Price Elasticities
169(1)
The Midpoint Formula
170(1)
Solved Problem 6-1: Calculating the Price Elasticity of Demand
171(1)
When Demand Curves Intersect, the Flatter Curve Is More Elastic
172(1)
Polar Cases of Perfectly Elastic and Perfectly Inelastic Demand
172(2)
Don’t Let This Happen to You! Don’t Confuse Inelastic with Perfectly Inelastic
174(1)
The Determinants of the Price Elasticity of Demand
174(3)
Availability of Close Substitutes
174(1)
Passage of Time
175(1)
Luxuries versus Necessities
175(1)
Definition of the Market
175(1)
Share of a Good in a Consumer’s Budget
175(1)
Some Estimated Price Elasticities of Demand
175(1)
Making the Connection: The Price Elasticity of Demand for Breakfast Cereal
176(1)
The Relationship between Price Elasticity of Demand and Total Revenue
177(6)
Elasticity and Revenue with a Linear Demand Curve
178(1)
Solved Problem 6-3: Price and Revenue Don’t Always Move in the Same Direction
179(1)
Estimating Price Elasticity of Demand
180(1)
Making the Connection: Determining the Price Elasticity of Demand through Market Experiments
180(1)
Other Demand Elasticities
181(1)
Cross-Price Elasticity of Demand
181(1)
Income Elasticity of Demand
182(1)
Making the Connection: Price Elasticity, Cross-Price Elasticity, and Income Elasticity in the Market for Alcoholic Beverages
183(2)
Using Elasticity to Analyze the Disappearing Family Farm
183(1)
Solved Problem 6-5: Using Price Elasticity to Analyze Policy toward Illegal Drugs
184(1)
The Price Elasticity of Supply and its Measurement
185(5)
Measuring the Price Elasticity of Supply
186(1)
Determinants of the Price Elasticity of Supply
186(1)
Making the Connection: Why Are Oil Prices So Unstable?
186(1)
Polar Cases of Perfectly Elastic and Perfectly Inelastic Supply
187(2)
Using Price Elasticity of Supply to Predict Changes in Price
189(1)
Conclusion
190(2)
An Inside Look: Consumers Change Their Behavior in Response to the Gas Prices
192(2)
Key Terms, Summary, Review Questions, Problems and Applications
194(8)
PART 3: Firms in the Domestic and International Economies
Firms, the Stock Market, and Corporate Governance
202(34)
Facebook: From Dorm Room to Wall Street
203(1)
Types of Firms
204(2)
Who Is Liable? Limited and Unlimited Liability
204(1)
Corporations Earn the Majority of Revenue and Profits
205(1)
Making the Connection: How Important Are Small Businesses to the U.S. Economy?
206(1)
The Structure of Corporations and the Principal-Agent Problem
206(2)
Corporate Structure and Corporate Governance
207(1)
Solved Problem 7-2: Does the Principal-Agent Problem Apply to the Relationship between Managers and Workers?
207(1)
How Firms Raise Funds
208(5)
Sources of External Funds
208(2)
Stock and Bond Markets Provide Capital—and Information
210(1)
Don’t Let This Happen to You! When Google Shares Change Hands, Google Doesn’t Get the Money
210(1)
Why Do Stock Prices Fluctuate So Much?
211(1)
Making the Connection: Following Abercrombie & Fitch’s Stock Price in the Financial Pages
212(1)
Using Financial Statements to Evaluate a Corporation
213(2)
The Income Statement
214(1)
The Balance Sheet
215(1)
Corporate Governance Policy
215(4)
The Accounting Scandals of the Early 2000s
215(1)
Solved Problem 7-5: What Makes a Good Board of Directors?
216(1)
The Financial Meltdown of the Late 2000s
217(1)
Making the Connection: Was the Principal-Agent Problem at the Heart of the Financial Crisis?
218(1)
Conclusion
219(8)
An Inside Look: The Principal-Agent Problem at Facebook
220(2)
Key Terms, Summary, Review Questions, Problems and Applications
222(5)
Appendix: Tools to Analyze Firms’ Financial Information
227(1)
Using Present Value to Make Investment Decisions
227(2)
Solved Problem 7A-1: How to Receive Your Contest Winnings
229(3)
Using Present Value to Calculate Bond Prices
230(1)
Using Present Value to Calculate Stock Prices
230(1)
A Simple Formula for Calculating Stock Prices
231(1)
Going Deeper into Financial Statements
232(4)
Analyzing Income Statements
232(1)
Analyzing Balance Sheets
233(1)
Key Terms, Review Questions, Problems and Applications
234(2)
Comparative Advantage and the Gains from International Trade
236(42)
Is a Government “Buy American” Policy a Good Idea for U.S. Firms Like Caterpillar?
237(1)
The United States in the International Economy
238(3)
The Importance of Trade to the U.S. Economy
238(1)
U.S. International Trade in a World Context
239(1)
Making the Connection: How Caterpillar Depends on International Trade
240(1)
Comparative Advantage in International Trade
241(2)
A Brief Review of Comparative Advantage
241(1)
Comparative Advantage in International Trade
242(1)
How Countries Gain from International Trade
243(6)
Increasing Consumption through Trade
243(1)
Solved Problem 8-3: The Gains from Trade
244(2)
Why Don’t We See Complete Specialization?
246(1)
Does Anyone Lose as a Result of International Trade?
246(1)
Don’t Let This Happen to You! Remember That Trade Creates Both Winners and Losers
246(1)
Where Does Comparative Advantage Come From?
247(1)
Making the Connection: Why Is Dalton, Georgia, the Carpet-Making Capital of the World?
248(1)
Comparative Advantage Over Time: The Rise and Fall—and Rise—of the U.S. Consumer Electronics Industry
248(1)
Government Policies that Restrict International Trade
249(6)
Tariffs
250(1)
Quotas and Voluntary Export Restraints
251(1)
Measuring the Economic Effect of the Sugar Quota
252(1)
Solved Problem 8-4: Measuring the Economic Effect of a Quota
253(1)
The High Cost of Preserving Jobs with Tariffs and Quotas
254(1)
Gains from Unilateral Elimination of Tariffs and Quotas
255(1)
Other Barriers to Trade
255(1)
The Arguments Over Trade Policies and Globalization
255(6)
Why Do Some People Oppose the World Trade Organization?
256(1)
Making the Connection: The Unintended Consequences of Banning Goods Made with Child Labor
257(2)
Dumping
259(1)
Positive versus Normative Analysis (Once Again)
259(1)
Making the Connection: The Obama Administration Develops a Trade Policy
260(1)
Conclusion
261(11)
An Inside Look at Policy: Caterpillar and Other Exporters Oppose “Buy American” Provision
262(2)
Key Terms, Summary, Review Questions, Problems and Applications
264(8)
Appendix: Multinational Firms
272(1)
A Brief History of Multinational Enterprises
272(1)
Strategic Factors in Moving from Domestic to Foreign Markets
273(2)
Making the Connection: Have Multinational Corporations Reduced Employment and Lowered Wages in the United States?
275(1)
Challenges to U.S. Firms in Foreign Markets
276(1)
Competitive Advantages of U.S. Firms
276(2)
Key Terms, Review Questions, Problems and Applications
277(1)
PART 4: Microeconomic Foundations: Consumers and Firms
Consumer Choice and Behavioral Economics
278(46)
Can Oprah Get You to Buy a Kindle?
279(1)
Utility and Consumer Decision Making
280(8)
The Economic Model of Consumer Behavior in a Nutshell
280(1)
Utility
280(1)
The Principle of Diminishing Marginal Utility
281(1)
The Rule of Equal Marginal Utility per Dollar Spent
281(3)
Solved Problem 9-1: Finding the Optimal Level of Consumption
284(1)
What if the Rule of Equal Marginal Utility per Dollar Does Not Hold?
285(1)
Don’t Let This Happen to You! Equalize Marginal Utilities per Dollar
286(1)
The Income Effect and Substitution Effect of a Price Change
287(1)
Where Demand Curves Come from
288(3)
Making the Connection: Are There Any Upward-Sloping Demand Curves in the Real World?
290(1)
Social Influences on Decision Making
291(5)
The Effects of Celebrity Endorsements
291(1)
Making the Connection: Why Do Firms Pay Tiger Woods to Endorse Their Products?
292(1)
Network Externalities
292(1)
Does Fairness Matter?
293(2)
Making the Connection: Professor Krueger Goes to the Super Bowl
295(1)
Behavioral Economics: Do People Make Their Choices Rationally?
296(5)
Ignoring Nonmonetary Opportunity Costs
296(1)
Failing to Ignore Sunk Costs
297(1)
Making the Connection: A Blogger Who Understands the Importance of Ignoring Sunk Costs
298(1)
Being Unrealistic about Future Behavior
298(1)
Making the Connection: Why Don’t Students Study More?
299(1)
Solved Problem 9-4: How Do You Get People to Save More of Their Income?
299(2)
Conclusion
301(8)
An Inside Look: The Power of Oprah’s Kindle Endorsement
302(2)
Key Terms, Summary, Review Questions, Problems and Applications
304(5)
Appendix: Using Indifference Curves and Budget Lines to Understand Consumer Behavior
309(1)
Consumer Preferences
309(1)
Indifference Curves
309(2)
The Slope of an Indifference Curve
310(1)
Can Indifference Curves Ever Cross?
311(1)
The Budget Constraint
311(1)
Choosing the Optimal Consumption of Pizza and Coke
312(7)
Making the Connection: Dell Determines the Optimal Mix of Products
313(1)
Deriving the Demand Curve
314(2)
Solved Problem 9A-1: When Does a Price Change Make a Consumer Better Off?
316(1)
The Income Effect and the Substitution Effect of a Price Change
317(1)
How a Change in Income Affects Optimal Consumption
318(1)
The Slope of the Indifference Curve, the Slope of the Budget Line, and the Rule of Equal Marginal Utility per Dollar Spent
319(5)
The Rule of Equal Marginal Utility per Dollar Spent Revisited
320(1)
Key Terms, Review Questions, Problems and Applications
321(3)
Technology, Production, and Costs
324(42)
Sony Uses a Cost Curve to Determine the Price of Radios
325(1)
Technology: An Economic Definition
326(1)
Making the Connection: Improving Inventory Control at Wal-Mart
326(1)
The Short Run and the Long Run in Economics
327(4)
The Difference between Fixed Costs and Variable Costs
327(1)
Making the Connection: Fixed Costs in the Publishing Industry
328(1)
Implicit Costs versus Explicit Costs
328(1)
The Production Function
329(1)
A First Look at the Relationship between Production and Cost
330(1)
The Marginal Product of Labor and the Average Product of Labor
331(4)
The Law of Diminishing Returns
331(1)
Graphing Production
332(1)
Making the Connection: Adam Smith’s Famous Account of the Division of Labor in a Pin Factory
333(1)
The Relationship between Marginal and Average Product
333(1)
An Example of Marginal and Average Values: College Grades
334(1)
The Relationship between Short-Run Production and Short-Run Cost
335(1)
Marginal Cost
335(1)
Why Are the Marginal and Average Cost Curves U-Shaped?
335(3)
Solved Problem 10-4: The Relationship between Marginal Cost and Average Cost
337(1)
Graphing Cost Curves
338(1)
Costs in the Long Run
338(6)
Economies of Scale
339(1)
Long-Run Average Total Cost Curves for Bookstores
340(1)
Solved Problem 10-6: Using Long-Run Average Cost Curves to Understand Business Strategy
341(1)
Making the Connection: The Colossal River Rouge: Diseconomies of Scale at Ford Motor Company
342(1)
Don’t Let This Happen to You! Don’t Confuse Diminishing Returns With Diseconomies of Scale
343(1)
Conclusion
344(11)
An Inside Look: Sony Gambles on the Future Cost of the Next Generation of TVs
346(2)
Key Terms, Summary, Review Questions, Problems and Applications
348(7)
Appendix: Using Isoquants and Isocosts to Understand Production and Cost
355(1)
Isoquants
355(1)
An Isoquant Graph
355(1)
The Slope of an Isoquant
356(1)
Isocost Lines
356(1)
Graphing the Isocost Line
356(2)
The Slope and Position of the Isocost Line
356(2)
Choosing the Cost-Minimizing Combination of Capital and Labor
358(1)
Different Input Price Ratios Lead to Different Input Choices
358(5)
Making the Connection: The Changing Input Mix in Walt Disney Film Animation
359(1)
Another Look at Cost Minimization
360(1)
Solved Problem 10A-1: Determining the Optimal Combination of Inputs
361(1)
Making the Connection: Do National Football League Teams Behave Efficiently?
362(1)
The Expansion Path
363(3)
Key Terms, Review Questions, Problems and Applications
364(2)
PART 5: Market Structure and Firm Strategy
Firms in Perfectly Competitive Markets
366(34)
Perfect Competition in the Market for Organic Apples
367(2)
Perfectly Competitive Markets
369(1)
A Perfectly Competitive Firm Cannot Affect the Market Price
369(1)
The Demand Curve for the Output of a Perfectly Competitive Firm
370(1)
Don’t Let This Happen to You! Don’t Confuse the Demand Curve for Farmer Parker’s Wheat with the Market Demand Curve for Wheat
370(1)
How a Firm Maximizes Profit in a Perfectly Competitive Market
371(3)
Revenue for a Firm in a Perfectly Competitive Market
371(1)
Determining the Profit-Maximizing Level of Output
372(2)
Illustrating Profit or Loss on the Cost Curve Graph
374(5)
Showing a Profit on the Graph
375(1)
Solved Problem 11-3: Determining Profit-Maximizing Price and Quantity
375(2)
Don’t Let This Happen to You! Remember that Firms Maximize Their Total Profits, Not Their Profits per Unit
377(1)
Illustrating When a Firm Is Breaking Even or Operating at a Loss
378(1)
Making the Connection: Losing Money in the Medical Screening Industry
378(1)
Deciding Whether to Produce or to Shut Down in the Short Run
379(3)
Making the Connection: When to Close a Laundry
380(1)
The Supply Curve of a Firm in the Short Run
381(1)
The Market Supply Curve in a Perfectly Competitive Industry
381(1)
“If Everyone Can Do It, You Can’t Make Money at It”: The Entry and Exit of Firms in the Long Run
382(7)
Economic Profit and the Entry or Exit Decision
382(4)
Long-Run Equilibrium in a Perfectly Competitive Market
386(1)
The Long-Run Supply Curve in a Perfectly Competitive Market
386(1)
Making the Connection: Easy Entry Makes the Long Run Pretty Short in the Apple iPhone Apps Store
387(1)
Increasing-Cost and Decreasing-Cost Industries
388(1)
Perfect Competition and Efficiency
389(2)
Productive Efficiency
389(1)
Solved Problem 11-6: How Productive Efficiency Benefits Consumers
389(2)
Allocative Efficiency
391(1)
Conclusion
391(9)
An Inside Look at Policy: It Isn’t Easy—or Cheap—to be Green
392(2)
Key Terms, Summary, Review Questions, Problems and Applications
394(6)
Monopolistic Competition: The Competitive Model in a More Realistic Setting
400(30)
Starbucks: The Limits to Growth Through Product Differentiation
401(1)
Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market
402(2)
The Demand Curve for a Monopolistically Competitive Firm
402(1)
Marginal Revenue for a Firm with a Downward-Sloping Demand Curve
402(2)
How a Monopolistically Competitive Firm Maximizes Profits in the Short Run
404(3)
Solved Problem 12-2: Does Minimizing Cost Maximize Profits?
406(1)
What Happens to Profits in the Long Run?
407(5)
How Does the Entry of New Firms Affect the Profits of Existing Firms?
407(1)
Don’t Let This Happen to You! Don’t Confuse Zero Economic Profit with Zero Accounting Profit
408(2)
Making the Connection: The Rise and Decline of Starbucks
410(1)
Is Zero Economic Profit Inevitable in the Long Run?
410(1)
Solved Problem 12-3: Can It Be Profitable to Be the High-Price Seller?
411(1)
Comparing Perfect Competition and Monopolistic Competition
412(2)
Excess Capacity under Monopolistic Competition
412(1)
Is Monopolistic Competition Inefficient?
413(1)
How Consumers Benefit from Monopolistic Competition
413(1)
Making the Connection: Abercrombie & Fitch: Can the Product Be Too Differentiated?
414(1)
How Marketing Differentiates Products
414(2)
Brand Management
415(1)
Advertising
415(1)
Making the Connection: Google Tries (and Fails) to Measure the Effectiveness of Radio Advertising
415(1)
Defending a Brand Name
416(1)
What Makes a Firm Successful?
416(2)
Making the Connection: Is Being the First Firm in the Market a Key to Success?
417(1)
Conclusion
418(12)
An Inside Look: Starbucks Faces McCompetition
420(2)
Key Terms, Summery, Review Questions, Problems and Applications
422(8)
Oligopoly: Firms in Less Competitive Markets
430(30)
Competition in the Computer Market
431(1)
Oligopoly and Barriers to Entry
432(3)
Barriers to Entry
433(2)
Using Game Theory to Analyze Oligopoly
435(8)
A Duopoly Game: Price Competition between Two Firms
435(1)
Firm Behavior and the Prisoner’s Dilemma
436(1)
Don’t Let This Happen to You! Don’t Misunderstand Why Each Firm Ends Up Charging a Price of $1,000
437(1)
Solved Problem 13-2: Is Advertising a Prisoner’s Dilemma for Coca-Cola and Pepsi?
437(1)
Making the Connection: Is There a Dominant Strategy for Bidding on eBay?
438(1)
Can Firms Escape the Prisoner’s Dilemma?
439(1)
Making the Connection: American Airlines and Northwest Airlines Fail to Cooperate on a Price Increase
440(1)
Cartels: The Case of OPEC
441(2)
Sequential Games and Business Strategy
443(3)
Deterring Entry
443(1)
Solved Problem 13-3: Is Deterring Entry Always a Good Idea?
444(1)
Bargaining
445(1)
The Five Competitive Forces Model
446(3)
Competition from Existing Firms
446(1)
The Threat from Potential Entrants
447(1)
Competition from Substitute Goods or Services
447(1)
The Bargaining Power of Buyers
448(1)
The Bargaining Power of Suppliers
448(1)
Making the Connection: Can We Predict Which Firms Will Continue to Be Successful?
448(1)
Conclusion
449(11)
An Inside Look: Hewlett-Packard Uses New Technology to Boost Sales of Personal Computers
450(2)
Key Terms, Summary, Review Questions, Problems and Applications
452(8)
Monopoly and Antitrust Policy
460(32)
Is Cable Television a Monopoly?
461(1)
Is Any Firm Ever Really a Monopoly?
462(1)
Making the Connection: Is Xbox 360 a Close Substitute for Playstation 3?
462(1)
Where Do Monopolies Come From?
463(6)
Entry Blocked by Government Action
463(1)
Making the Connection: The End of the Christmas Plant Monopoly
464(1)
Control of a Key Resource
465(1)
Making the Connection: Are Diamond Profits Forever? The De Beers Diamond Monopoly
465(1)
Network Externalities
466(1)
Natural Monopoly
467(1)
Solved Problem 14-2: Is the OpenTable Web Site a Natural Monopoly?
468(1)
How Does a Monopoly Choose Price and Output?
469(4)
Marginal Revenue Once Again
469(2)
Profit Maximization for a Monopolist
471(1)
Solved Problem 14-3: Finding Profit-Maximizing Price and Output for a Monopolist
472(1)
Does Monopoly Reduce Economic Efficiency?
473(3)
Comparing Monopoly and Perfect Competition
473(1)
Don’t Let This Happen to You! Don’t Assume That Charging a Higher Price Is Always More Profitable for a Monopolist
474(1)
Measuring the Efficiency Losses from Monopoly
474(1)
How Large Are the Efficiency Losses Due to Monopoly?
475(1)
Market Power and Technological Change
476(1)
Government Policy Toward Monopoly
476(7)
Antitrust Laws and Antitrust Enforcement
476(1)
Mergers: The Trade-off between Market Power and Efficiency
477(2)
The Department of Justice and FTC Merger Guidelines
479(1)
Making the Connection: Have Google and Microsoft Violated the Antitrust Laws?
480(1)
Regulating Natural Monopolies
481(2)
Conclusion
483(9)
An Inside Look at Policy: The End of the Cable TV Monopoly?
484(2)
Key Terms, Summary, Review Questions, Problems and Applications
486(6)
Pricing Strategy
492(28)
Getting into Walt Disney World: One Price Does not Fit All
493(1)
Pricing Strategy, the Law of One Price, and Arbitrage
494(2)
Arbitrage
494(1)
Solved Problem 15-1: Is Arbitrage Just a Rip-off?
495(1)
Why Don’t All Firms Charge the Same Price?
495(1)
Price Discrimination: Charging Different Prices for the Same Product
496(9)
Don’t Let This Happen to You! Don’t Confuse Price Discrimination with Other Types of Discrimination
496(1)
The Requirements for Successful Price Discrimination
497(1)
Solved Problem 15-2: How Apple Uses Price Discrimination to Increase Profits
498(1)
Airlines: The Kings of Price Discrimination
499(2)
Making the Connection: How Colleges Use Yield Management
501(1)
Perfect Price Discrimination
501(2)
Price Discrimination across Time
503(1)
Can Price Discrimination Be Illegal?
503(1)
Making the Connection: Price Discrimination with a Twist at Netflix
504(1)
Other Pricing Strategies
505(6)
Odd Pricing: Why Is the Price $2.99 Instead of $3.00?
505(1)
Why Do Firms Use Cost-Plus Pricing?
506(1)
Making the Connection: Cost-Plus Pricing in the Publishing Industry
506(2)
Why Do Some Firms Use Two-Part Tariffs?
508(3)
Conclusion
511(9)
An Inside Look: Paying for the Right to Pay to See “America’s Team”
512(2)
Key Terms, Summary, Review Questions, Problems and Applications
514(6)
PART 6: Markets for Factors of Production
The Markets for Labor and Other Factors of Production
520(38)
Why are the New York Giants Paying CC Sabathia $161 Million?
521(1)
The Demand for Labor
522(4)
The Marginal Revenue Product of Labor
522(2)
Solved Problem 16-1: Hiring Decisions by a Firm That Is a Price Maker
524(1)
The Market Demand Curve for Labor
525(1)
Factors That Shift the Market Demand Curve for Labor
525(1)
The Supply of Labor
526(2)
The Market Supply Curve of Labor
528(1)
Factors That Shift the Market Supply Curve of Labor
528(1)
Equilibrium in the Labor Market
528(4)
The Effect on Equilibrium Wages of a Shift in Labor Demand
529(1)
Making the Connection: Will Your Future Income Depend on Which Courses You Take in College?
530(1)
The Effect on Equilibrium Wages of a Shift in Labor Supply
531(1)
Explaining Differences in Wages
532(10)
Don’t Let This Happen to You! Remember That Prices and Wages Are Determined at the Margin
532(1)
Making the Connection: Technology and the Earnings of “Superstars”
533(1)
Compensating Differentials
534(1)
Making the Connection: Are U.S. Firms Handicapped by Paying for Their Employees’ Health Insurance?
535(1)
Discrimination
536(2)
Solved Problem 16-4: Is Passing “Comparable Worth” Legislation a Good Way to Close the Gap between Men’s and Women’s Pay?
538(3)
Labor Unions
541(1)
Personnel Economics
542(2)
Should Workers’ Pay Depend on How Much They Work or on How Much They Produce?
542(1)
Making the Connection: Raising Pay, Productivity, and Profits at Safelite AutoGlass
543(1)
Other Considerations in Setting Compensation Systems
543(1)
The Markets for Capital and Natural Resources
544(3)
The Market for Capital
544(1)
The Market for Natural Resources
545(1)
Monopsony
545(1)
The Marginal Productivity Theory of Income Distribution
546(1)
Conclusion
547(11)
An Inside Look: Basketball Coaches’ Salaries: A March to Madness?
548(2)
Key Terms, Summary, Review Questions, Problems and Applications
550(8)
PART 7: Information, Taxes, and the Distribution of Income
The Economics of Information
558(20)
Why Does State Farm Charge Young Men So Much More than Young Women for Auto Insurance?
559(1)
Asymmetric Information
560(4)
Adverse Selection and the Market for “Lemons”
560(1)
Reducing Adverse Selection in the Car Market: Warranties and Reputations
561(1)
Asymmetric Information in the Market for Insurance
561(1)
Reducing Adverse Selection in the Insurance Market
561(1)
Making the Connection: Does Adverse Selection Explain Why Some People Do Not Have Health Insurance?
562(1)
Moral Hazard
563(1)
Don’t Let This Happen to You! Don’t Confuse Adverse Selection with Moral Hazard
564(1)
Adverse Selection and Moral Hazard in Financial Markets
564(2)
Reducing Adverse Selection and Moral Hazard in Financial Markets
565(1)
Making the Connection: Moral Hazard, Big Time: Bernie Madoff’s “Ponzi” Scheme
565(1)
Adverse Selection and Moral Hazard in Labor Markets
566(2)
Solved Problem 17-3: Changing Workers’ Compensation to Reduce Adverse Selection and Moral Hazard
567(1)
The Winner’s Curse: When Is It Bad to Win an Auction?
568(3)
Making the Connection: Is There a Winner’s Curse in the Marriage Market?
569(1)
When Does the Winner’s Curse Apply?
569(1)
Solved Problem 17-4: Auctions, Available Information, and the Winner’s Curse
570(1)
Making the Connection: Want to Make Some Money? Try Auctioning a Jar of Coins
570(1)
Conclusion
571(7)
An Inside Look at Policy: Pay Less for Car Insurance! (But We’ll Be Watching How You Drive)
572(2)
Key Terms, Summary, Review Questions, Problems and Applications
574(4)
Public Choice, Taxes, and the Distribution of Income
578
Should the Government Use the Tax System to Reduce Inequality?
579(1)
Public Choice
580(4)
How Do We Know the Public Interest? Models of Voting
580(2)
Government Failure?
582(2)
Is Government Regulation Necessary?
584(1)
The Tax System
584(8)
An Overview of the U.S. Tax System
585(1)
Progressive and Regressive Taxes
586(1)
Making the Connection: Which Groups Pay the Most in Federal Taxes?
587(1)
Marginal and Average Income Tax Rates
587(1)
The Corporate Income Tax
588(1)
International Comparison of Corporate Income Taxes
588(1)
Evaluating Taxes
589(1)
Making the Connection: Should the United States Shift from an Income Tax to a Consumption Tax?
590(2)
Tax Incidence Revisited: The Effect of Price Elasticity
592(3)
Don’t Let This Happen to You! Remember Not to Confuse Who Pays the Tax with Who Bears the Burden of the Tax
592(1)
Making the Connection: Do Corporations Really Bear the Burden of the Federal Corporate Income Tax?
593(1)
Solved Problem 18-3: The Effect of Price Elasticity on the Excess Burden of a Tax
594(1)
Income Distribution and Poverty
595(4)
Measuring the Income Distribution and Poverty
595(1)
Explaining Income Inequality
596(2)
Showing the Income Distribution with a Lorenz Curve
598(1)
Problems in Measuring Poverty and the Distribution of Income
599(4)
Solved Problem 18-4: Are Many Individuals Stuck in Poverty?
600(1)
Income Distribution and Poverty around the World
601(2)
Conclusion
603
An Inside Look at Policy: Should the Government Use a Tax on Soda to Pay For an Overhaul of Health Care?
604(2)
Key Terms, Summary, Review Questions, Problems and Applications
606
Glossary
1(1)
Company Index
1(2)
Subject Index
3
Credits
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