MicroEconomics 11th by michael parkin

www.downloadslide.com www.downloadslide.com ® MyEconLab Provides the Power of Practice Study Plan Unlimited Practice Learning Resources Study Plan problems link to learning resources that further reinforce concepts you need to master r Help Me Solve This learning aids help you break down a problem much the same way as an instructor would during office hours Help Me Solve This is available for select problems r eText links are specific to the problem at hand so that related concepts are easy to review just when they are needed r A graphing tool enables you to build and manipulate graphs to better understand how concepts, numbers, and graphs connect ® MyEconLab Find out more at www.myeconlab.com www.downloadslide.com Real-Time Data Analysis Exercises Up-to-date macro data is a great way to engage in and understand the usefulness of macro variables and their impact on the economy Real-Time Data Analysis exercises communicate directly with the Federal Reserve Bank of St Louis’s FRED site, so every time FRED posts new data, students see new data End-of-chapter exercises accompanied by the Real-Time Data Analysis icon include Real-Time Data versions in MyEconLab Select in-text figures labeled MyEconLab Real-Time Data update in the electronic version of the text using FRED data Current News Exercises Posted weekly, we find the latest microeconomic and macroeconomic news stories, post them, and write auto-graded multi-part exercises that illustrate the economic way of thinking about the news Interactive Homework Exercises Participate in a fun and engaging activity that helps promote active learning and mastery of important economic concepts Pearson’s experiments program is flexible and easy for instructors and students to use For a complete list of available experiments, visit www.myeconlab.com www.downloadslide.com This page intentionally left blank www.downloadslide.com MICROECONOMICS Eleventh Edition Michael Parkin University of Western Ontario Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam  Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto  Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo www.downloadslide.com Editor in Chief Donna Battista Executive Acquisitions Editor Adrienne D’Ambrosio Editorial Project Manager Sarah Dumouchelle Executive Marketing Manager Lori DeShazo Managing Editor Senior Production Project Manager MyEconLab Content Project Manager Noel Lotz Executive Media Producer Melissa Honig Digital Publisher, Economics Denise Clinton Jeff Holcomb Text Design, Project Management and Page Make-up Nancy Freihofer Integra Software Services, Inc Copyeditor Catherine Baum Operations Specialist Carol Melville Technical Illustrator Richard Parkin Cover Designer Jonathan Boylan Printer/Binder Courier Kendallville Cover Photos Kristin Johnson Cover Printer Lehigh-Phoenix Color/Hagerstown Director of Media Susan Schoenberg Text Font Adobe Garamond Pro Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on page C-1 Copyright © 2014, 2012, 2010 by Pearson Education, Inc All rights reserved Manufactured in the United States of America This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290 Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps Library of Congress Cataloging-in-Publication Data Parkin, Michael   Economics/Michael Parkin.—11th ed   p cm   Includes bibliographical references and index   ISBN 978-0-13-299484-2 (economics)—ISBN 978-0-13-301994-0 (microeconomics)—ISBN 978-0-13-302025-0 (macroeconomics)  1. Economics I.  Title   HB171.5.P313 2014  330—dc23 2012046079 10 9 8 7 6 5 4 3 2 1 ISBN 10:      0-13-301994-2 ISBN 13: 978-0-13-301994-0 www.downloadslide.com TO ROBIN www.downloadslide.com This page intentionally left blank www.downloadslide.com About The Author Michael Parkin is Professor Emeritus in the Department of Economics at the University of Western Ontario, Canada Professor Parkin has held faculty appointments at Brown University, the University of Manchester, the University of Essex, and Bond University He is a past president of the Canadian Economics Association and has served on the editorial boards of the American Economic Review and the Journal of Monetary Economics and as managing editor of the Canadian Journal of Economics Professor Parkin’s research on macroeconomics, monetary economics, and international economics has resulted in over 160 publications in journals and edited volumes, including the American Economic Review, the Journal of Political Economy, the Review of Economic Studies, the Journal of Monetary Economics, and the Journal of Money, Credit and Banking He became most visible to the public with his work on inflation that discredited the use of wage and price controls Michael Parkin also spearheaded the movement toward European monetary union Professor Parkin is an experienced and dedicated teacher of introductory economics vii www.downloadslide.com This page intentionally left blank www.downloadslide.com Index      I-7 Natural monopoly good, 372 Natural oligopoly, 342 Natural resources factor markets for, 418, 430–432 nonrenewable, 3, 418, 431–432 renewable, Nautica Clothing Corporation, 326–328 Navistar International, 283 NBC, 429 NCAA See National Collegiate Athletic Association NEC, 283 Necessities, 86 Negative externality, 372 pollution, 394–401 Negative relationships, 19, 20, 27 Nestlé, 70 Netscape Navigator, 358 Neuroeconomics, 193 New Balance, 324 News Corp, 359 New Zealand, 407 Nike, 166, 324 No-claim bonus, 478 Nokia, 351 Nonexcludable, 372 Nonrenewable natural resources, 3, 418, 431–432 Nonrival, 372 Normal good, 60 Normal profit, 225, 253, 272 Normative statements, 12 North American Free Trade Agreement (NAFTA), 167 Nozick, Robert, 118 OASDHI See Old Age, Survivors, Disability, and Health Insurance Obama, Barack, 12, 166, 460 Obamacare, 384 Occupy Wall Street, Office of Child Support Enforcement, 459 Offshore outsourcing, 165–166 Oil demand for, 431 equilibrium price of, 432 global markets for, 152, 431 supply of, 431–432 trade and, 152 world and U.S markets for, 433 Old Age, Survivors, Disability, and Health Insurance (OASDHI), 457 Oligopoly, 233, 341–361 antitrust law, 356–358 barriers to entry, 342 examples of, 343 games, 344–351 game theory, 344 HHI and, 343 Nash equilibrium, 345, 349, 350 natural, 342 price-fixing game, 346–350 repeated games, 352–355 sequential games, 352–355 small number of firms, 343 Opportunity cost, 10–11 increasing, 33–34 of corn (Reading Between the Lines), 46 of leisure, 423 of production, 224–225 production possibilities and, 32–34 as ratio, 33 relative price as, 56 Organization, 229–232 business, 230–231 Origin, 15 Outcome, 280, 345 efficient, 404–407 Output costs and, 247–266 decisions, 274–277, 300–303, 326 firms and price of, 326 in monopolistic competition, 326–329 perfect competition and, 274–283 pollution and, 396 price compared to, 304 profit-maximizing, 302 single-price monopoly decisions for, 300–303 time frame decisions, 248 Outsourcing, 238 offshore, 165–166 Overfishing equilibrium, 403–404 Overproduction, 114 incentive for, 140 inefficient, 141, 396 Overprovision, 381 Ownership as barrier to entry, 298 principal-agent problem relating to, 229 Paper books v e-books (Reading Between the Lines), 214 Paradox of value, 189 Parkhouse, Albert J., 162 Partnership, 231 Patents, 298–299 Patient Protection and Affordable Care Act See Affordable Care Act Pay ability-to-pay principle, 138 CEO (Reading Between the Lines), 460 incentive, 229 willingness and ability to, 108 Payoff matrix, 344, 349 Payroll taxes, 457 Pell Grant, 381 PepsiCo, 359 Percentages and proportions, 85 Perfect competition, 233–234, 271–291 economic profit and revenue in, 272–273 efficiency and, 288–289 firm’s decisions, 273 monopolistic competition compared with, 328–329 output, price, and profit in long run, 281–283 output, price, and profit in short run, 278–280 output decisions of firm, 274–277 price and output comparison, 278–283 price takers in, 272 temporary shutdown decision, 276 Perfectly elastic demand, 85, 136 Perfectly elastic supply, 136 Perfectly inelastic demand, 85, 135 Perfectly inelastic supply, 136 Perfect price discrimination, 310 Personal characteristics, 107 Personal computers, 283 Personal Responsibility and Work Opportunities Reconciliation Act, 459 P&G See Procter & Gamble Pharmaceutical industry, 236 Physical ability, 449 Pigou, Arthur Cecil, 398 Pigovian taxes, 398–399 Pizzigati, Sam, 460 Political equilibrium, 371 Political marketplace, 370–371 Politicians, 370–371 Pollution air, 394–401 consequences of, 394 equilibrium and, 396–397 as external cost, 396 as negative production externalities, 394–401 output and, 396 production and, 394–397 sources of, 394 tax, 398–399 trends in, 395 Pooling equilibrium, 477 Population, 60 Positive externality, 372 private benefits and social benefits, 379–380 Positively skewed distribution, 444 Positive marginal utility, 179 Positive relationships, 18, 19, 27 Positive statements, 12 Postal Service, U.S., 298, 299 Potential entry, 236 Poverty, 449 PowerBar, 70 Predatory pricing, 358 Pre-Existing Condition Insurance Plan, 385 Preferences, 10, 179–180 demand and, 60 indifference curves and, 205–208 map, 205 marginal benefits and, 36 revealing, 184 Premium, 471 Present value, 436 rent-v.-buy decision and, 436 of sequence of future amounts, 437 Prices See also Single-price monopoly adjustments, 67 average quantity and, 84–85 best affordable, 209 change in, 68–72, 87, 203–204, 209–211 commodity, 418 decisions, 300–303 demand and, 59–60 elasticity of demand and, 84–88 expected future, 59–60, 64 of factors of production, 56, 259–260, 421 www.downloadslide.com I-8 Index Prices (continued ) fall in, 140 firms’ output decision and, 326 maintaining resale, 357 marginal revenue and, 300 markets and, 56, 106 in monopolistic competition, 326–329 output compared to, 304 perfect competition and, 278–283 predatory, 358 predicting changes in, 68–72 regulations, 114 as regulator, 66–67 of related goods, 59, 63 relative, 56, 203 rise in, 140 short run and, 278–280, 326 single-price monopoly decisions for, 300–303 supply and, 63–64 time since change in, 87 Price cap, 128 Price cap regulation, 315 Price ceiling, 128 Price discrimination, 299 efficiency and rent seeking with, 311 monopoly and, 307–311 perfect, 310 Price effect, 209 Price elasticity of demand, 84–88 calculating, 84–85 for food, 89 Price fixing, 357 game, 346–350 Price floor, 131 Price gouging, 119 Price index, 56 Price takers, 272 Price wars, 354 Princeton University, 12, 132, 345 Principals, 229 Principal–agent problem, 229 Principle of decreasing marginal benefit, 36 Principle of increasing marginal cost, 403 Principle of minimum differentiation, 377 The Principles of Economics (Marshall, A.), 175 Prisoner’s dilemma, 344–345 Private benefits, 379–380 Private choice, 370 Private good, 372 Private information, 474–478 asymmetric information, 474 loan market, 477 used car market, 474–477 Private production, 383, 385 Private property, 404–406 Private provision, 376 Private schools, 381 Private subsidy, 381–382 Procter & Gamble (P&G), 360 Producer surplus, 111, 288, 305, 308 Product curves, 249, 256–258 average, 252 marginal, 250–251 total, 250 Product development, 330–333 Product differentiation, 233, 324 for smartphones (Reading Between the Lines), 334 Production See also Factors of production agriculture, complements of, 63 function, 250 incentive systems, 229 opportunity cost of, 224–225 overproduction, 114, 140–141, 396 pollution and, 394–397 principal-agent problem, 229 private, 383, 385 public, 381, 383–385 substitutes of, 63 team, 239 underproduction, 113–114 Production efficiency, 33 Production possibilities, opportunity cost and, 32–34 Production possibilities frontier (PPF), 32–34 marginal cost and, 35 total product curve and, 250 tradeoffs, 33 Production quotas, 139, 406 Product schedules, 249 Profits, See also Economic profit colluding to maximize, 347 increasing, 308 loss minimizing and, 326–327 maximum, 8, 347 normal, 225, 253, 272 output for maximizing, 302 perfect competition and, 272–273, 278–283 product innovation and maximizing, 330 Progressive income tax, 457 Prohibition, 143 Property, private, 404–406 Property rights, 44, 370, 397–398, 404–406 See also Private property Proportional income tax, 457 Proprietorship, 230–231 Protection, argument against, 164–167 Psychology, 192 Public choice, 369–387 governments and, 370 inefficiencies that require, 374 political equilibrium and, 371 political marketplace and, 370–371 Public franchise, 298 Public goods, 115, 369–387 efficient quantity of, 376 excludable, 372 lighthouses as, 373 marginal social benefit from, 375 marginal social cost of, 376 providing, 375–378 rival, 372 Public overprovision, 378 Public production, 381, 383–385 Public provision, 376–378, 383–385 Public schools, 381 Puma, 324 Qatar, 163 Quality, 324 advertising and, 332–333 of education, 382 of local air, 394 Quantity affordable and unaffordable, 202 average price and, 84–85 efficient, of public good, 376 equilibrium, 66 increase in, 140 predicting changes in, 68–72 regulations, 114 Quantity demanded, 57 change in, 60–61 Quantity supplied, 62 change in, 64–65 Quintiles, 444 Quotas import, 160–161 ITQs, 406–407 production, 139, 406 Race, 449 Ralph Lauren, 329 Rate of return regulation, 314 Rational choice, 10 Rational ignorance, 378 Rationality, bounded, 192 Rawls, John, 117 Razors (Reading Between the Lines), 360 R&D See Research and development Reading Between the Lines carbon tax, 408 CEO pay, 460 charter schools, 434 corn, 46 Facebook, 240 Google, 316 grades, 480 Internet advertising market battles, 240 iPhone apps, 290 McDonald’s, 264 minimum wage, 144 paper books v e-books, 214 product differentiation, 334 public transit, 120 razors, 360 smartphones, 334 solar panels, 168 sugary drinks, 194 tomatoes, 98 Real income, 203 Real property, 44 Recorded music, 190–191 Redbox, 210 Redistribution of income, 457–459 of surplus, 306 Reebok, 324 Region, 449 Regional market, 236 Regressive income tax, 457 Regulation, 114, 313 See also Deregulation earnings sharing, 315 health, 163 www.downloadslide.com Index      I-9 monopoly, 313–315 of natural monopoly, 313–315, 374 price cap, 315 rate of return, 314 safety, 163 Relative price, 56, 203 Renewable natural resources, Rent, economic, 306 Rental markets, 431 capital, 430 vehicle, 418 Rental rate, 418 of capital, 430 implicit, 224, 256 of land, 430–431 Rent ceiling, 128–130 Rent seeking, 167, 306 equilibrium, 306 with price discrimination, 311 Rent-v.-buy decision, 430, 436 Repeated duopoly game, 352–354 Repeated games, 352–355 Resale price maintenance, 357 Research and development (R&D), 350–351 Reservation wage, 422 Resources, 62 See also Common resources; Goods and resources allocation methods, 106–107 common, 115 competition and efficient use of, 288–289 efficient use of, 35–37, 288 natural, 3, 418, 430–432 substitution possibilities, 95–96 Revenue IRS, 117, 224, 459 marginal, 272, 300–302 tariffs, 166 total, 88, 272, 300 Risk buying and selling, 471–473 credit, 477 default, 477 insurance and, 471–472 trading, 472 Risk aversion, 468 Rival, 372 Robber barons, 356 Robinson-Patman Act, 356 Rockefeller, John D., 356, 358 Rodriguez, Alex, Rojstaczer, Stuart, 480 Rosen, Sherwin, 456 Saez, Emmanuel, 448, 488 Safety regulations, 163 Samsung, 334 Scarcity, 2, 32 Scatter diagrams, 16–17 Schick, 360 Screening, 477 Search activity, 128 Self-interest, bounded, 192–193 Selling costs, 331–332 Separating equilibrium, 477 Sequential entry games, 354–355 Sequential games, 352–355 7-Up, 359 Shephard, William G., 237 Shepperson, John, 119 Sherman Act, 356–358 Shoes, 331 Shoebuy.com, 323 Shortages, 67 housing, 128 of natural disaster generators, 118 Short run, 248 economic profit and, 279–280 equilibrium, 279 output, price, and profit, 278–280 output and price decision, 326 possible outcomes, 280 profits and losses in, 279–280 supply, 96 Short-run costs average cost, 254 average total cost curve, 254–255 cost curves, 256–258 long-run costs and, 260–261 marginal cost, 254 product curves, 256–258 shifts in cost curves, 258–259 total cost, 253 Short-run market supply curve, 278 Short-run technology constraints average product curve, 252 marginal product curve, 250–251 product curves, 249 product schedules, 249 total product curve, 250 Shutdown decision, 276 Shutdown point, 276 Signal, 332–333 grades as (Reading Between the Lines), 480 Signaling, 476 in loan market, 477 Simon, Julian, 487 Single-price monopoly, 299 competition compared to, 304–306 output and price decision, 300–303 The Skeptical Environmentalist (Lomborg), 401 Slope, 22 across arc, 23–24 of curved line, 23–24 of line, 26–27 at point, 23 of relationship, 22–24 of straight line, 22–23 Smartphones (Reading Between the Lines), 334 See also specific phones Smith, Adam, 8, 113 Smoot-Hawley Act, 158, 166 Social benefits, 379–380 See also Marginal Social benefit Social interest, Social interest theory, 313 Socialism, Social loss, 158–160 Social networking, 241 Social Security, 135, 457 Solar panels (Reading Between the Lines), 168 Sony Reader, 214 South Africa, 451 Soybeans, 46 Specialization, 40 differences in degree of, 455 Stafford, Penny, 343 Standard of living, 38 Standard Oil, 358 Starbucks, 343 State of nature, 64 Stern, Nicholas, 401 Stern Review on the Economics of Climate Change (Stern), 401 Straight line equations, 26–27 Strategic behavior, 344 Strategic interdependence, 367 Strategies, 344 Sub-prime credit crisis, 478 Subsidies, 114, 140–141 education and, 381–382 exports, 163 government, 140–141, 314 private, 381–382 Subsidized services, 457–458 Substitutability, degree of, 207–208 Substitutes, 59, 92–93 close, 207, 298 closeness of, 86 of production, 63 Substitution diminishing marginal rate of, 206 possibilities, 95–96 Substitution effect, 57, 208, 212–213, 423 Sugary drinks, 194 Sunk cost, 248 Supplementary Security Insurance (SSI), 457 Supply, 62–65 all possible changes in, 72–73 change in, 63–65, 284–287 decision time-frame, 96 decrease in, 70, 139 elasticity of, 94–96, 98, 136 expected future prices, 64 factors of production, 63 increase in, 64, 70, 140 individual, 110 inelastic, 94–95 law of, 62 long-run, 96 marginal cost and, 109–110 market, 110, 422, 423 minimum price and cost, 63 momentary, 96 of oil, 431–432 perfectly elastic, 136 perfectly inelastic, 136 prices of related goods produced, 63 short-run, 96 state of nature, 64 Supply curve, 62–63, 76 of firm, 277 for labor markets, 422 market, 110, 423 short-run market, 278 www.downloadslide.com I-10 Index Supply schedule, 62 Surface Transportation Board, 313 Surplus, 67, 108–111 consumer, 109, 189, 288, 305 producer, 111, 288, 305, 308 redistribution of, 306 total, 112, 288 Sustainable Fishing Act, 407 Sweden, 451 Symmetry principle, 118 Talking with Caroline M Hoxby, 416 David Card, 488 Jagdish Bhagwati, 54 Steven D Levitt, 222 Susan Athey, 176 Thomas Hubbard, 368 TANF See Temporary Assistance for Needy Households Tariffs, 157–159 deadweight loss, 159 effects of, 157–158 revenue, 166 social loss from, 158–160 T-shirt, 157–159 two-part, 313 Taxes, 114, 133–138 on buyers, 134–135 cap-and-trade v., 399 on carbon emissions, 400, 408 on drugs, 143 efficiency and, 137–138 elasticity of demand and, 135–136 elasticity of supply and, 136 equivalence of, on buyers and sellers, 134 fairness and, 138 income, 457 payroll, 457 with perfectly elastic demand, 136 with perfectly inelastic demand, 135 Pigovian, 398–399 pollution and, 398–399 progressive income, 457 prohibition v., 143 proportional income, 457 regressive income, 457 on sellers, 133–134 Social Security, 135, 457 Tax incidence, 133, 136 Team production, economies of, 239 Technology, 226 abatement, 397 advancing, 284–287 clean, 398 constraints, 62, 249–252 cost curves and, 258–259 economic inequality and, 453 fracking, 401 labor demand and, 421 short-run constraint of, 249–252 Technological change, 38, 64, 453 Technological efficiency, 227–228 Temperature analogy, 190 Temperature trends, 395 Temporary Assistance for Needy Households (TANF), 457, 459 Temporary shutdown decision, 276 Texaco, 229 Texas A&M University, 132 A Theory of Justice (Rawls), 117 Time elapsed since price change, 87 Tit-for-tat strategy, 352, 354 Tomatoes (Reading Between the Lines), 98 Toshiba, 239 Total cost, 253, 331 Total fixed cost, 253 Total product, 249, 256 Total product curve, 250 Total revenue, 88, 272, 300 Total revenue test, 88 Total surplus, 112, 288 Total utility, 179 Total variable cost, 253, 256 Trade See also International trade cap-and-trade, 399 with China, 152 free, 167 gains and losses from exports, 156 gains and losses from imports, 155 gains from, 40–42 net gain from, 155–156 protection in, 164–167 in risk, 472 of services for oil, 152 wars, 166 Tradeoff, 10 big, 117, 458–459 along PPF, 33 Tragedy of the commons, 402–404 Transaction costs, 115, 238, 398 Transportation, 373–374 Trends in economic inequality, 447–449 in pollution, 395 Trigger strategy, 352 T-shirts, 153, 157–159, 167 Twitter, 223 Two-part tariff, 313 Tying arrangement, 357 compensation, 457 minimum wage and, 131 Unequal wealth, 456 Unions, 426–429 United Kingdom (U.K.), 400 United States (U.S.) airplane exports in, 154 air pollution trends in, 395 corn and, 46 Department of Commerce, 235, 236 economic growth in, 38–39 economic inequality in, 444–450 Great Depression, 166 import quotas and, 160 income distribution in, 451 inflation in, 17–18 Justice Department, 235, 356 oil markets in, 433 Postal Service, 298, 299 solar panels and, 168 tariffs in, 158 T-shirt import in, 153 wage rates in, 424 Unit elastic demand, 85 Units-free measure, 85 University of California, 132, 457 University of Chicago, 456 University of Missouri, 360 University of Texas, Austin, 132 Unlimited liability, 230 joint, 231 UPS, 299 U.S See United States Used car market, 474–477 Utilitarianism, 116 Utility, 179 expected, 469–470 marginal, 179–180, 182, 185–191 maximizing, 181–184 risk aversion and, 468 temperature analogy, 190 total, 179 of wealth, 468–469 Utility-maximizing choice, 181–184 U.K See United Kingdom Unaffordable quantities, 202 Unattainability, 32 Uncertainty buying and selling risk, 471–473 choice with, 470 decisions and, 468–470 expected utility, 469–470 expected wealth, 468 factor markets, inequality and, 487 information and invisible hand and, 479 insurance markets, 471–472, 478 monopoly and, 479 risk aversion, 468 understanding, 487 utility of wealth, 468–469 Underproduction, 113–114 Underprovision, 381 Unemployment Vaccinations, 373 Value, 108 absolute, 85 of external costs, 394 of insurance, 472 market, 225 paradox of, 189 Value of marginal product, 419, 453 of land, 430 Vanderbilt, W H., 356 Variables, 26 having maximum and minimum points, 20–21 more than two, 24–27 moving in opposite direction, 19–20 moving in same direction, 18–19 unrelated, 21 Vehicle rental market, 418 Verizon, 313 www.downloadslide.com www.downloadslide.com This page intentionally left blank www.downloadslide.com photo Credits Chapter 1: p 1: Andres Rodriguez/Fotolia; p 2: © The New Yorker Collection1985/Frank Modell from cartoonbank.com All Rights Reserved p (top): Adek Berry/AFP/Getty Images; p (bottom) N.V Jagadeesh/ Reuters; p (left): Imagebroker/Alamy; p (right): Snap Happy/Fotolia; p 8 (left): Brendan McDermid/ Reuters; p (right): Pictorial Press, Ltd./Alamy; p 9: Alberto Martin/EFE Photos/Newscom Chapter 2: p 31 (left): M Sheldrake/Shutterstock; p. 31 (right): David R Frazier Photolibrary, Inc./Alamy; p. 53: Everett Collection, Inc./Alamy; p 54: Michael Parkin Chapter 3: p 55: MCT/Getty Images; p 69: Danny Moloshok/Newscom; p 71: Anthony Berenyi/ Shutterstock Chapter 4: p 83: Chris O’Meara/AP Images Chapter 5: p 105: Stephen Coburn/Shutterstock; p. 113: © The New Yorker Collection 1985/Mike Twohy from Cartoonbank.com All Rights Reserved p 119: UPI Photo/A.J Sisco/Newscom; p 121 (top): Bloomberg/ Getty Images; p 121 (bottom): Munshi Ahmed/Bloomberg News/Getty Images Chapter 6: p 127: Amy Harris/Corbis Chapter 7: p 151: Keith Wood/Getty Images; p 162: Justin Sullivan/Getty Images; p 166: Joerg Boethling/ Alamy; p 175: Stock Montage, Inc./Historical Pictures Collection; p 176: Photo courtesy of Susan Athey Chapter 8: p 177: European Pressphoto Agency (EPA)/ Alamy Chapter 9: p 201: CJG - Technology/Alamy; p 208: © The New Yorker Collection Robert Weber from cartoonbank.com All Rights Reserved p 210 (left): Corbis; p 210 (right): Justin Sullivan/Getty Images; p 214: Newscom; p. 221: Bettmann/Corbis; p 222: Michael Parkin Chapter 10: p 223: Fry Design Ltd/Getty Images; p 230: Eric Piermont/AFP/Getty Images; p 233 (left): Robert Glusic/Photodisc/Getty Images; (left insert): Michael Newman/PhotoEdit, Inc.; p 233 (right): Alastair Miller/ Bloomberg News/Getty Images; (right insert): George Widman/AP Images; p 239: Oliver Leedham/Alamy Chapter 11: p 247: Kim Karpeles/Alamy; p 257 (left): Blend Images/Alamy; p 257 (right): Dennis Wall/MCT/ Newscom; p 263: Glowimages/Getty Images Chapter 12: p 271: Urbanmyth/Alamy; p 281: Rena Schild/Shutterstock; p 283 (left): Digital Vision/Getty Images; p 283 (right): Elena Elisseeva/Shutterstock; p 285: Landis Images; p 290: Iain Masterton/Alamy Chapter 13: p 297: ZUMA Wire Service/Alamy; p 311: William Hamilton; p 312: Imaginechina/AP Images Chapter 14: p 323: Michael Blann/Getty Images Chapter 15: p 341: Fancy/Alamy; p 353 (top): Photo by A Doumenjou/ExM Company/© 2012 Airbus SAS; p 353 (bottom): © 2012 Boeing Used by permission All Rights Reserved p 367: Topham/The Image Works; p. 368: Evanston Photographic Studio Chapter 16: p 369: US Army photo by Sgt Jess Geffre; p 373: Kenneth C Zirkel/Photodisc/Getty Images; p. 377: Code Red/Getty Images; p 382: Diane Bondareff Photography, LLC; p 384 (left): Lawrence Kotlikoff; p. 384 (right): MIT Press Journals Chapter 17: p 393: Bruce Forster/Stone/Getty Images; p. 395: Danita Delimont/Gallo/Getty Images; p 401 (left): David Pearson/Alamy; p 401 (right): Patrick Jube/Getty Images; p 404: River Valley with Swineherd Resting Under a Tree (ca 1625), Marten Ryckaert Oil on panel Private collection/Christie’s Images/Bridgeman Art Library; p 405: Jeff Rotman/Photonica/Getty Images; p 415: David Joel Photography; p 416: Caroline M Hoxby/E.S Lee/ Courtesy of Michael Parkin Chapter 18: p 417: Andy Lyons/Getty Images; p 425: Javier Larrea/AGE Fotostock; p 428 (left): Susana Gonzalez/ Bloomberg/Getty Images; p 428 (right): Chris Graythen/ Getty Images Chapter 19: p 443: David Crausby/Alamy Chapter 20: p 467: Myrleen Pearson/Alamy; p 487: World History Archive/Alamy; p 488: Photo courtesy of Stuart Schwartz C-1 www.downloadslide.com This page intentionally left blank www.downloadslide.com The Pearson Series in Economics Abel/Bernanke/Croushore Macroeconomics* Bade/Parkin Foundations of Economics* Berck/Helfand The Economics of the ­Environment Bierman/Fernandez Game Theory with ­Economic Applications Blanchard Macroeconomics* Blau/Ferber/Winkler The Economics of Women, Men and Work Boardman/Greenberg/ Vining/ Weimer Cost-Benefit Analysis Boyer Principles of Transportation Economics Branson Macroeconomic Theory and Policy Brock/Adams The Structure of American Industry Bruce Public Finance and the American Economy Carlton/Perloff Modern Industrial O­rganization Case/Fair/Oster Principles of Economics* Caves/Frankel/Jones World Trade and ­Payments: An Introduction Chapman Environmental Economics: Theory, Application, and Policy Cooter/Ulen Law & Economics Downs An Economic Theory of Democracy Ehrenberg/Smith Modern Labor Economics Farnham Economics for Managers Folland/Goodman/Stano The Economics of Health and Health Care Fort Sports Economics Froyen Macroeconomics Fusfeld The Age of the Economist Gerber International Economics* González-Rivera Forecasting for Economics and Business Gordon Macroeconomics* Greene Econometric Analysis Gregory Essentials of Economics Gregory/Stuart Russian and Soviet ­Economic Performance and Structure Hartwick/Olewiler The Economics of Natural Resource Use Heilbroner/Milberg The Making of the ­ Economic Society Heyne/Boettke/Prychitko The Economic Way of Thinking Hoffman/Averett Women and the Economy: Family, Work, and Pay Holt Markets, Games and ­Strategic Behavior Hubbard/O’Brien Economics* Money and Banking and the Financial System* Hubbard/O’Brien/Rafferty Macroeconomics* Hughes/Cain American Economic History Husted/Melvin International Economics Jehle/Reny Advanced Microeconomic Theory Johnson-Lans A Health Economics Primer Keat/Young Managerial Economics Klein Mathematical Methods for Economics Krugman/Obstfeld/Melitz International Economics: Theory & Policy* Laidler The Demand for Money Leeds/von Allmen The Economics of Sports Leeds/von Allmen/Schiming Economics* Lipsey/Ragan/Storer Economics* Lynn Economic Development: Theory and Practice for a Divided World Miller Economics Today* Understanding Modern Economics Miller/Benjamin The Economics of Macro Issues Miller/Benjamin/North The Economics of Public Issues Mills/Hamilton Urban Economics Mishkin The Economics of Money, Banking, and Financial Markets* The Economics of Money, Banking, and Financial ­Markets, Business School Edition* Macroeconomics: Policy and Practice* Murray Econometrics: A ModernIntroduction 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* Phelps Health Economics Pindyck/Rubinfeld Microeconomics* Riddell/Shackelford/Stamos/ Schneider Economics: A Tool for ­Critically Understanding Society * denotes MyEconLab titles  Log onto www.myeconlab.com to learn more Ritter/Silber/Udell Principles of Money, ­Banking & Financial Markets* Roberts The Choice: A Fable of Free Trade and ­P rotection 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 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 Walters/Walters/Appel/ Callahan/Centanni/ Maex/O’Neill Econversations: Today’s Students Discuss Today’s Issues Weil Economic Growth Williamson Macroeconomics www.downloadslide.com Reading Between the Lines Reading Between the Lines, which appears at the end of each chapter, helps students think like economists by connecting chapter tools and concepts to the world around them The Rising Opportunity Cost of Food  46 11 Expanding Capacity at McDonald’s  264 Demand and Supply: The Price of Peanut B­utter  74 The Elasticities of Demand and Supply for ­Tomatoes  98 12 Perfect Competition in iPhone “Apps”  290 Making Traffic Flow Efficiently  120 13 Is Google Misusing Monopoly Power?  316 14 Product Differentiation and Entry in the Market for Smartphones  334 Push to Raise the Minimum Wage  144 15 Gillette and Schick in a ­Duopoly Game  360 A Tariff on Solar Panels  168 Influencing Consumer Choice for Sugary Drinks  194 16 Reforming Health Care  386 Paper Books Versus e-Books  214 10 Battling for Markets in Internet ­Advertising  240 17 A Carbon Tax at Work  408 18 Labor Markets in Action  434 19 Trends in Incomes of the Super Rich  460 20 Grades as Signals  480 Economics in Action Economics in Action boxes apply economic theory to current events to illustrate the importance of economic forces in the world around us Hong Kong Catching Up to the United States  39 Elastic and Inelastic Demand  89  u  Price Elasticities of Demand for Food  89  u  Necessities and Luxuries  91 Seeing the Invisible Hand  113 Rent Control Winners: The Rich and Famous  130 u  Workers and Consumers Pay the Most Tax  138  u  Rich High-Cost Farmers the Winners  141 We Trade Services for Oil  152  u  U.S Tariffs Almost Gone  158  u  Self-Interest Beats the Social Interest 163 Maximizing Utility from Recorded Music  190 Best Affordable Choice of Movies and DVDs  210 10 Types of Firms in the Economy  232  u  Concentration in the U.S Economy  235  u  A Competitive Environment 237  u  Apple Doesn’t Make the iPhone! 239 11 How to Pull Up Your Average  252  u  Produce More to Cut Cost  263 12 Production Cutback and Temporary Shutdown 281  u  Entry and Exit  283 13 Information-Age Monopolies  299  u  Attempting Perfect Price Discrimination  311 14 Monopolistic Competition Today  325  u  The Cost of Selling a Pair of Shoes  331 www.downloadslide.com 15 Oligopoly Today  343  u  A Game in the Market for Tissues  350  u  The United States Versus Microsoft 358  u  FTC Takes the Fizz out of Soda Mergers 359 16 Is a Lighthouse a Public Good?  373  u  Fighting Colorado’s Wildfires  377  u  Education Quality and Cost: Charter Schools  382  u  U.S Health-Care Expenditures in Global Perspective  383 17 Opposing Trends: Success and Failure  395  u  Taxing Carbon Emissions  400  u  The Original Tragedy of the Commons  404  u  One of Today’s Tragedies of the Commons  404  u  ITQs Work 407 18 Wage Rates in the United States  424  u  The World and U.S Markets for Oil  433 19 The Rich Get Richer, but School Still Pays  448  u  Is the American Dream Still Alive?  450  u  Income Redistribution: Only the Richest Pay  458 20 Insurance in the United States  473  u  The Sub-Prime Credit Crisis  478 Economics in the News Economics in the News boxes shows students how to use the economic toolkit to understand the events and issues they are confronted with in the media The Invisible Hand   A Fragile Global Economy   Cost of Global Food Up Again   34 Energy Independence  43 The Market for College Education   69 The Market for Gasoline   71 The Elasticity of Demand for Peanut Butter   90 More Peanut Butter Demand Elasticities   93 The Changing Market for Coat Hangers   162 10 Principals and Agents Get It Wrong   230 11 Checkout Cost Curves   256 12 Record Stores Exit   285 The Falling Cost of Sequencing DNA   287 13 Microsoft Monopoly  312 15 Airbus Versus Boeing   353 18 College Major and Job Prospects   425 At Issue At Issue boxes shows two sides of a controversial issue and helps students to apply the economic way of thinking to clarify and debate the issues The Protest against Market Capitalism   5 Price Gouging  119 Does the Minimum Wage Cause 16 Is Obamacare the Solution to U.S Health-Care Is Offshore Outsourcing Bad or Good for 18 Monopoly Power for Evil or Good?   428 Unemployment?  132 America?  166 Problems?  384 17 Should We Be Doing More to Reduce Carbon Emissions?  401 www.downloadslide.com Microeconomic Data These microeconomic data series show some of the trends in what, how, and for whom goods and services are produced — the central questions of microeconomics You will find these data in a spreadsheet that you can download from your MyEconLab Web site 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 WHAT WE PRODUCE Percentage of gross domestic product Agriculture, forestry, fishing, and hunting Mining Construction Durable goods 10 Nondurable goods Utilities Wholesale trade Retail trade Transportation and warehousing Finance, insurance, real estate, rental, and leasing 11 Professional and business services 12 Information 13 Educational services, health care, and social assistance 14 Arts, entertainment, recreation, accommodation, and food services 15 Other services, except government 3.0 2.8 2.5 2.6 2.5 2.3 2.1 2.2 2.1 2.1 2.3 1.2 4.3 14.5 1.2 4.4 14.7 1.1 4.5 14.7 1.1 4.5 15.3 1.0 4.5 15.4 1.0 4.5 14.8 1.0 4.5 14.8 0.9 4.6 14.4 1.0 4.6 12.7 1.0 4.7 12.4 1.0 4.7 12.7 10.6 4.1 6.6 10.5 4.1 6.6 10.4 4.1 6.6 10.3 4.0 6.5 10.3 3.9 6.5 10.0 3.9 6.5 10.0 3.9 6.5 9.7 3.9 6.5 9.4 4.0 6.6 9.1 4.0 6.5 8.9 4.0 6.6 8.9 3.6 8.9 3.5 9.1 3.5 9.0 3.5 8.8 3.4 8.9 3.3 9.1 3.2 9.1 3.2 9.2 3.2 9.2 3.2 9.1 3.3 11.9 11.9 11.8 11.7 11.4 11.6 11.6 11.7 11.9 12.1 12.0 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 40.4 40.6 40.8 41.2 41.4 40.6 40.8 40.7 39.8 39.9 40.5 9.5 8.8 8.2 7.5 6.7 6.1 5.8 5.4 5.3 5.1 5.0 1.2 4.9 1.1 4.9 1.1 4.9 1.1 5.0 1.0 4.9 1.0 4.7 0.9 4.7 0.9 4.9 0.9 4.9 0.9 5.0 0.9 5.1 25.2 59.3 25.1 60.0 25.0 60.8 25.2 61.2 25.8 61.6 25.5 62.7 25.2 63.3 24.9 63.9 23.8 65.1 22.8 66.1 22.7 66.3 2.33 2.41 2.52 2.62 2.82 3.03 3.26 3.50 3.79 4.00 4.19 12.2 12.5 12.9 13.2 13.8 14.3 14.8 15.2 15.6 15.7 15.7 HOW WE PRODUCE 16 Average weekly hours Employment (percentage of total) 17 Agriculture 18 Mining 19 Construction 20 Manufacturing 21 Services FOR WHOM WE PRODUCE 22 Wage rate (dollars per hour) 23 Real wage rate (2005 dollars per hour) 24 Stock price index (Dow Jones) 25 Real stock price index (2005 dollars) 26 Interest rate Aaa (percent per year) 27 Real interest rate (percent per year) GOVERNMENT IN THE ECONOMY 28 Government receipts (billions of dollars) 29 Government expenditures (billions of dollars) 30 Government surplus(+)/deficit(–) (billions of dollars) 31 Government debt (billions of dollars) 639.1 714.7 834.1 910.7 872.8 879.5 904.0 875.7 753.1 884.9 950.1 3,350.1 3,706.9 4,260.1 4,568.6 4,257.5 4,162.0 4,103.7 3,788.0 3,094.4 3,462.9 3,564.9 4.3 4.3 4.4 4.5 5.1 5.5 6.2 7.0 8.0 7.4 7.2 3.3 2.9 3.1 2.9 2.3 2.4 2.0 1.6 2.3 3.0 4.0 153.2 165.1 169.9 183.9 206.7 221.7 256.2 288.2 291.6 309.4 353.8 161.5 169.1 177.8 189.1 214.7 242.9 268.3 286.7 313.2 340.7 370.7 –8.3 –4.1 –7.9 –5.2 –8.0 –21.2 –12.1 1.4 –21.5 –31.3 –16.8 218.3 222.0 222.1 221.7 221.5 219.9 237.3 224.0 225.5 237.5 251.0 www.downloadslide.com 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 3.2 2.8 2.7 2.3 2.0 2.1 2.2 1.8 2.0 1.8 1.3 1.6 1.5 1.4 1.0 4.8 13.0 8.7 1.4 4.7 12.3 8.8 1.5 4.3 11.5 8.8 1.4 4.4 12.1 8.9 1.6 4.4 12.5 8.8 1.5 4.6 12.7 8.6 1.7 4.7 12.3 8.6 2.4 4.4 11.3 8.5 2.9 3.9 11.0 8.5 2.5 3.7 10.0 8.2 1.9 3.7 9.8 7.8 1.8 3.9 10.3 7.4 1.5 4.1 9.8 7.2 3.9 6.6 9.0 3.3 3.8 6.9 8.7 3.3 4.1 6.9 8.9 3.0 4.1 6.6 9.0 3.2 4.1 6.5 9.0 3.2 4.1 6.6 8.9 3.2 3.8 6.6 8.6 3.2 4.0 6.5 8.3 3.1 4.1 6.4 8.2 2.9 4.5 6.3 8.3 2.7 4.4 6.1 8.5 2.7 4.3 6.3 8.6 2.8 4.2 6.2 8.7 2.7 1.0 4.4 9.5 6.6 4.1 6.1 8.7 2.7 11.7 11.8 12.0 11.7 11.8 11.9 11.8 12.3 12.5 13.1 13.4 13.4 13.6 14.0 — — — — — — — — — — — — — — — — — — — — — — — — — — –– –– — — — — — — — — — — — — — –– — — — — — — — — — — — — — –– — — — — — — — — — — — — — –– 40.7 40.0 39.4 40.1 40.3 40.4 40.2 39.7 39.8 39.0 40.1 40.6 40.5 40.7 4.9 0.9 5.2 23.0 66.1 4.8 0.9 5.0 22.5 66.9 4.7 1.0 4.5 20.9 68.9 4.5 1.0 4.4 21.1 69.0 4.2 1.0 4.6 21.1 69.1 4.1 1.0 4.8 20.9 69.2 3.8 1.1 4.9 20.8 69.5 3.8 1.1 4.7 19.9 70.5 3.7 1.2 4.5 19.7 71.0 3.6 1.3 4.3 18.7 72.2 3.5 1.1 4.3 18.2 73.0 3.2 1.0 4.6 18.4 72.9 2.8 1.0 4.8 17.8 73.8 2.6 0.8 4.8 17.2 4.51 4.93 5.40 5.72 6.12 6.62 7.25 8.04 8.76 9.51 9.68 10.13 10.69 11.03 16.0 16.1 16.1 16.1 16.2 16.4 16.6 16.8 16.8 17.2 16.8 16.9 17.3 17.5 74.6 924.1 759.1 802.9 975.2 894.3 821.1 844.4 891.1 932.9 884.5 1,190.8 1,178.6 1,328.0 1793.1 3,284.6 2,473.1 2,390.8 2,745.8 2,367.5 2,031.6 1,928.1 1,864.5 1,784.7 1,594.9 2,065.9 1,970.5 2,155.0 2,846.7 7.4 8.6 8.8 8.4 8.0 8.7 9.6 11.9 14.2 13.8 12.0 12.7 11.4 9.0 7.2 1.2 –2.5 –0.3 2.7 1.5 1.1 –1.7 –1.6 3.9 7.6 8.8 8.4 7.8 926.9 949.4 1,008.6 1,121.8 1,223.6 1,300.1 397.0 438.1 448.5 513.2 576.6 653.3 736.5 807.4 400.7 453.8 535.2 575.6 622.6 685.2 763.1 883.1 1,000.5 1,110.7 1,210.4 1,312.2 1,439.1 1,538.6 –3.8 –15.7 –86.7 –62.5 –46.0 –31.9 –26.7 –75.7 –73.5 –161.3 265.7 263.1 309.7 382.7 444.1 491.6 524.7 591.1 664.9 790.1 –201.8 –190.4 –215.5 –238.5 981.7 1,151.9 1,337.5 1,549.8 www.downloadslide.com Microeconomic Data These microeconomic data series show some of the trends in what, how, and for whom goods and services are produced — the central questions of microeconomics You will find these data in a spreadsheet that you can download from your MyEconLab Web site 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 WHAT WE PRODUCE Percentage of gross domestic product Agriculture, forestry, fishing, and hunting Mining Construction Durable goods Nondurable goods Utilities Wholesale trade Retail trade Transportation and warehousing 10 Finance, insurance, real estate, rental, and leasing 11 Professional and business services 1.7 1.6 1.7 1.7 1.5 1.6 1.4 1.5 1.3 1.5 1.3 1.5 4.6 10.2 1.4 4.6 10.2 1.4 4.5 9.9 1.5 4.3 9.4 1.3 3.8 9.0 1.1 3.7 8.9 1.1 3.7 8.9 1.0 3.9 9.2 1.0 3.9 9.2 1.1 4.0 9.0 6.9 2.6 6.0 7.4 3.2 7.0 2.4 6.2 7.2 3.2 7.0 2.5 6.2 7.1 3.0 7.0 2.5 6.0 6.9 2.9 6.9 2.5 6.0 6.8 3.0 6.8 2.5 6.0 6.8 2.9 6.7 2.5 6.0 6.9 3.0 6.7 2.5 6.3 7.0 3.1 6.8 2.5 6.2 7.0 3.1 6.4 2.3 6.3 7.0 3.0 1.1 4.1 9.1 6.3 2.2 6.3 17.7 17.8 17.8 18.0 18.4 18.6 18.6 18.4 18.7 18.8 19.2 6.9 3.1 8.7 9.1 9.4 9.8 9.7 9.9 9.9 9.9 10.0 10.4 10.8 12 Information 3.9 3.8 3.8 3.9 3.9 4.0 4.1 4.2 4.2 4.3 4.2 13 Educational services, health care, and social assistance 14 Arts, entertainment, recreation, accommodation, and food services 15 Other services, except government 6.0 6.1 6.3 6.7 7.1 7.3 7.3 7.2 7.2 7.1 6.9 3.2 3.3 3.3 3.4 3.4 3.4 3.4 3.3 3.4 3.4 3.5 2.4 2.4 2.4 2.5 2.4 2.4 2.5 2.4 2.4 2.4 2.4 41.0 41.0 40.9 40.5 40.4 40.8 41.2 41.7 41.3 41.3 41.7 2.6 0.7 4.9 16.8 75.0 2.5 0.7 4.8 16.6 75.4 2.4 0.7 4.8 16.3 75.9 2.3 0.7 4.7 15.8 76.6 2.3 0.7 4.3 15.4 77.3 2.3 0.6 4.1 15.1 77.9 2.1 0.6 4.2 14.8 78.3 2.2 0.6 4.4 14.6 78.3 2.2 0.5 4.4 14.4 78.5 2.0 0.5 4.5 14.1 78.8 1.9 0.5 4.6 13.9 79.0 11.42 12.06 12.55 13.30 13.91 14.46 14.75 15.00 15.66 16.15 16.62 17.6 18.0 18.0 18.4 18.6 18.9 18.8 18.8 19.2 19.4 19.6 HOW WE PRODUCE 16 Average weekly hours Employment (percentage of total) 17 Agriculture 18 Mining 19 Construction 20 Manufacturing 21 Services FOR WHOM WE PRODUCE 22 Wage rate (dollars per hour) 23 Real wage rate (2005 dollars per hour) 24 Stock price index (Dow Jones) 25 Real stock price index (2005 dollars) 26 Interest rate Aaa (percent per year) 27 Real interest rate (percent per year) GOVERNMENT IN THE ECONOMY 28 Government receipts (billions of dollars) 29 Government expenditures (billions of dollars) 30 Government surplus(+)/deficit(–) (billions of dollars) 31 Government debt (billions of dollars) 2,277.5 2,061.5 2,510.3 2,679.5 2,929.0 3,284.1 3,524.9 3,794.6 4,499.4 5,743.9 7,443.2 3,514.1 3,075.1 3,608.2 3,707.9 3,914.8 4,287.8 4,502.6 4,747.1 5,513.8 6,907.5 8,795.6 7.3 9.4 9.7 9.3 9.3 8.8 8.1 7.2 8.0 7.6 7.4 5.0 5.7 5.6 4.4 3.9 4.6 5.1 4.2 5.4 4.8 4.4 1,413.8 1,513.6 1,639.6 1,725.0 1,775.3 1,860.9 1,965.9 2,112.1 2,235.5 2,403.5 2,584.2 1,622.1 1,700.2 1,821.3 1,976.9 2,076.7 2,234.0 2,304.1 2,374.4 2,480.1 2,583.2 2,658.0 –208.4 –186.7 –181.7 –251.8 –301.3 –373.1 –338.3 –262.3 –244.5 –179.7 –73.8 1,677.7 1,822.4 1,970.6 2,177.1 2,430.4 2,703.3 2,922.7 3,077.9 3,230.3 3,343.1 3,347.8 www.downloadslide.com 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1.2 1.0 1.0 1.0 0.9 1.0 1.2 0.9 1.1 1.1 1.2 0.9 4.3 9.2 6.1 0.9 4.4 8.9 6.0 1.2 4.4 8.8 5.7 1.2 4.6 7.7 5.6 1.0 4.6 7.4 5.5 1.3 4.5 7.0 5.4 1.3 4.7 6.9 5.6 1.5 4.9 5.5 1.7 4.9 6.9 5.4 1.8 4.7 6.7 5.4 2.2 4.3 6.3 5.1 1.5 3.9 5.7 5.3 1.6 3.5 6.3 5.4 1.9 3.4 6.6 5.6 2.1 2.0 1.9 2.0 2.0 2.0 1.8 1.6 1.8 1.8 1.8 1.9 1.8 1.7 6.2 6.8 3.1 6.2 6.9 3.1 6.0 6.7 3.1 6.0 6.8 2.9 5.9 6.9 2.9 5.8 6.9 2.9 5.8 6.7 2.9 5.7 6.6 2.9 5.8 6.5 2.9 5.8 6.3 2.9 5.8 5.9 2.9 5.5 2.8 5.5 6.1 2.8 5.6 6.1 2.8 19.3 19.4 19.7 20.3 20.5 20.5 20.3 20.6 20.7 20.4 20.4 21.3 20.7 19.9 11.2 4.4 11.5 4.7 11.6 4.7 11.5 4.7 11.4 4.6 11.4 4.5 11.4 4.7 11.6 4.6 11.7 4.4 12.1 4.5 12.5 4.5 12 4.4 12.3 4.3 12.6 4.4 6.9 6.8 6.9 7.3 7.6 7.8 7.6 7.6 7.6 7.7 8.1 8.7 8.8 8.7 3.5 3.5 3.6 3.6 3.6 3.6 3.9 3.8 3.8 3.9 3.8 3.7 3.8 3.9 2.4 2.3 2.3 2.4 2.4 2.4 2.5 2.5 2.5 2.5 2.4 2.4 2.5 2.4 41.5 41.4 41.2 40.4 40.5 40.4 40.8 40.6 41.1 41.2 40.8 39.8 41.1 41.4 1.8 0.5 1.7 0.5 1.6 0.4 1.6 0.5 1.6 0.4 1.6 0.4 1.5 0.4 1.5 0.5 1.4 0.5 1.3 0.5 1.3 0.6 1.3 0.5 1.3 0.5 1.3 0.6 4.8 13.7 79.2 5.0 13.2 79.6 5.1 12.9 80.0 5.1 12.3 80.6 5.1 11.5 81.4 5.1 11.0 81.9 5.2 10.7 82.1 5.4 10.5 82.2 5.6 10.3 82.3 5.5 10.0 82.7 5.2 9.7 83.3 4.5 8.9 84.6 4.2 8.8 85.2 4.2 8.8 85.1 17.72 18.65 19.75 20.80 21.28 22.08 22.68 23.63 24.24 25.13 26.20 26.97 26.84 27.58 20.7 21.5 22.3 22.9 23.1 23.5 23.4 23.6 23.5 23.7 24.1 24.6 24.2 24.3 8,631.9 10,482.6 10,723.8 10,205.8 10,086.5 12,071.6 12,087.5 11,249.0 6.5 5.0 7.0 4.8 7.6 4.3 7.1 4.2 2,762.2 2,939.2 3,168.1 2,735.2 2,874.8 27.0 3,262.9 9,214.9 9,006.6 10,315.5 10,546.7 11,409.8 13,178.0 11,244.1 9,995.1 9,568.5 10,658.8 10,547.4 11,053.0 12,406.1 10,354.7 6.5 4.9 8,885.7 10,668.6 11,957.6 8,112.6 9,612.3 10,548.8 5.7 3.4 5.6 3.0 5.2 1.9 5.6 2.4 5.6 2.7 5.6 1.8 5.3 5.7 4.9 3.6 4.6 1.5 3,155.6 3,000.5 3,071.4 3,296.0 3,691.6 4,028.3 4,228.8 4,085.6 3,730.4 3,926.7 4,100.6 3,021.5 3,220.8 3,422.9 3,624.6 3,827.0 4,109.9 4,319.8 4,636.9 5,022.9 5,398.7 5,577.8 5,642.9 64.4 146.6 –65.1 –553.3 –531.1 –418.3 –291.6 –408.1 3,135.7 2,898.4 2,785.5 2,936.2 3,257.3 3,595.2 3,855.9 4,060.0 4,255.5 –422.4 –937.3 –1,668.3 –1,651.0 –1,542.3 5,311.9 6,775.5 8,207.2 8,463.5 ... Cataloging-in-Publication Data Parkin, Michael   Economics /Michael Parkin. 11th ed   p cm   Includes bibliographical references and index   ISBN 978-0-13-299484-2 (economics)—ISBN 978-0-13-301994-0 (microeconomics) —ISBN... www.downloadslide.com This page intentionally left blank www.downloadslide.com MICROECONOMICS Eleventh Edition Michael Parkin University of Western Ontario Boston Columbus Indianapolis New York San... www.downloadslide.com About The Author Michael Parkin is Professor Emeritus in the Department of Economics at the University of Western Ontario, Canada Professor Parkin has held faculty appointments