THE PEARSON SERIES IN ECONOMICS

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2 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* 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* 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 titles Log onto to learn more

3 Microeconomics:Global Edition - PDF - PDF - PDF Table of Contents Cover Contents Preface Chapter 1 Introduction 1.1 Microeconomics: The Allocation of Scarce Resources Trade-Offs Who Makes the Decisions APPLICATION: Flu Vaccine Shortage Prices Determine Allocations APPLICATION: The Fat Tax 1.2 Models APPLICATION: Income Threshold Model and China Simplifications by Assumption Testing Theories Positive Versus Normative 1.3 Uses of Microeconomic Models Chapter 2 Supply and Demand CHALLENGE: Quantities and Prices of Genetically Modified Foods 2.1 Demand The Demand Curve APPLICATION: Calorie Counting at Starbucks The Demand Function Solved Problem 2.1 Summing Demand Curves APPLICATION: Aggregating the Demand for Broadband Service 2.2 Supply The Supply Curve The Supply Function Summing Supply Curves Effects of Government Import Policies on Supply Curves Solved Problem Market Equilibrium Using a Graph to Determine the Equilibrium Using Math to Determine the Equilibrium Forces That Drive the Market to Equilibrium 2.4 Shocking the Equilibrium

4 Effects of a Shift in the Demand Curve Effects of a Shift in the Supply Curve Solved Problem Equilibrium Effects of Government Interventions Policies That Shift Supply Curves APPLICATION: Occupational Licensing Solved Problem 2.4 Policies That Cause Demand to Differ from Supply APPLICATION: Price Controls Kill Solved Problem 2.5 Why Supply Need Not Equal Demand 2.6 When to Use the Supply-and-Demand Model CHALLENGE SOLUTION: Quantities and Prices of Genetically Modified Foods Chapter 3 Applying the Supply-and-Demand Model CHALLENGE: Who Pays the Gasoline Tax? 3.1 How Shapes of Supply and Demand Curves Matter 3.2 Sensitivity of Quantity Demanded to Price Price Elasticity of Demand Solved Problem 3.1 Elasticity Along the Demand Curve Demand Elasticity and Revenue Solved Problem 3.2 Demand Elasticities over Time Other Demand Elasticities APPLICATION: Substitution May Save Endangered Species 3.3 Sensitivity of Quantity Supplied to Price Elasticity of Supply Elasticity Along the Supply Curve APPLICATION: Volcanic Eruptions and Africas Cut Flower Market Supply Elasticities over Time APPLICATION: Oil Drilling in the Arctic National Wildlife Refuge Solved Problem Effects of a Sales Tax Two Types of Sales Taxes Equilibrium Effects of a Specific Tax Tax Incidence of a Specific Tax Solved Problem 3.4 APPLICATION: Subsidizing Ethanol

5 The Same Equilibrium No Matter Who Is Taxed The Similar Effects of Ad Valorem and Specific Taxes Solved Problem 3.5 CHALLENGE SOLUTION: Who Pays the Gasoline Tax? Chapter 4 Consumer Choice CHALLENGE: Paying Employees to Relocate 4.1 Preferences Properties of Consumer Preferences APPLICATION: Money Buys Happiness Preference Maps Solved Problem 4.1 APPLICATION: Indifference Curves Between Food and Clothing 4.2 Utility Utility Function Ordinal Preferences Utility and Indifference Curves Utility and Marginal Utility Utility and Marginal Rates of Substitution 4.3 Budget Constraint Slope of the Budget Constraint Effect of a Change in Price on the Opportunity Set Effect of a Change in Income on the Opportunity Set Solved Problem 4.2 APPLICATION: Rationing Solved Problem Constrained Consumer Choice The Consumers Optimal Bundle APPLICATION: Buying an SUV in the United States Versus Europe Solved Problem 4.4 Optimal Bundles on Convex Sections of Indifference Curves Buying Where More Is Better Food Stamps APPLICATION: Benefiting from Food Stamps 4.5 Behavioral Economics Tests of Transitivity Endowment Effect APPLICATION: Opt In Versus Opt Out Salience

6 CHALLENGE SOLUTION: Paying Employees to Relocate Chapter 5 Applying Consumer Theory CHALLENGE: Per-Hour Versus Lump-Sum Child-Care Subsidies 5.1 Deriving Demand Curves Indifference Curves and a Rotating Budget Line Price-Consumption Curve APPLICATION: Quitting Smoking The Demand Curve Corresponds to the Price-Consumption Curve Solved Problem 5.1 Solved Problem How Changes in Income Shift Demand Curves Effects of a Rise in Income Solved Problem 5.3 Consumer Theory and Income Elasticities 5.3 Effects of a Price Change Income and Substitution Effects with a Normal Good Income and Substitution Effects with an Inferior Good Solved Problem 5.4 APPLICATION: Shipping the Good Stuff Away 5.4 Cost-of-Living Adjustments Inflation Indexes Effects of Inflation Adjustments APPLICATION: Fixing the CPI Substitution Bias 5.5 Deriving Labor Supply Curves Labor-Leisure Choice Income and Substitution Effects Solved Problem 5.5 Shape of the Labor Supply Curve APPLICATION: Working After Winning the Lottery Income Tax Rates and Labor Supply APPLICATION: Maximizing Income Tax Revenue CHALLENGE SOLUTION: Per-Hour Versus Lump-Sum Child-Care Subsidies Chapter 6 Firms and Production CHALLENGE: Labor Productivity During Recessions

7 6.1 The Ownership and Management of Firms Private, Public, and Nonprofit Firms The Ownership of For-Profit Firms The Management of Firms What Owners Want 6.2 Production Production Functions Time and the Variability of Inputs 6.3 Short-Run Production: One Variable and One Fixed Input Total Product Marginal Product of Labor Average Product of Labor Graphing the Product Curves Law of Diminishing Marginal Returns APPLICATION: Malthus and the Green Revolution 6.4 Long-Run Production: Two Variable Inputs Isoquants APPLICATION: A Semiconductor Integrated Circuit Isoquant Substituting Inputs Solved Problem Returns to Scale Constant, Increasing, and Decreasing Returns to Scale Solved Problem 6.2 APPLICATION: Returns to Scale in U.S. Manufacturing Varying Returns to Scale 6.6 Productivity and Technical Change Relative Productivity Innovations APPLICATION: Tata Nanos Technical and Organizational Innovations CHALLENGE SOLUTION: Labor Productivity During Recessions Chapter 7 Costs CHALLENGE: Technology Choice at Home Versus Abroad 7.1 The Nature of Costs Opportunity Costs APPLICATION: The Opportunity Cost of an MBA Solved Problem 7.1 Costs of Durable Inputs

8 Sunk Costs 7.2 Short-Run Costs Short-Run Cost Measures Short-Run Cost Curves Production Functions and the Shape of Cost Curves APPLICATION: Short-Run Cost Curves for a Furniture Manufacturer Effects of Taxes on Costs Solved Problem 7.2 Short-Run Cost 7.3 Long-Run Costs Input Choice Solved Problem 7.3 How Long-Run Cost Varies with Output Solved Problem 7.4 The Shape of Long-Run Cost Curves APPLICATION: Innovations and Economies of Scale Estimating Cost Curves Versus Introspection 7.4 Lower Costs in the Long Run Long-Run Average Cost as the Envelope of Short-Run Average Cost Curves APPLICATION: Long-Run Cost Curves in Furniture Manufacturing and Oil Pipelines APPLICATION: Choosing an Inkjet or a Laser Printer Short-Run and Long-Run Expansion Paths The Learning Curve Why Costs Fall over Time APPLICATION: Cut-Rate Heart Surgeries Cost of Producing Multiple Goods APPLICATION: Economies of Scope CHALLENGE SOLUTION: Technology Choice at Home Versus Abroad Chapter 8 Competitive Firms and Markets CHALLENGE: The Rising Cost of Keeping on Truckin 8.1 Perfect Competition Price Taking Why the Firms Demand Curve Is Horizontal Deviations from Perfect Competition Derivation of a Competitive Firms Demand Curve Why We Study Perfect Competition 8.2 Profit Maximization

9 Profit APPLICATION: Breaking Even on Christmas Trees Two Steps to Maximizing Profit 8.3 Competition in the Short Run Short-Run Competitive Profit Maximization Solved Problem 8.1 Solved Problem 8.2 Short-Run Firm Supply Curve APPLICATION: Oil, Oil Sands, and Oil Shale Shutdowns Short-Run Market Supply Curve Short-Run Competitive Equilibrium Solved Problem Competition in the Long Run Long-Run Competitive Profit Maximization Long-Run Firm Supply Curve Long-Run Market Supply Curve APPLICATION: Enter the Dragon: Masses Producing Art for the Masses APPLICATION: Upward-Sloping Long-Run Supply Curve for Cotton APPLICATION: Reformulated Gasoline Supply Curves Solved Problem 8.4 Long-Run Competitive Equilibrium CHALLENGE SOLUTION: The Rising Cost of Keeping on Truckin Chapter 9 Applying the Competitive Model CHALLENGE: Big Dry Water Rationing 9.1 Zero Profit for Competitive Firms in the Long Run Zero Long-Run Profit with Free Entry Zero Long-Run Profit When Entry Is Limited APPLICATION: Tiger Woods Rents The Need to Maximize Profit 9.2 Consumer Welfare Measuring Consumer Welfare Using a Demand Curve APPLICATION: Willingness to Pay and Consumer Surplus on ebay APPLICATION: Consumer Surplus from Television Effect of a Price Change on Consumer Surplus Solved Problem Producer Welfare Measuring Producer Surplus Using a Supply Curve Using Producer Surplus

10 Solved Problem Competition Maximizes Welfare Solved Problem 9.3 APPLICATION: Deadweight Loss of Christmas Presents 9.5 Policies That Shift Supply Curves Restricting the Number of Firms APPLICATION: Licensing Cabs Raising Entry and Exit Costs 9.6 Policies That Create a Wedge Between Supply and Demand Welfare Effects of a Sales Tax Solved Problem 9.4 Welfare Effects of a Price Floor Solved Problem 9.5 APPLICATION: Farmer Subsidies Welfare Effects of a Price Ceiling Solved Problem 9.6 APPLICATION: The Social Cost of a Natural Gas Price Ceiling 9.7 Comparing Both Types of Policies: Imports Free Trade Versus a Ban on Imports Free Trade Versus a Tariff Free Trade Versus a Quota Rent Seeking CHALLENGE SOLUTION: Big Dry Water Rationing Chapter 10 General Equilibrium and Economic Welfare CHALLENGE: Anti-Price Gouging Laws 10.1 General Equilibrium Feedback Between Competitive Markets Minimum Wages with Incomplete Coverage Solved Problem 10.1 APPLICATION: Urban Flight 10.2 Trading Between Two People Endowments Mutually Beneficial Trades Solved Problem 10.2 Bargaining Ability 10.3 Competitive Exchange Competitive Equilibrium

11 The Efficiency of Competition Obtaining Any Efficient Allocation Using Competition 10.4 Production and Trading Comparative Advantage Solved Problem 10.3 Efficient Product Mix Competition 10.5 Efficiency and Equity Role of the Government APPLICATION: Wealth Inequality Efficiency Equity APPLICATION: How You Vote Matters Efficiency Versus Equity CHALLENGE SOLUTION: Anti-Price Gouging Laws Chapter 11 Monopoly CHALLENGE: Pricing Apples ipod 11.1 Monopoly Profit Maximization Marginal Revenue Solved Problem 11.1 Choosing Price or Quantity Graphical Approach Mathematical Approach Solved Problem 11.2 Effects of a Shift of the Demand Curve 11.2 Market Power Market Power and the Shape of the Demand Curve APPLICATION: Chinas New Monopolies Lerner Index APPLICATION: Apples Lerner Indexes Solved Problem 11.3 Sources of Market Power 11.3 Welfare Effects of Monopoly Solved Problem Cost Advantages That Create Monopolies Sources of Cost Advantages Natural Monopoly

12 Solved Problem Government Actions That Create Monopolies Barriers to Entry Patents APPLICATION: Botox Patent Monopoly APPLICATION: Property Rights and Pirates 11.6 Government Actions That Reduce Market Power Regulating Monopolies Solved Problem 11.6 APPLICATION: Natural Gas Regulation Increasing Competition 11.7 Monopoly Decisions over Time and Behavioral Economics Network Externalities Network Externalities as an Explanation for Monopolies APPLICATION: Critical Mass and ebay A Two-Period Monopoly Model CHALLENGE SOLUTION: Pricing Apples ipod Chapter 12 Pricing and Advertising CHALLENGE: Magazine Pricing and Advertising 12.1 Why and How Firms Price Discriminate Why Price Discrimination Pays Who Can Price Discriminate APPLICATION: Disneyland Pricing Preventing Resale APPLICATION: Preventing Resale of Designer Bags Not All Price Differences Are Price Discrimination Types of Price Discrimination 12.2 Perfect Price Discrimination How a Firm Perfectly Price Discriminates APPLICATION: Google Uses Bidding for Ads to Price Discriminate Perfect Price Discrimination: Efficient But Hurts Consumers APPLICATION: Botox Revisited Solved Problem 12.1 Transaction Costs and Perfect Price Discrimination Solved Problem 12.2 APPLICATION: Unions That Set Wages and Hours 12.3 Quantity Discrimination

13 12.4 Multimarket Price Discrimination Multimarket Price Discrimination with Two Groups APPLICATION: Smuggling Prescription Drugs into the United States Solved Problem 12.3 Identifying Groups APPLICATION: Buying Discounts Welfare Effects of Multimarket Price Discrimination 12.5 Two-Part Tariffs A Two-Part Tariff with Identical Customers A Two-Part Tariff with Nonidentical Consumers 12.6 Tie-In Sales Requirement Tie-In Sales APPLICATION: IBM Bundling Solved Problem 12.4 APPLICATION: Available for a Song 12.7 Advertising The Decision Whether to Advertise How Much to Advertise CHALLENGE SOLUTION: Magazine Pricing and Advertising Chapter 13 Oligopoly and Monopolistic Competition CHALLENGE: Airline Frequent Flier Programs 13.1 Market Structures 13.2 Cartels Why Cartels Form Laws Against Cartels APPLICATION: Catwalk Cartel Why Cartels Fail Maintaining Cartels APPLICATION: Bail Bonds Mergers APPLICATION: Hospital Mergers: Market Power Versus Efficiency 13.3 Noncooperative Oligopoly 13.4 Cournot Model Cournot Model of an Airlines Market The Cournot Equilibrium and the Number of Firms APPLICATION: Air Ticket Prices and Rivalry

14 The Cournot Model with Nonidentical Firms Solved Problem 13.1 Solved Problem 13.2 APPLICATION: Bottled Water 13.5 Stackelberg Model Stackelberg Graphical Model Solved Problem 13.3 Why Moving Sequentially Is Essential Strategic Trade Policy APPLICATION: Government Aircraft Subsidies Solved Problem Comparison of Collusive, Cournot, Stackelberg, and Competitive Equilibria APPLICATION: Deadweight Losses in the Food and Tobacco Industries 13.7 Bertrand Model Bertrand Equilibrium with Identical Products Bertrand Equilibrium with Differentiated Products Cola Market APPLICATION: Welfare Gain from More Toilet Paper 13.8 Monopolistic Competition Monopolistically Competitive Equilibrium Fixed Costs and the Number of Firms Solved Problem 13.5 APPLICATION: Zoning Laws as a Barrier to Entry by Hotel Chains CHALLENGE SOLUTION: Airline Frequent Flier Programs Chapter 14 Game Theory CHALLENGE: Competing E-book Standards 14.1 An Overview of Game Theory 14.2 Static Games Normal-Form Games Predicting a Games Outcome Multiple Nash Equilibria, No Nash Equilibrium, and Mixed Strategies APPLICATION: Playing Chicken APPLICATION: Parasites, Boomerangs, and Other Youths Solved Problem 14.1 Cooperation APPLICATION: Strategic Advertising 14.3 Dynamic Games

15 Sequential Game APPLICATION: First Mover Advantages and Disadvantages Repeated Game Solved Problem Auctions Elements of Auctions Bidding Strategies in Private-Value Auctions Winners Curse APPLICATION: Bidders Curse CHALLENGE SOLUTION: Competing E-book Standards Chapter 15 Factor Markets CHALLENGE: Athletes Salaries and Ticket Prices 15.1 Competitive Factor Market Short-Run Factor Demand of a Firm Solved Problem 15.1 APPLICATION: Thread Mill Long-Run Factor Demand Factor Market Demand Competitive Factor Market Equilibrium 15.2 Effect of Monopolies on Factor Markets Market Structure and Factor Demands A Model of Market Power in Input and Output Markets APPLICATION: Union Monopoly Power Solved Problem Monopsony Monopsony Profit Maximization APPLICATION: Company Towns Welfare Effects of Monopsony Solved Problem 15.3 CHALLENGE SOLUTION: Athletes Salaries and Ticket Prices Chapter 16 Interest Rates, Investments, and Capital Markets CHALLENGE: Choosing to Go to College 16.1 Comparing Money Today to Money in the Future Interest Rates

16 Using Interest Rates to Connect the Present and Future APPLICATION: Power of Compounding Stream of Payments Solved Problem 16.1 APPLICATION: Saving for Retirement Inflation and Discounting APPLICATION: Winning the Lottery 16.2 Choices over Time Investing Solved Problem 16.2 Solved Problem 16.3 Rate of Return on Bonds Behavioral Economics: Time-Varying Discounting APPLICATION: Falling Discount Rates and Self-Control 16.3 Exhaustible Resources When to Sell an Exhaustible Resource Price of a Scarce Exhaustible Resource APPLICATION: Redwood Trees Why Price May Be Constant or Fall 16.4 Capital Markets, Interest Rates, and Investments Solved Problem 16.4 CHALLENGE SOLUTION: Choosing to Go to College Chapter 17 Uncertainty CHALLENGE: Flight Insurance 17.1 Degree of Risk Probability Expected Value Solved Problem 17.1 Variance and Standard Deviation 17.2 Decision Making Under Uncertainty Expected Utility Risk Aversion Solved Problem 17.2 Risk Neutrality Risk Preference APPLICATION: Gambling 17.3 Avoiding Risk

17 Just Say No APPLICATION: Harry Potters Magic Obtain Information APPLICATION: Weathering Bad Sales Diversify APPLICATION: Mutual Funds Insure Solved Problem 17.3 APPLICATION: No Insurance for Natural Disasters 17.4 Investing Under Uncertainty How Investing Depends on Attitudes Toward Risk Investing with Uncertainty and Discounting Solved Problem Behavioral Economics of Risk Difficulty Assessing Probabilities APPLICATION: Biased Estimates? Behavior Varies with Circumstances Prospect Theory CHALLENGE SOLUTION: Flight Insurance Chapter 18 Externalities, Open-Access, and Public Goods CHALLENGE: Trade and Pollution 18.1 Externalities APPLICATION: Negative Externality: SUVs Kill APPLICATION: Positive Externality: The Superstar Effect 18.2 The Inefficiency of Competition with Externalities Supply-and-Demand Analysis Reducing Externalities APPLICATION: Pulp and Paper Mill Pollution and Regulation Solved Problem 18.1 APPLICATION: Reducing Auto Externalities Through Taxes 18.3 Market Structure and Externalities Monopoly and Externalities Monopoly Versus Competitive Welfare with Externalities Solved Problem 18.2 Taxing Externalities in Noncompetitive Markets 18.4 Allocating Property Rights to Reduce Externalities Coase Theorem Markets for Pollution

18 APPLICATION: European Cap-and-Trade Policy 18.5 Open-Access Common Property Open-Access Common Property Solving the Commons Problem APPLICATION: For Whom the Bridge Tolls 18.6 Public Goods Types of Goods Markets for Public Goods APPLICATION: Radioheads Public Good Experiment Reducing Free Riding APPLICATION: Whats Their Beef? Valuing Public Goods CHALLENGE SOLUTION: Trade and Pollution Chapter 19 Asymmetric Information CHALLENGE: Dying to Work 19.1 Due to Asymmetric Information 19.2 Responses to Adverse Selection Controlling Opportunistic Behavior Through Universal Coverage Equalizing Information APPLICATION: Risky Hobbies 19.3 How Ignorance About Quality Drives Out High-Quality Goods Lemons Market with Fixed Quality Solved Problem 19.1 Lemons Market with Variable Quality Solved Problem 19.2 Limiting Lemons APPLICATION: Adverse Selection on ebay 19.4 Price Discrimination Due to False Beliefs About Quality APPLICATION: Twin Brands 19.5 Market Power from Price Ignorance Tourist-Trap Model Solved Problem 19.3 Advertising and Prices 19.6 Arising from Ignorance When Hiring Cheap Talk Education as a Signal Solved Problem 19.4

19 Screening in Hiring CHALLENGE SOLUTION: Dying to Work Chapter 20 Contracts and Moral Hazards CHALLENGE: Health Insurance 20.1 Principal-Agent Problem A Model Types of Contracts Efficiency 20.2 Production Efficiency Efficient Contract Full Information Solved Problem 20.1 Asymmetric Information APPLICATION: Contracts and Productivity in Agriculture 20.3 Trade-Off Between Efficiency in Production and in Risk Bearing Contracts and Efficiency Solved Problem 20.2 Choosing the Best Contract APPLICATION: Music Contracts: Changing Their Tunes 20.4 Monitoring Bonding Solved Problem 20.3 Deferred Payments Efficiency Wages After-the-Fact Monitoring APPLICATION: Abusing Leased Cars APPLICATION: Subprime Borrowing Solved Problem Checks on Principals APPLICATION: Layoffs Versus Pay Cuts 20.6 Contract Choice CHALLENGE SOLUTION: Health Insurance Chapter Appendixes Appendix 2A: Regressions

20 Appendix 3A: Effects of a Specific Tax on Equilibrium Appendix 4A: Utility and Indifference Curves Appendix 4B: Maximizing Utility Appendix 5A: The Slutsky Equation Appendix 5B: Labor-Leisure Model Appendix 6A: Properties of Marginal and Average Product Curves Appendix 6B: The Slope of an Isoquant Appendix 6C: Cobb-Douglas Production Function Appendix 7A: Minimum of the Average Cost Curve Appendix 7B: U.S. Furniture Manufacturers Short-Run Cost Curves Appendix 7C: Minimizing Cost Appendix 8A: The Elasticity of the Residual Demand Curve Appendix 8B: Profit Maximization Appendix 9A: Demand Elasticities and Surplus Appendix 11A: Relationship Between a Linear Demand Curve and Its Marginal Revenue Curve Appendix 11B: Incidence of a Specific Tax on a Monopoly Appendix 12A: Perfect Price Discrimination Appendix 12B: Quantity Discrimination Appendix 12C: Multimarket Price Discrimination Appendix 12D: Two-Part Tariffs Appendix 12E: Profit-Maximizing Advertising and Production Appendix 13A: Cournot Equilibrium Appendix 13B: Stackelberg Equilibrium Appendix 13C: Bertrand Equilibrium Appendix 15A: Factor Demands Appendix 15B: Monopsony Appendix 16A: Perpetuity Appendix 18A: Welfare Effects of Pollution in a Competitive Market Appendix 20A: Nonshirking Condition Answers to Selected and Sources for Applications References Index