Preface p. xxiii Introduction: Markets and Prices p. 1 Preliminaries p. 3 The Themes of Microeconomics p. 4 What Is a Market? p. 7 Real versus Nominal Prices p. 11 Why Study Microeconomics? p. 15 Summary p. 17 Questions for Review p. 17 Exercises p. 18 The Basics of Supply and Demand p. 19 Supply and Demand p. 20 The Market Mechanism p. 23 Changes in Market Equilibrium p. 24 Elasticities of Supply and Demand p. 30 Short-Run versus Long-Run Elasticities p. 35 Understanding and Predicting the Effects of Changing Market Conditions p. 44 Effects of Government Intervention--Price Controls p. 53 Summary p. 55 Questions for Review p. 56 Exercises p. 57 Producers, Consumers, and Competitive Markets p. 59 Consumer Behavior p. 61 Consumer Preferences p. 62 Budget Constraints p. 75 Consumer Choice p. 79 Revealed Preference p. 86 Marginal Utility and Consumer Choice p. 89 Cost-of-Living Indexes p. 92 Summary p. 98 Questions for Review p. 99 Exercises p. 99 Individual and Market Demand p. 101 Individual Demand p. 102 Income and Substitution Effects p. 110 Market Demand p. 116 Consumer Surplus p. 123 Network Externalities p. 127 Empirical Estimation of Demand p. 131 Summary p. 135 Questions for Review p. 136
Exercises p. 136 Appendix to Chapter 4: Demand Theory--A Mathematical Treatment p. 139 Choice Under Uncertainty p. 149 Describing Risk p. 150 Preferences Toward Risk p. 155 Reducing Risk p. 161 The Demand for Risky Assets p. 166 Summary p. 174 Questions for Review p. 175 Exercises p. 175 Production p. 177 The Technology of Production p. 178 Isoquants p. 179 Production with One Variable Input (Labor) p. 181 Production with Two Variable Inputs p. 191 Returns to Scale p. 197 Summary p. 201 Questions for Review p. 201 Exercises p. 202 The Cost of Production p. 203 Measuring Cost: Which Costs Matter? p. 203 Cost in the Short Run p. 208 Cost in the Long Run p. 215 Long-Run versus Short-Run Cost Curves p. 224 Production with Two Outputs--Economies of Scope p. 229 Dynamic Changes in Costs--The Learning Curve p. 232 Estimating and Predicting Cost p. 237 Summary p. 242 Questions for Review p. 243 Exercises p. 243 Appendix to Chapter 7: Production and Cost Theory--A Mathematical Treatment p. 246 Profit Maximization and Competitive Supply p. 251 Perfectly Competitive Markets p. 252 Profit Maximization p. 254 Marginal Revenue, Marginal Cost, and Profit Maximization p. 255 Choosing Output in the Short Run p. 258 The Competitive Firm's Short-Run Supply Curve p. 263 The Short-Run Market Supply Curve p. 266 Choosing Output in the Long Run p. 271 The Industry's Long-Run Supply Curve p. 277 Summary p. 283
Questions for Review p. 284 Exercises p. 284 The Analysis of Competitive Markets p. 287 Evaluating the Gains and Losses from Government Policies--Consumer and Producer Surplus p. 288 The Efficiency of a Competitive Market p. 294 Minimum Prices p. 298 Price Supports and Production Quotas p. 302 Import Quotas and Tariffs p. 309 The Impact of a Tax or Subsidy p. 313 Summary p. 320 Questions for Review p. 320 Exercises p. 321 Market Structure and Competitive Strategy p. 325 Market Power: Monopoly and Monopsony p. 327 Monopoly p. 328 Monopoly Power p. 339 Sources of Monopoly Power p. 345 The Social Costs of Monopoly Power p. 347 Monopsony p. 352 Monopsony Power p. 355 Limiting Market Power: The Antitrust Laws p. 359 Summary p. 364 Questions for Review p. 365 Exercises p. 365 Pricing with Market Power p. 369 Capturing Consumer Surplus p. 370 Price Discrimination p. 371 Intertemporal Price Discrimination and Peak-Load Pricing p. 382 The Two-Part Tariff p. 385 Bundling p. 392 Advertising p. 403 Summary p. 407 Questions for Review p. 408 Exercises p. 408 Appendix to Chapter 11: Transfer Pricing in the Integrated Firm p. 413 Monopolistic Competition and Oligopoly p. 423 Monopolistic Competition p. 424 Oligopoly p. 429 Price Competition p. 437 Competition versus Collusion: The Prisoners' Dilemma p. 442 Implications of the Prisoners' Dilemma for Oligopolistic Pricing p. 445
Cartels p. 451 Summary p. 456 Questions for Review p. 457 Exercises p. 457 Game Theory and Competitive Strategy p. 461 Gaming and Strategic Decisions p. 461 Dominant Strategies p. 464 The Nash Equilibrium Revisited p. 466 Repeated Games p. 472 Sequential Games p. 476 Threats, Commitments, and Credibility p. 479 Entry Deterrence p. 483 Bargaining Strategy p. 489 Auctions p. 491 Summary p. 496 Questions for Review p. 497 Exercises p. 498 Markets for Factor Inputs p. 501 Competitive Factor Markets p. 501 Equilibrium in a Competitive Factor Market p. 514 Factor Markets with Monopsony Power p. 518 Factor Markets with Monopoly Power p. 523 Summary p. 529 Questions for Review p. 530 Exercises p. 530 Investment, Time, and Capital Markets p. 533 Stocks versus Flows p. 534 Present Discounted Value p. 534 The Value of a Bond p. 538 The Net Present Value Criterion for Capital Investment Decisions p. 542 Adjustments for Risk p. 545 Investment Decisions by Consumers p. 549 Intertemporal Production Decisions--Depletable Resources p. 551 How Are Interest Rates Determined? p. 555 Summary p. 558 Questions for Review p. 558 Exercises p. 559 Information, Market Failure, and the Role of Government p. 561 General Equilibrium and Economic Efficiency p. 563 General Equilibrium Analysis p. 563 Efficiency in Exchange p. 567
Equity and Efficiency p. 575 Efficiency in Production p. 578 The Gains from Free Trade p. 585 An Overview--The Efficiency of Competitive Markets p. 590 Why Markets Fail p. 591 Summary p. 593 Questions for Review p. 594 Exercises p. 594 Markets with Asymmetric Information p. 595 Quality Uncertainty and the Market for Lemons p. 596 Market Signaling p. 601 Moral Hazard p. 606 The Principal-Agent Problem p. 609 Managerial Incentives in an Integrated Firm p. 613 Asymmetric Information in Labor Markets: Efficiency Wage Theory p. 616 Summary p. 619 Questions for Review p. 619 Exercises p. 619 Externalities and Public Goods p. 621 Externalities p. 621 Ways of Correcting Market Failure p. 625 Externalities and Property Rights p. 638 Common Property Resources p. 642 Public Goods p. 644 Private Preferences for Public Goods p. 649 Summary p. 651 Questions for Review p. 651 Exercises p. 652 The Basics of Regression p. 655 Glossary p. 663 Answers to Selected Exercises p. 675 Index p. 687 List of Examples Markets for Prescription Drugs p. 10 The Price of Eggs and the Price of a College Education p. 12 The Minimum Wage p. 13 The Price of Eggs and the Price of a College Education Revisited p. 26 Wage Inequality in the United States p. 27 The Long-Run Behavior of Natural Resource Prices p. 28 The Market for Wheat p. 33 The Demand for Gasoline and Automobiles p. 39
The Weather in Brazil and the Price of Coffee in New York p. 41 Declining Demand and the Behavior of Copper Prices p. 47 Upheaval in the World Oil Market p. 49 Price Controls and Natural Gas Shortages p. 54 Designing New Automobiles p. 71 Designing New Automobiles (II) p. 81 Decision Making and Public Policy p. 82 A College Trust Fund p. 85 Revealed Preference for Recreation p. 88 Gasoline Rationing p. 91 The Bias in the CPI p. 97 Consumer Expenditures in the United States p. 108 The Effects of a Gasoline Tax p. 114 The Aggregate Demand for Wheat p. 120 The Demand for Housing p. 122 The Value of Clean Air p. 125 Network Externalities and the Demands for Computers and E-Mail p. 130 The Demand for Ready-to-Eat Cereal p. 134 Deterring Crime p. 154 Business Executives and the Choice of Risk p. 160 The Value of Title Insurance When Buying a House p. 163 The Value of Information in the Dairy Industry p. 165 Investing in the Stock Market p. 173 Malthus and the Food Crisis p. 187 Labor Productivity and the Standard of Living p. 189 A Production Function for Wheat p. 196 Returns to Scale in the Carpet Industry p. 199 Choosing the Location for a New Law School Building p. 205 Sunk, Fixed, and Variable Costs: Computers, Software, and Pizzas p. 207 The Short-Run Cost of Aluminum Smelting p. 213 The Effect of Effluent Fees on Input Choices p. 220 Economies of Scope in the Trucking Industry p. 232 The Learning Curve in Practice p. 236 Cost Functions for Electric Power p. 240 A Cost Function for the Savings and Loan Industry p. 241 The Short-Run Output Decision of an Aluminum Smelting Plant p. 260 Some Cost Considerations for Managers p. 261 The Short-Run Production of Petroleum Products p. 265 The Short-Run World Supply of Copper p. 268 The Long-Run Supply of Housing p. 282 Price Controls and Natural Gas Shortages p. 292
The Market for Human Kidneys p. 295 Airline Regulation p. 300 Supporting the Price of Wheat p. 306 The Sugar Quota p. 312 A Tax on Gasoline p. 318 Astra-Merck Prices Prilosec p. 334 Markup Pricing: Supermarkets to Designer Jeans p. 342 The Pricing of Prerecorded Videocassettes p. 343 Monopsony Power in U.S. Manufacturing p. 358 A Phone Call About Prices p. 362 The United States versus Microsoft p. 363 The Economics of Coupons and Rebates p. 379 Airline Fares p. 380 How to Price a Best-Selling Novel p. 384 Polaroid Cameras p. 389 Pricing Cellular Phone Service p. 390 The Complete Dinner versus a la Carte: A Restaurant's Pricing Problem p. 401 Advertising in Practice p. 406 Monopolistic Competition in the Markets for Colas and Coffee p. 428 A Pricing Problem for Procter and Gamble p. 440 Procter and Gamble in a Prisoners' Dilemma p. 444 Price Leadership and Price Rigidity in Commercial Banking p. 448 The Cartelization of Intercollegiate Athletics p. 455 The Milk Cartel p. 456 Acquiring a Company p. 463 Oligopolistic Cooperation in the Water Meter Industry p. 474 Competition and Collusion in the Airline Industry p. 475 Wal-Mart Stores' Preemptive Investment Strategy p. 482 DuPont Deters Entry in the Titanium Dioxide Industry p. 487 Diaper Wars p. 488 Internet Auctions p. 495 The Demand for Jet Fuel p. 508 Labor Supply for One- and Two-Earner Households p. 513 Pay in the Military p. 517 Monopsony Power in the Market for Baseball Players p. 520 Teenage Labor Markets and the Minimum Wage p. 521 The Decline of Private-Sector Unionism p. 527 Wage Inequality--Have Computers Changed the Labor Market? p. 528 The Value of Lost Earnings p. 537 The Yields on Corporate Bonds p. 541 Capital Investment in the Disposable Diaper Industry p. 548
Choosing an Air Conditioner and a New Car p. 550 How Depletable Are Depletable Resources? p. 554 The Interdependence of International Markets p. 566 The Effects of Automobile Import Quotas p. 588 The Costs and Benefits of Special Protection p. 589 Lemons in Major League Baseball p. 600 Working into the Night p. 605 Reducing Moral Hazard--Warranties of Animal Health p. 608 Crisis in the Savings and Loan Industry p. 608 Managers of Nonprofit Hospitals as Agents p. 611 Efficiency Wages at Ford Motor Company p. 618 The Costs and Benefits of Reduced Sulfur Dioxide Emissions p. 631 Emissions Trading and Clean Air p. 632 Regulating Municipal Solid Wastes p. 637 The Coase Theorem at Work p. 641 Crawfish Fishing in Louisiana p. 643 The Demand for Clear Air p. 647 The Demand for Coal p. 661 Table of Contents provided by Blackwell's Book Services and R.R. Bowker. Used with permission.