Microeconomics. 8th edition. Jeffrey M. Perloff. University of California, Berkeley. Pearson New York, NY

Transcription

1 Microeconomics 8th edition Jeffrey M. Perloff University of California, Berkeley Pearson New York, NY

2 Chapter 1 Introduction 1.1 Microeconomics: The Allocation of Scarce Resources Trade-Offs Who Makes the Decisions Prices Determine Allocations APPLICATION Twinkie Tax 1.2 Models APPLICATION Income Tbresbold Model and China Simplifications by Assumption Testing Theories Maximizing Subject to Constraints Positive Versus Normative 1.3 Uses of Microeconomic Models Summary 7 Chapter 2 Supply and Demand CHALLENGE Qwdnriries and Prices o/ Genetically Modified Foods 2.1 Demand The Demand Curve APPLICATION Calorie Counting The Demand Function Solved Problem 2.1 Summing Demand Curves APPLICATION Aggregating Com Demand Curves 2.2 Supply The Supply Curve The Supply Function Summing Supply Curves How Government Import Policies Affect 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 Effects of a Shock to the Supply Curve Solved Problem 2.3 Effects of a Shock to the Demand Curve 2.5 Effects of Government Interventions Policies That Shift Supply Curves APPLICATION Occupational Licensing Solved Problem Policies That Cause the Quantity Demanded to Differ from the Quantity Supplied 31 APPLICATION Venezuelan Price Ceilings and Shortages 33 Solved Problem Why the Quantity Supplied Need Not Equal the Quantity Demanded When to Use the Supply-and-Demand Model 36 CHALLENGE SOLUTION ßwawriri«and Prices of Genetically Modified Foods 37 SwtMfMdry 38 # Q«&srions 39 Chapter 3 Applying the Supply-and-Demand Model 43 CHALLENGE W&o Pdya f&e GAso/tne How Shapes of Supply and Demand Curves Matter Sensitiv!ty of the Quantity Demanded to Price 45 Price Elasticity of Demand 45 Solved Problem APPLICATION The Demand Elasticities for Google Play and Apple Apps 47 Elasticity Along the Demand Curve 47 Demand Elasticity and Revenue 50 Solved Problem APPLICATION Amazon Prime 51 Demand Elasticities over Time 51 Other Demand Elasticities 52 APPLICATION Anti-Smoking Policies May Reduce Drunk Driving Sensitivity of the Quantity Supplied to Price 54 Elasticity of Supply 54 Elasticity Along the Supply Curve 55 Supply Elasticities over Time 56 APPLICATION Oil Drilling in the Arctic National Wildlife Refuge 56 Solved Problem Effects of a Sales Tax 58 Effects of a Specific Tax on the Equilibrium 59 The Equilibrium Is the Same No Matter Whom the Government Taxes 60 Solved Problem Firms and Customers Share the Bürden of the Tax 61 APPLICATION Taxes to Prevent Obesity 63

3 vu Solved Problem 3.5 Ad Valorem and Specific Taxes Have Similar Effects Solved Problem 3.6 Subsidies APPLICATION Subsidizing Ethanol CHALLENGE SOLUTION WAo fays fae Gasoline Tax? Summary 68 Questions 69 Chapter 4 Consumer Choice CHALLENGE W&y AtMericaMS Bwy More Ebooks Than Do Germans 4.1 Preferences Properties of Consumer Preferences APPLICATION You Can't Have Too Much Money Preference Maps Solved Problem 4.1 APPLICATION Indifference Curves Between Food and Clothing 4.2 Utility Utility Function Ordinal Preferences Utility and Indifference Curves Marginal Utility Utility and Marginal Rates of Substitution 4.3 Budget Constraint Slope of the Budget Constraint Solved Problem 4.2 Effect of a Change in Price on the Opportunity Set Effect of a Change in Income on the Opportunity Set Solved Problem Constrained Consumer Choice The Consumer's Optimal Bündle APPLICATION Substituting Alcohol for Marijuana Solved Problem 4.4 Solved Problem 4.5 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 and Bounded Rationality APPLICATION Unaware of Taxes CHALLENGE SOLUTION WAy AmencaMs Buy More Ebooks Than Do Germans Summary 105 Questions Chapter 5 Applying Consumer Theory 109 CHALLENGE Per-Ffowr Versus Lump-Sum Childcare Subsidies Deriving Demand Curves 110 Indifference Curves and a Rotating Budget Line 111 Price-Consumption Curve 112 APPLICATION Smoking Versus Eating and Phoning 113 The Demand Curve Corresponds to the Price-Consumption Curve 113 Solved Problem How Changes in Income Shift Demand Curves 114 Effects of a Rise in Income 115 Solved Problem Consumer Theory and Income Elasticities 117 APPLICATION Fast-Food Engel Curve Effects of a Price Change 121 Income and Substitution Effects with a Normal Good 121 Solved Problem Solved Problem Income and Substitution Effects with an Inferior Good 125 Solved Problem Compensating Variation and Equivalent Variation 126 APPLICATION What's Your Smart Phone Worth to You? Cost-of-Living Adjustments 127 Inflation Indexes 127 Effects of Inflation Adjustments 129 APPLICATION Paying Employees to Relocate Deriving Labor Supply Curves 133 Labor-Leisure Choice 133 Income and Substitution Effects 135 Solved Problem Shape of the Labor Supply Curve 137 APPLICATION Working After Winning the Lottery 138 Income Tax Rates and Labor Supply 139 CHALLENGE SOLUTION Per-Hour Versus Lump-Sum Childcare Subsidies 141 Summary 142 Questions 143 Chapter 6 Firms and Production 147 CHALLENGE More ProdwcTü/e Wbrters Düring Downturns The Ownership and Management of Firms 148 Private, Public, and Nonprofit Firms 148 APPLICATION Chinese State-Owned Enterprises 149 The Ownership of For-Profit Firms 149 The Management of Firms 150 What Owners Want 150

4 Vlll 6.2 Production Production Functions Varying Inputs over Time 6.3 Short-Run Production Total Product Marginal Product of Labor Solved Problem 6.1 Average Product of Labor Graphing the Product Curves Law of Diminishing Marginal Returns APPLICATION Malthus and the Green Revolution 6.4 Long-Run Production Isoquants APPLICATION A Semiconductor Integrated Circuit Isoquant Substituting Inputs Solved Problem Returns to Scale Constant, Increasing, and Decreasing Returns to Scale Solved Problem 6.3 APPLICATION Returns to Scale in Various Industries Varying Returns to Scale 6.6 Productivity and Technical Change Relative Productivity Innovations APPLICATION Robots and the Food You Eat APPLICATION A Good Boss Raises Productivity CHAI THON Lahor ProrfwcfwAy Düring Downturns Summary 174 Questions 175 Chapter 7 Costs i 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 Opportunity Cost of Capital Sunk Costs 7.2 Short-Run Costs Short-Run Cost Measures APPLICATION The Sharing Economy and the Short Run Short-Run Cost Curves Production Functions and the Shape of Cost Curves APPLICATION A Beer Manufacturer's Short-Run Cost Curves Effects of Taxes on Costs Solved Problem 7.2 Short-Run Cost Summary Long-Run Costs 194 All Costs Are Avoidable in the Long Run 194 Minimizing Cost 194 Isocost Line 195 Combining Cost and Production Information 197 Solved Problem Factor Price Changes 200 Solved Problem The Long-Run Expansion Path and the Long-Run Cost Function 201 Solved Problem The Shape of Long-Run Cost Curves 203 APPLICATION 3D Printing 206 Estimating Cost Curves Versus Introspection Lower Costs in the Long Run 207 Long-Run Average Cost as the Envelope of Short-Run Average Cost Curves 207 APPLICATION A Beer Manufacturer's Long-Run Cost Curves 208 APPLICATION Should You Buy an Inkjet or a Laser Printerf 209 Short-Run and Long-Run Expansion Paths 210 The Learning Curve Cost of Producing Multiple Goods 212 APPLICATION Medical Economies of Scope 214 s Technology Choice at Home Versus Abroad 214 Summary 215 Questions 216 Chapter 8 Competitive Firms and Markets 221 CHAL i.. The Rising Cost of Keeping On Trucktn' Perfect Competition 222 Price Taking 222 Why the Firm's Demand Curve Is Horizontal 223 Deviations from Perfect Competition 224 Derivation of a Competitive Firm's Demand Curve 225 Solved Problem Why We Study Perfect Competition Profit Maximization 227 Profit 227 Two Decisions for Maximizing Profit Competition in the Short Run 231 Short-Run Output Decision 232 Solved Problem Short-Run Shutdown Decision 235 APPLICATION Fracking and Shutdowns 237 Solved Problem Short-Run Firm Supply Curve 238 Short-Run Market Supply Curve 238 Short-Run Competitive Equilibrium 241 Solved Problem Competition in the Long Run 243 Long-Run Competitive Profit Maximization 243 Long-Run Firm Supply Curve 244

5 ix APPLICATION The Size of Ethanol Processing Plauts 245 Long-Run Market Supply Curve 245 APPLICATION Entry and Exit of Solar Power Firms 246 APPLICATION Upward-Sloping Long-Run Supply Curve for Cotton 249 APPLICATION Reformulated Gasoline Supply Curves 253 Solved Problem Long-Run Competitive Equilibrium 255 CHALLENGE SOLUTION The Risrng Cosf of Keeping On Truckin' 256 Summary 257 Questions 258 Chapter 9 Applying the Competitive Model 263 CHALLENGE Liquor Licenses Zero Profit for Competitive Firms in the Long Run 264 Zero Long-Run Profit with Free Entry 264 Zero Long-Run Profit When Entry Is Limited 265 APPLICATION What's a Name Worth? 267 The Need to Maximize Profit Consumer Weifare 267 Measuring Consumer Weifare Using a Demand Curve 268 APPLICATION Willingness to Pay on ebay 270 Effect of a Price Change on Consumer Surplus 271 APPLICATION Goods with a Farge Consumer Surplus Eoss from Price Increases 272 Solved Problem Producer Weifare 273 Measuring Producer Surplus Using a Supply Curve 274 Using Producer Surplus 275 Solved Problem Competition Maximizes Weifare 276 Solved Problem APPLICATION Deadweight Loss of Christmas Presents Policies That Shift Supply and Demand Curves 281 Entry Barrier 282 APPLICATION Weifare Effects of Allowing Fracking Policies That Create a Wedge Between Supply and Demand 283 Weifare Effects of a Sales Tax 283 APPLICATION The Deadweight Loss from Gas Taxes 285 Solved Problem Weifare Effects of a Subsidy 286 Solved Problem Weifare Effects of a Price Floor 288 Solved Problem APPLICATION How Big Are Farm Subsidies and Who Gets Them? 291 Weifare Effects of a Price Ceiling 292 Solved Problem APPLICATION The Social Cost of a Natural Gas Price Ceiling Comparing Both Types of Policies: Imports 294 Free Trade Versus a Ban on Imports 294 APPLICATION Russian Food Ban 296 Free Trade Versus a Tariff 296 Free Trade Versus a Quota 299 Rent Seeking 299 CHALLENGE SOLUTION Liquor Licenses 300 Summary 302 B Questions 303 Chapter 10 General Equilibrium and Economic Weifare 307 CHALLENGE Anfi-Price Gougiwg Law# General Equilibrium 309 Feedback Between Competitive Markets 310 Solved Problem Minimum Wages with Incomplete Coverage 313 Solved Problem APPLICATION Urban Flight Trading Between Two People 316 Endowments 316 Mutually Beneficial Trades 318 Solved Problem Bargaining Ability Competitive Exchange 320 Competitive Equilibrium 321 The Efficiency of Competition 322 Obtaining Any Efficient Allocation Using Competition Production and Trading 323 Comparative Advantage 323 Solved Problem Efficient Product Mix 327 Competition Efficiency and Equity 329 Role of the Government 329 APPLICATION The 1% Grow Wealthier 330 Efficiency 332 Equity 332 APPLICATION How You Vote Matters 335 Efficiency Versus Equity 337 CHALLENGE SOLUTION AMfi-frice Gouging Laws 338 Summary 339 Questions 339 Chapter 11 Monopoly 343 CHALLENGE Brand-Name und Genend Drugs Monopoly Profit Maximization 344 Marginal Revenue 345 Solved Problem Choosing Price or Quantity 349 Graphical Approach 349 Mathematical Approach 351 APPLICATION Apple's ipad 352

6 x Solved Problem APPLICATION Google Uses Bidding for Effects of a Shift of the Demand Curve 353 Ads to Price Discriminate Market Power 354 Transaction Costs and Perfect Price Market Power and the Shape of the Demand Discrimination 395 Curve Group Price Discrimination 395 APPLICATION Cable Cars and Profit APPLICATION Warner Brothers Sets Prices Maximization 356 for a Harry Potter DVD 396 Lerner Index 357 Solved Problem Solved Problem Prices and Elasticities 398 Sources of Market Power 357 Solved Problem Market Failure Due to Monopoly Pricing 358 Preventing Resale 399 Solved Problem APPLICATION Reselling Textbooks Causes of Monopoly 361 Solved Problem Cost-Based Monopoly 361 Identifying Croups 401 Solved Problem APPLICATION Buying Discounts 402 Government Creation of a Monopoly 363 Weifare Effects of Group Price Discrimination 403 APPLICATION Botox Patent Monopoly Nonlinear Price Discrimination Government Actions That Reduce 12.5 Two-Part Pricing 406 Market Power 366 Two-Part Pricing with Identical Customers 406 Regulating Monopolies 366 Two-Part Pricing with Nonidentical Solved Problem Consumers 407 APPLICATION Natural Gas Regulation 370 APPLICATION itunes for a Song 409 Increasing Competition Tie-In Sales 410 APPLICATION Movie Studios Attacked Requirement Tie-In Sale 410 by 3D Printers! 371 APPLICATION Ties That Bind 410 Solved Problem Bundling Networks, Dynamics, and Behavioral Solved Problem Economics Advertising 414 Network Externalities 373 The Decision Whether to Advertise 414 Network Externalities and Behavioral How Much to Advertise 415 Economics 374 APPLICATION Super Botvl Commercials 416 Network Externalities as an Explanation Sale Prices 417 for Monopolies 374 Summary 418 ' Questions 419 APPLICATION ebay's Critical Mass 375 A Two-Period Monopoly Model 375 Chapter 13 Oligopoly and Monopolistic CHALLENGE: Brand-Name and Competition 425 Generic Drugs 376 Summary 377 # Qwesrions 378 CHALLENGE Gorernmenf A;rcra/f Swbridies Market Structures 427 Chapter 12 Pricing and Advertising Cartels 428 Why Cartels Form 428 CHALLENGE Sabinas 383 Why Cartels Fail Conditions for Price Discrimination 385 Laws Against Cartels 430 Why Price Discrimination Pays 385 APPLICATION The Apple-Google-Intel-Adobe- APPLICATION Disneyland Pricing 387 Intuit-Lucasfilms-Pixar Wage Cartel 432 Which Pinns Can Price Discriminate 387 Maintaining Cartels 432 Preventing Resale 388 APPLICATION Cheating on the Maple APPLICATION Preventing Resale of Syrup Cartel 433 Designer Bags 388 Mergers 434 Not All Price Differences Are Price APPLICATION Mergers to Monopolize 435 Discrimination Cournot Oligopoly 435 Types of Price Discrimination 389 The Duopoly Nash-Cournot Equilibrium Perfect Price Discrimination 390 Equilibrium, Elasticity, and the Number How a Firm Perfectly Price Discriminates 390 of Firms 440 Perfect Price Discrimination Is Efficient but Harms APPLICATION Mobile Number Portability 442 Some Consumers 391 Nonidentical Firms 442 APPLICATION Botox and Price Discrimination 393 Solved Problem Solved Problem Solved Problem

7 XI 13.4 Stackelberg Oligopoly Graphical Model Solved Problem 13.3 Why Moving Sequentially Is Essential Comparison of Competitive, Stackelberg, Cournot, and Collusive Equilibria 13.5 Bertrand Oligopoly Identical Products Differentiated Products APPLICATION Bottled Water 13.6 Monopolistic Competition APPLICATION Monopolistically Competitive Food Truck Market Equilibrium Solved Problem 13.4 Fixed Costs and the Number of Firms Solved Problem 13.5 APPLICATION Zoning Laws as a Barrier to Entry by Hotel Chains CHALLENGE SOLUTION Goremmenf Aircra/t Subsidies Summary 462 Questions 462 Chapter 14 GameTheory CHALLENGE Intel and AMD's Advertising Strategies 14.1 Static Games Normal-Form Games Failure to Maximize Joint Profits APPLICATION Strategie Advertising Multiple Equilibria Solved Problem 14.1 Mixed Strategies APPLICATION TougbLove Solved Problem Repeated Dynamic Games Strategies and Actions in Dynamic Games Cooperation in a Repeated Prisoners' Dilemma Game Solved Problem Sequential Dynamic Games Game Tree Subgame Perfect Nash Equilibrium Credibility Dynamic Entry Game Solved Problem 14.4 APPLICATION Keeping Out Casinos Solved Problem Auctions Elements of Auctions Bidding Strategies in Private-Value Auctions Winner's Curse APPLICATION Bidder's Curse 14.5 Behavioral Game Theory APPLICATION GM's Ultimatum An Experiment Reciprocity 497 CHALLENGE SOLUTION Intel and AMD's Advertising Strategies 497 Summary 498 Questions 499 Chapter 15 Factor Markets 505 CHALLENGE Athfetes' Salaries and Tretet Prices Competitive Factor Market 506 Short-Run Factor Demand of a Firm 506 Solved Problem Solved Problem Long-Run Factor Demand 511 Factor Market Demand 512 Competitive Factor Market Equilibrium Effects of Monopolies on Factor Markets 515 Market Structure and Factor Demands 515 A Model of Market Power in Input and Output Markets 516 APPLICATION Unions and Profits 519 Solved Problem Monopsony 521 Monopsony Profit Maximization 521 APPLICATION Monopsony and the Gender Wage Gap 523 Weifare Effects of Monopsony 523 Solved Problem CHALLENGE SOLUTION Athletes' Salaries and Ticket Prices 525 Summary 526 Questions 527 Chapter 16 Interest Rates, Investments, and Capital Markets 529 CHALLENGE Does Going to College Payf Comparing Money Today to Money in the Future 530 Interest Rates 531 Using Interest Rates to Connect the Present and Future 533 APPLICATION Power of Compounding 533 Stream of Payments 534 Solved Problem APPLICATION Saving for Retirement 537 Inflation and Discounting 538 APPLICATION Winning the Lottery Choices over Time 540 Investing 541 Solved Problem Solved Problem Rate of Return on Bonds 543 Behavioral Economics: Time-Varying Discounting 544 APPLICATION Falling Discount Rates and Self-Control Exhaustible Resources 546 When to Seil an Exhaustible Resource 546

8 xii 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 CHALLEN' 4 Does Going to College Ray? Swmmary 556 # ßwggAorw 556 Chapter 17 Uncertainty C * BP and Limited Liability 17.1 Assessing Risk Probability Expected Value Solved Problem 17.1 Variance and Standard Deviation 17.2 Attitudes Toward Risk Expected Utility Risk Aversion Solved Problem 17.2 APPLICATION Stocks' Risk Premium Risk Neutrality Risk Preference APPLICATION Gambling 17.3 Reducing Risk Just Say No Obtain and Use Information Diversify APPLICATION Failure to Diversify Buy Insurance Solved Problem 17.3 APPLICATION Pligbt Insurance APPLICATION Limited Insurance for Natural Disasters 17.4 Investing Under Uncertainty Risk-Neutral Investing Risk-Averse Investing Solved Problem Behavioral Economics of Uncertainty Biased Assessment of Probabilities APPLICATION Biased Estimates Violations of Expected Utility Theory Prospect Theory APPLICATION Loss Aversion Contracts CHAL! TION BP and Limited Liability Summary 590 Questions 591 Chapter 18 Externalities, Open-Access, and Public Goods GHALI Trade and Pollution 18.1 Externalities APPLICATION Negative Externalities from Spam The Inefficiency of Competition with Externalities 597 APPLICATION Global Warming 600 n r D O Regulating Externalities 600 Emissions Standard 602 Emissions Fee 602 Solved Problem APPLICATION Why Tax Drivers 604 Benefits Versus Costs from Controlling Pollution 604 APPLICATION Protecting Babies Market Structure and Externalities 605 Monopoly and Externalities 605 Monopoly Versus Competitive Weifare with Externalities 606 Solved Problem Taxing Externalities in Noncompetitive Markets Allocating Property Rights to Reduce Externalities 607 Coase Theorem 608 APPLICATION Buying a Town 609 Markets for Pollution 610 APPLICATION Acid Rain Cap-and-Trade Program 610 Markets for Positive Externalities Rivalry and Exclusion 611 Open-Access Common Property 611 APPLICATION Road Congestion 612 Club Goods 613 APPLICATION Software Piracy 613 Public Goods 614 Solved Problem APPLICATION Free Riding on Measles Vaccinations 616 APPLICATION What's Tbeir Beefi 617 Trade and Pollution Summary 620 VI Questions Chapter 19 Asymmetrie Information 625 CI- ie Dyingto Work Adverse Selection 627 Insurance Markets 627 Products of Unknown Quality 628 Solved Problem Solved Problem Reducing Adverse Selection 632 Equalizing Information 632 APPLICATION Discounts for Data 633 APPLICATION Adverse Selection and Remanufactured Goods 635 Restricting Opportunistic Behavior Price Discrimination Due to False Beliefs About Quality 636

9 xiii APPLICATION Reducing Consumers' Information 19.4 Market Power from Price Ignorance Tourist-Trap Model Solved Problem 19.3 Advertising and Prices 19.5 Problems Arising from Ignorance Whcn Hiring Cheap Talk APPLICATION Cheap Talk in ebay's Best Offer Market Education as a Signal Solved Problem 19.4 Screening in Hiring CHALLENGE SOLUTION Dyrng fo Work Summary 649 Questions 650 Chapter 20 Contracts and Moral Hazards CHALLENGE C&BWM# Back Bomtses 20.1 The Principal-Agent Problem Efficiency Symmetrie Information Asymmetrie Information Solved Problem 20.1 APPLICATION Honest Cabbie? 20.2 Using Contracts to Reduce Moral Hazard Fixed-Fee Contracts Contingent Contracts APPLICATION Health Insurance and Moral Hazard Solved Problem 20.2 Solved Problem 20.3 APPLICATION Sing for Your Supper Solved Problem 20.4 Choosing the Best Contract 20.3 Monitoring to Reduce Moral Hazard Bonding Solved Problem 20.5 APPLICATION Capping Oil and Gas Bankruptcies Deferred Payments Efficiency Wages Monitoring Outcomes 20.4 Checks on Principals APPLICATION Layoffs Versus Pay Cuts 20.5 Contract Choice CHALLENGE SOLUTION CfawmgBack Bonuses Summary 678 Questions Chapter Appendixes A-1 Appendix 2A: Regressions A-1 Appendix 3A: Effects of a Specific Tax on Equilibrium A-3 Appendix 4A: Utility and Indifference Curves A-4 Appendix 4B: Maximizing Utility A-6 Appendix 5A: The Slutsky Equation A-8 Appendix 5B: Labor-Leisure Model A-9 Appendix 6A: Properties of Marginal and Average Product Curves A-10 Appendix 6B: The Slope of an Isoquant A-10 Appendix 6C: Cobb-Douglas Production Function A-10 Appendix 7A: Minimum of the Average Cost Curve A-ll Appendix 7B: Japanese Beer Manufacturer's Short-Run Cost Curves A ll Appendix 7C: Minimizing Cost A-12 Appendix 8A: The Elasticity of the Residual Demand Curve A-14 Appendix SB: Profit Maximization A-15 Appendix 9A: Demand Elasticities and Surplus A-15 Appendix IIA: Relationship Between a Linear Demand Curve and Its Marginal Revenue Curve A-16 Appendix IIB: Incidence of a Specific Tax on a Monopoly A-16 Appendix 12A: Perfect Price Discrimination A-17 Appendix 12B: Group Price Discrimination A-18 Appendix 12C: Block Pricing A-18 Appendix 12D: Two-Part Pricing A-19 Appendix 12E: Profit-Maximizing Advertising and Production A-19 Appendix 13A: Nash-Cournot Equilibrium A-20 Appendix 13B: Nash-Stackelberg Equilibrium A-22 Appendix 13C: Nash-Bertrand Equilibrium A-23 Appendix 15A: Factor Demands A-24 Appendix 15B: Monopsony A-25 Appendix 16A: The Present Value of Payments over Time A-26 Appendix ISA: Weifare Effects of Pollution in a Competitive Market A-26 Appendix 20A: Nonshirking Condition A-28 Answers to Selected Questions and Problems A-29 Sources for Challenges and Applications A-46 References A-60 Definitions A-69 Index A-75 Credits A-105