Giáo trình foundations of microeconomics 7e by parkin bade

MyEconLab Provides the Power of Practice ® Optimize your study time with MyEconLab, the online assessment and tutorial ­system When you take a sample test online, MyEconLab gives you targeted ­feedback and a personalized Study Plan to identify the topics you need to review Study Plan The Study Plan shows you the sections you should study next, gives easy access to practice problems, and provides you with an automatically generated quiz to prove mastery of the course material Unlimited Practice As you work each exercise, instant feedback helps you understand and apply the concepts Many Study Plan exercises contain algorithmically generated values to ensure that you get as much practice as you need Learning Resources Study Plan problems link to learning resources that further reinforce concepts you need to master • 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 • eText links are specific to the problem at hand so that related concepts are easy to review just when they are needed • 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 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 Foundations of MICROEconomics delivers a complete, hands-on learning system designed around active learning A Learning-by-Doing Approach The Checklist that begins each chapter highlights the key topics covered and the chapter is divided into sections that directly correlate to the Checklist Why does tuition keep rising? The Checkpoint that ends each section provides a full page of practice problems to encourage students to review the material while it is fresh in their minds Each chapter opens with a question about a central issue that sets the stage for the ­material CHECKPOINT 4.1 Distinguish between quantity demanded and demand, and explain what determines demand Demand and Supply CHAPTER CHECKLIST When you have completed your study of this chapter, you will be able to Distinguish between quantity demanded and demand, and explain 88 determines demand Part what • INTRODUCTION Distinguish between quantity supplied and supply, and explain what determines supply Change in Quantity Demanded Versus Change in Demand Explain how demand and determine price and that quantity in just a seen bring a change in demand These Thesupply influences on buyers’ plans you’ve MyEconLab Big picture market, and explain the effects of changes in demand and supply are all the influences on buying plans except for the price of the good To avoid confusion, when the price of the good changes and all other influences on buying plans Chapter • Demand and Supply 89 remain the same, we say there has been a change in the quantity demanded Change in the quantity demanded The distinction between a change in demand and a change in the quantity A change in the quantity of a good demanded is crucial for working out how a market responds to the forces that hit MyEconLab 4.1 that people plan to buyStudy that Plan results 81 it Figure 4.4 illustrates and summarizes the distinction: Key Terms Quiz from a change in the price of the good with all other influences Solutionson buying plans remaining the same Chapter • Demand and Supply • If the price of bottled water rises when other things remain the same, the quantity demanded of bottled water decreases and there is a movement up along the demand curve D0 If the price falls when other things remain the same, the quantity demanded increases and there is a movement down along the demand curve D0 • If some influence on buyers’ plans other than the price of bottled Why Does Tuition Rising? waterKeep changes, there is a change in demand When the demand for bottled water decreases, the demand curve shifts leftward to D1 When Tuition has increased every year since the demand In a given otherwater things remain described In 2001, was D01 foryear, bottled increases, the demand curvedemand shifts right1980 and at the same time, enrollmentward thetosame, and supply was S The market was in D2 but from one year to the Practice Problems 101 EYE on TUITION The following events occur one at a time in the market for cell phones: • The price of a cell phone falls • Producers announce that cell-phone prices will fall next month • The price of a call made from a cell phone falls • The price of a call made from a land-line phone increases • The introduction of camera phones makes cell phones more popular has steadily climbed Figure shows next, some things change The populaequilibrium with 16 million students When you are thinking about the influences on demand, try to get into the these facts The points tell us the levels tion has grown, incomes have increased, enrolled paying an average tuition of habit of asking: Does this influence change the quantity demanded or does it of enrollment (x-axis) and tuition (y-axis, jobs that require more than a high$15,000 By 2010, demand had change The test is: Did the price of the good change or did some other measured in 2010 dollars) in 1981, 1991, demand? school diploma have expanded while increased to D10 At the tuition of influence change? If the price changed, then quantity demanded changed If some and each year from 2001 to 2010 We jobs for high-school graduates have 2001, there would be a severe shortother influence changed and the price remained constant, then demand changed In the News can interpret the data using the demand shrunk, and government subsidized stu- age of college places, so tuition rises and supply model dent loans programs have expanded In 2010, the market was in equilibrium Airlines, now flush, fear a downturn More than 4,500 public and private, 2- These changes increase the demand for at a tuition of $21,000 with 21 million So far this year, airlines have been able to raise fares but still fill their planes FIGURE 4.4 4-year schools supply college year and ■ college education students enrolled Source: The New York Times, June 10, 2011 education services andDemanded more than 20 VersusFigure MyEconLab Animation Change in Quantity Change in Demand illustrates the market for Demand for college places will keep Does this news clip imply that the law of demand doesn’t work in the real million people demand these services college education that we’ve just increasing and tuition will keep rising world? Explain why or why not Theinlaw of demand says: Other things A decrease the An increase in the Pricethe (dollars per bottle) remaining the same, if tuition rises, quantity demanded quantity demanded Solutions to Practice Problems FIGURE 2.50 The quantity demanded decreases The quantity demanded increases Tuition (thousands of 2010 dollars per year) quantity of college places demanded Price A fall in the price of a cell phone increases the quantity of cell phones and there is a movement and there is a movement down decreases The lawup of along supply says: Other demanded but has no effect on the demand for cell phones 40 An increase in population, a rise curve D if the demand D if the price if tuition rises, along the demand thingscurve remaining same, Quantity in incomes, changes in jobs, and With the producers’ announcement, the expected future price of a cell phone of the good rises and0 other demanded 2.00 things theofprice ofloans the good falls and the quantity of college places supplied an expansion student falls, which decreases the demand for cell phones today increases increased the demand for remain the same remainincreases the same.Tuition is determined at the other things A fall in the price of a call from a cell phone increases the demand for cell college education level that the quantity of college A decrease in makes demand An increase in demand phones because a cell-phone call and a cell phone are complements S places demanded equal the quantity 1.50 decreases and the Demand increases and the A rise in the price of a call from a land-line phone increases the demand for Demand 30 supplied demand curve shifts leftward demand curve shifts rightward cell phones because a land-line phone and a cell phone are substitutes Explain the effect of each event on the demand for cell phones Use a graph to illustrate the effect of each event Does any event (or events) illustrate the law of demand? Eye On boxes apply theory to important issues and problems that shape our global society and ­individual decisions Confidence-Building Graphs use color to show the direction of shifts and detailed, numbered captions guide students With cell phones more popular, the demand for cell phones increases step-by-step through the action Figure illustrates the effect of a fall in the price of a cell phone as a move- ment along the demand curve D Figure illustrates the effect of an increase in the demand for cell phones as the shift of the demand curve from D0 to D1 and a decrease in the demand for cell phones as the shift of the demand curve from D0 to D2 A fall in the price of a cell phone (other things remaining the same) illustrates the law of demand Figure illustrates the law of demand The other events change demand and not illustrate the law of demand 100% of the figures are animated in ­MyEconLab, with step-by-step audio narration Solution to In the News The law of demand states: If the price of an airline ticket rises, other things remaining the same, the quantity demanded of airline tickets will decrease The demand curve for airline tickets slopes downward The law of demand does work in the real world Airlines can still fill their planes because “other things” did not remain the same Some event increased the demand for airline tickets D (from D0 to D1) if (from D0 to D2) if 1.00 The price of a substitute Quantity falls0 or the price of a complement Tuition rises (thousands 2010is dollars per year) The price of theofgood 0.50 expected FIGURE 25 2to fall Price decreases.* Income 20 future income Demand 10 Expected or credit decreases increases 05 15 The number of buyers 01 decreases * Bottled 10 water is a normal91good Demand decreases 21 D1 15 10 10 expected to rise D0 tuition increased 11 12 The price of a substitute rises or the price of a complement and the quantity falls supplied increased The price of the good is 13 Quantity (millions of bottles per day) Income increases Expected future income or credit increases The number of buyers D10 increases D1 D01 81 D2 D0 D2 10 15 20 Quantity 25 Enrollment (millions) Figure The Data: A Scatter Diagram 10 16 21 30 40 Enrollment (millions) Figure The Market for College Education This page intentionally left blank Foundations of MICROEconomics Robin Bade Michael Parkin University of Western Ontario Seventh Edition 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 Editor in Chief: Donna Battista Executive Acquisitions Editor: Adrienne D’Ambrosio Editorial Project Manager: Sarah Dumouchelle Editorial Assistant: Elissa Senra-Sargent Executive Marketing Manager: Lori DeShazo Managing Editor: Jeff Holcomb Production Project Manager: Nancy Freihofer Media Publisher: Denise Clinton Content Product Manager: Noel Lotz Senior Media Producer: Melissa Honig Image Permission Manager: Rachel Youdelman Photo Researcher: Joseph Songco Art Director, Cover: Jonathan Boylan Cover Image: Rich Bunpot/Shutterstock Copyeditor: Catherine Baum Technical Illustrator: Richard Parkin Project Management, Page Makeup, Design: Integra Printer/Binder: Courier/Kendallville Cover Printer: Courier/Kendallville Text Font: 10/12, Palatino-Roman Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on pages C-1–C-2 FRED® is a registered trademark and the FRED® logo and ST.LOUIS FED are trademarks of the Federal Reserve Bank of St Louis, http://researchstlouisfed.org/fred2/ Copyright © 2015, 2013, 2011 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 Bade, Robin   Foundations of microeconomics/Robin Bade, Michael Parkin.—7th ed   pages cm   Includes index   ISBN 978-0-13-346240-1   ISBN 978-0-13-347710-8 (microeconomics split version)   ISBN 978-0-13-346062-9 (macroeconomics split version)   ISBN 978-0-13-346254-8 (essentials split version)   1. Economics.  I. Parkin, Michael, 1939–  II. Title   HB171.5.B155 2015  330—dc23 2013045475 10 9 8 7 6 5 4 3 2 1 ISBN 10:      0-13-347710-X ISBN 13: 978-0-13-347710-8 To Erin, Tessa, Jack, Abby, and Sophie This page intentionally left blank About the Authors Robin Bade was an undergraduate at the University of Queensland, Australia, where she earned degrees in mathematics and economics After a spell teaching high school math and physics, she enrolled in the Ph.D program at the Australian National University, from which she graduated in 1970 She has held faculty appointments at the University of Edinburgh in Scotland, at Bond University in Australia, and at the Universities of Manitoba, Toronto, and Western Ontario in Canada Her research on international capital flows appears in the International Economic Review and the Economic Record Robin first taught the principles of economics course in 1970 and has taught it (alongside intermediate macroeconomics and international trade and finance) most years since then She developed many of the ideas found in this text while conducting tutorials with her students at the University of Western Ontario Michael Parkin studied economics in England and began his university teaching career immediately after graduating with a B.A from the University of Leicester He learned the subject on the job at the University of Essex, England’s most exciting new university of the 1960s, and at the age of 30 became one of the youngest full professors 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 His research on macroeconomics, monetary economics, and international economics has resulted in more than 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 is author of the bestselling textbook, Economics (Addison-Wesley), now in its Eleventh Edition Robin and Michael are a wife-and-husband team Their most notable joint r­ esearch created the Bade-Parkin Index of central bank independence and spawned a vast amount of research on that topic They don’t claim credit for the independence of the new European Central Bank, but its constitution and the movement toward greater independence of central banks around the world were aided by their pioneering work Their joint textbooks include Macroeconomics (Prentice-Hall), Modern Macroeconomics (Pearson Education Canada), and Economics: Canada in the Global Environment, the Canadian adaptation of Parkin, Economics (Addison-Wesley) They are dedicated to the challenge of explaining economics ever more clearly to a growing body of students Music, the theater, art, walking on the beach, and five grandchildren provides their relaxation and fun ix www.downloadslide.net INDEX land markets in, 498 marginal product value in, 485–486 market income in, 508 natural resources in, 484 nonrenewable natural resources in, 499–501 services in, 484 Factor prices, 360–361, 484 Factors of production, 34 capital in, 35 entrepreneurship in, 36 labor in, 35 land in, 34 prices and, 360–361, 488 Fairness big tradeoff and, 159 of markets, 159 of minimum wage, 179 of monopolies, 411 of perfect competition, 393 of price gouging, 160 of rent ceilings, 172 of resource allocation, 161 rules of, 159 Federal government, 48 Federal Trade Commission (FTC), 477 Financial capital, 35, 520 Firms, 46 See also Businesses Fishing/overfishing, 278–284 Fixed costs, 423 Fixed plant, 348 Food Stamp program, 258, 523 Force, 140–141 Foreign labor, 233 Four-firm concentration ratio, 434, 458 Free lunch, 61–62 Free markets, 182 Free rider, 269, 276 FTC See Federal Trade Commission Functional distribution of income, 37 Future prices, 94 Games, 470 Game theory, 465, 469–471 duopolists’ dilemma and, 467–468 in oligopoly, 465 prisoners’ dilemma and, 465–467 Gasoline prices, 121 Gates, Bill, 6, 36, 139, 425, 520 General Agreement on Tariffs and Trade (GATT), 223 GHG See Greenhouse gases Gifts of nature, 34 Global economy advanced economies in, 39, 40 average incomes in, 44 career choices in, 45 circular flows in, 51 developing economies in, 39, 42 goods and services in, 39, 42 human capital in, 42 income distribution in, 43–44 inequalities in, 43–44 international trade in, 52 physical capital in, 42 poverty in, 44 price elasticity of demand in, 119 production in, 40 Globalization, 5, 219 Global oil cartel, 463 Goods capital, 32 classifying, 266–267 inferior, 87 markets for, 46 normal, 87 price elasticity of demand and, 112–113, 131 prices of related, 86 private/public, 266–267 Goods and services, consumption of, 32 explanation of, 3–4 exports/imports of, 50 in global economy, 39, 42 production changes in, 43 United States deficits from, United States producing, 33 Goods markets, 46 Goodwin, Phil, 121 Google, 423 Governments agricultural price support of, 181–183 in circular flow, 48, 49 external benefits and, 256–258 external costs and, 249–250 federal, 48 growth of, 50, 275 import quotas imposed by, 228–229 I-5 Income distribution/redistribution by, 522–523 license, 402 state/local, 48 subsidies from, 181–182, 422 tariff revenue of, 225 Grade point average (GPA), 62, 353 Graphs axes of, 21 ceteris paribus used in, 28 cross-section of, 22–23 economic models using, 12, 24–26 making, 21 origin of, 21 relationships/variables in, 21 time-series, 22–23 Greenhouse gases (GHG), 252 Hamermesh, Daniel, 177 Hanly, Mark, 121 Health care economic problems in, 305–306 expenditures, 307–308 global expenditures in, 308 moral hazards in, 305–306 in other countries, 307–308 poverty and, 306–307 reform ideas in, 309 in United States, 306 vouchers in, 309 Health insurance, 305–306 Health Maintenance Organizations (HMO), 306 Herfindahl-Hirschman index, 435, 458, 477 High-speed rail networks, 276 HMO See Health Maintenance ­Organizations Hong Kong, 70 Horizontal drilling, 69 Horizontal equity, 206– 207 Hotelling, Harold, 501 Hotelling Principle, 501 Households, 46, 512, 527 Housing market, 168 Hoxby, Caroline, 259 Human capital, 35 in developing and global ­economies, 42 in employment, 516–518 high/low skilled labor as, 516–517 Hydraulic fracturing, 69 www.downloadslide.net I-6 INDEX Illegal hiring, 176 Implicit costs, 345 Import quota, 227 government imposing, 228–229 influence of, 227–229 international trade and, 227–229 producer surplus and, 227–229 profits from, 229 Imports, 214 gains/losses from, 220 of goods/services, 50 policy barriers of, 229 producer surplus influenced by, 220 United States, 33, 215, 216, 217 Incentives, 11 Income break-even, 375 capital, 199, 200 change in demand and, 87 disposable, 524 economic mobility and, 510–511 education influencing, 512 expected future, 87 functional distribution of, 37 household, 512, 527 inequality, 510 labor, 198 land, 199, 201 maintenance programs, 522 market, 508 money, 508 personal distribution of, 37, 43 price elasticity of demand and, 119 prospects for, 499 rent, 37, 201 taxable, 196 from taxes, 196–197 from wages, 37 Income distribution in global economy, 43–44 by governments, 522–523 Income elasticity of demand, 130– 131 Income redistribution of consumers, 527 by governments, 522–523 income maintenance programs for, 522 income taxes for, 522 negative income tax and, 527 normative theories of, 525 positive theories of, 526 poverty and, 526 scale of, 523–524 subsidized services and, 523 Income taxes income redistribution through, 522 labor income and, 198 from land, 199, 201 negative, 527 origins of, 204 personal, 196–197 proportional, 522 in United States, 204 Increasing marginal returns, 350 Indifference curve, 337, 340–341 marginal rate of substitution in, 338–339 preference map of, 337–338 Individual demand, 85, 326–327 Individual supply, 92 Individual transferable quota (ITQ), 284, 285 Inefficiency with external costs, 246 of minimum wage, 178–179 of monopoly, 410 in pooling equilibrium, 301 in production, 60–61, 72–74, 141 of rent ceiling, 171–172 Inelastic demand, 114 Inelastic supply, 124 Inequalities, 43–44, 510 See also ­Economic inequality Infant-industry argument, 231 Inferior good, 87 Information age economy, 5–6, 36 Information revolution, 5–6 Insurance asymmetric information in, 300 auto, 302–303 deductibles in, 302 health, 305–306 life, 299 no-claim bonus in, 302 in United States economy, 299 Insurance markets, 300, 303 inefficient pooling equilibrium in, 301 screening in, 302 in United States, 299 Interest, 37, 345 International finance, 50–51 International outsourcing, International trade comparative advantage in, 214 consumer/producers in, 215, 235 with consumer/producer surplus, 225–226 exports in, 50, 214–215 in global economy, 52 import quotas and, 227–229 protection/restriction arguments in, 231–235 regulations in, 229 restrictions to, 223–229, 234–235 slump in, 52 of United States, 50–51, 214 Inverse relationship, 25 Invisible hand, 153, 154 ITQ See Individual transferable quota Jevons, William Stanley, 323, 332 Job, 484 Job choices, 499 Job-search activity, 176 Katz, Jane, 511 Kershaw, Clayton, 15 Keynes, John Maynard, 499 Kimberly-Clark, 469 Kotlikoff, Laurence, 309 Krueger, Alan, 177 Labor, 35 See also Demand for labor division of, 13, 350–351 in factors of production, 35 foreign, 233 high/low skilled, 516–517 income, 198 income taxes from, 198 skill differentials/wage rates of, 517 specialization of, 71 in United States, 35, 58, 492 wage rate and quantity of, 200 Labor markets equilibrium of, 492–493 labor supply influences on, 490, 491–492 labor unions in, 494–495 with price floor, 183 www.downloadslide.net INDEX school/training in, 492 wage rate in, 490, 492, 516–518 wages and, 492 Labor union, 494– 495 Land, 34 in factors of production, 34 income taxes from, 199, 201 marginal product and, 498 market for, 498 as natural resources, 34, 484 Law of decreasing returns, 352 Law of demand, 83, 84, 96, 101, 103 Law of market forces, 98 Law of supply, 90, 96, 101, 103, 377 Legal barriers to entry, 401–402 Legal monopolies, 401 Lemons problem, 292– 297 Life insurance, 299 Lighthouse, 268 Linear demand curve, 118 Linear relationships, 24 Local governments, 48 Long run, 348 excess capacity and, 441 markup in, 441 output/price/profit in, 440 plant size and cost in, 363–365 variable plant and, 348 zero economic profit in, 382, 440 Long-run average cost curve, 364– 365 Long-run costs, 363 Long-run equilibrium, 386, 390 Lorenz curve, 509 disposable income and, 524 in United States, 509, 511 Loss, 37 Lottery, 140 Lucky Brand, 438–442 Macroeconomics, Majority rule, 139 Margin, 10 Marginal analysis, 376–377 Marginal benefits, 10 demand curve and, 146 marginal costs equal to, 142–143, 152–153 of public good, 270–271 rational choices and, 11 Marginal cost curve, 358, 406 Marginal cost, 10, 356 average cost and, 357 marginal benefits equal to, 142–143, 152–153 natural monopolies pricing and, 420–421 of public goods, 270 short-run cost and, 356 supply and, 149 zero, 423 Marginal cost pricing rule, 420– 421 Marginal external benefits, 254 Marginal external cost, 244 Marginal private benefit, 254 Marginal private cost, 244, 250 Marginal product, 350 average product and, 352–353 curve, 486 in factor markets, 485–486 land demand and, 498 total product and, 350, 351 value of, 485–486, 493, 516 Marginal rate of substitution, 338– 340 Marginal returns, 350–352 Marginal revenue, 373 curve, 404 demand and, 404 elasticity and, 405–406 in perfect competition, 373–374 price and, 404–405 total revenue and, 404–405 Marginal social benefits, 280 Marginal social benefit, 254 Marginal social cost, 244, 250 Marginal tax rate, 197 Marginal utility, 322 diminishing, 322 per dollar, 324 theory, 322–327, 332 total utility and, 323, 325, 329 Marginal utility per dollar, 326 Market(s), 46 See also Factor markets; Labor markets for airplanes, 217, 460–462 alternatives to, 157 black, 169–170 businesses entering, 387–388 businesses exiting, 388–389 capital, 497 for capital services, 484, 497 I-7 with circular flow, 46 for college education, 101 competitive, 82, 153, 390 domestic, 181–182 efficient, 152–157 emerging, 39 exports of, 217 fairness of, 159 free, 182 for goods, 46 housing, 168 income, 508 insurance, 299–303 for land, 498 monopolies, 372 scarce resources and prices in, 138 solar panel, 103 structure, 435 supply and demand in, 294–295 types of, 372 in used cars, 296–297 Market demand, 85, 386 Market equilibrium, 98 demand/supply changes ­influencing, 100, 102 fishing/overfishing and, 281 labor and, 492–493 law of market forces and, 98–99 price influencing, 98–99 with property rights, 248 tax incidence and, 191–192 Market failure, 155– 156 Market forces, law of, 98–99 Market income, 508 Marketing, 432–433, 445–446 Market supply, 92 curve, 381, 491 in short run, 381 Markup, 441, 447 Marriage tax penalty, 207–208 Maximum/minimum points, 26 Median voter theory, 526 Medicaid, 306, 309, 523 Medicare, 306, 309 Merger rules, 476–477 Metal prices, 500 MFA See Multifiber Arrangement Microeconomics, Microsoft, 36, 423, 425, 471, 475–476 Midpoint method, 112–113 Minimum differentiation, principle of, 274 www.downloadslide.net I-8 INDEX Minimum wage efficiency/inefficiency of, 178–179 employment and, 175–179 fairness of, 179 illegal hiring and, 176 job-search activity and, 176 law, 175–176 unemployment created by, 175 in United States, 177 Minimum wage law, 175 Money flows, 46–47 Money income, 508 Monopolistic competition, 372 advertising in, 449 businesses involved in, 432 concentration measures in, 436 deadweight loss created in, 442 efficiency of, 442 entry/exit in, 433 four-firm concentration ratios and, 434 Herfindahl-Hirschman index and, 435, 436 identifying, 433 output/prices in, 432–433, 438 perfect competition and, 441 product differentiation in, 432, 442 quality price and marketing in, 432–433 United States economy and, 436 Monopoly, 372, 400 See also ­Natural monopolies barriers to entry causing, 400–401 buying/creating, 411 cartels and, 461 causes of, 400 close substitutes and, 400 competition and, 409–412 consumers facing, 425 deadweight loss and, 410–411, 425 efficiency/inefficiency of, 410 fairness of, 411 Gates and, 425 legal, 401 market, 372 natural resources and, 401 oligopoly and, 372, 460–461 output/price decisions of, 406, 409 price-discriminating, 402 price-setting strategies of, 402 profits maximized by, 156, 407 regulation of, 420–425 rent seeking creating, 411–412 single-price, 402, 404–407, 415 Moore, Gordon, Moral hazard, 301, 305–306 MP3 players, 191–193 Multifiber Arrangement (MFA), 233 Murphy, Kevin, 177 NAFTA See North American Free Trade Agreement Nash, John, 466 Nash equilibrium, 466, 468 National comparative advantage, 214 National security, 231 Natural gas shale, 69 Natural Monopoly, 267, 400 average cost pricing of, 422 deadweight loss and, 420 efficient regulation of, 420–421 marginal cost pricing in, 420–421 price cap regulations and, 424–425 regulations of, 421–425 Natural oligopoly, 456–457 Natural resources capital and, 497–501 in factor markets, 484 land as, 34, 484 monopolies and, 401 population growth influencing, 501 supply of, 499–500 Negative externality, 242 in consumption, 243 pollution as, 244–252 Negative income tax, 527 Negative relationship, 25 Nintendo, 126 No-claim bonus, 302 Nonexcludable, 266– 268 Nonrenewable natural resources, 484, 499–501 Nonrivals, 266– 268 Normal good, 87 Normal profit, 345–346 Normative statements, 13 Normative theories of income ­redistribution, 525 North American Free Trade ­Agreement (NAFTA), 223 Nozick, Robert, 159, 525 Obamacare See Patient Protection and ­Affordable Care Act Oil prices, 500 Oligopoly, 372 advertising and, 468–469 barriers to entry in, 456–458 cartel dilemma and, 456, 462 collusion and, 456 duopolists’ dilemma in, 467 efficiency of, 471 four-firm concentration ratios and, 458 game theory in, 465 Herfindahl-Hirschman index and, 458 identifying, 458 interdependence in, 456 monopoly outcome in, 372, 460–461 natural, 456–457 research games in, 468–469 in United States economy, 458 OPEC See Organization of the ­Petroleum Exporting Countries Opportunity cost, 8–9 budget line slope is, 319–320 of cell phones, 64 comparative advantage compared to, 71, 72–74 PPF slope and, 65 ratios in, 65 resources with, 66 search activity and, 170 Orange prices, 122 Organization of the Petroleum Export­ ing Countries (OPEC), 463 Origin (of graphs), 21 Output business prices of, 488 external costs and, 245 long run, 440 monopolies/price decisions of, 406, 409 in monopolistic competition, 432–433, 438 prices and, 406–407, 409 profit-maximizing, 407 Overproduction, 155, 274–275 Ownership barriers to entry, 401 Page, Larry, 520 Patent, 402 www.downloadslide.net INDEX Patient Protection and Affordable Care Act (Obamacare), 309 Payoff matrix, 466– 470 Pencil manufacturing, 71 Perfect competition, 372 consumers and, 393 demand/price/revenue in, 374 efficiency of, 392 fairness of, 393 marginal revenue and, 373–374 monopolistic competition and, 441 outcome of, 461 price taker in, 373 supply decisions in, 376–377, 379 technological change in, 360 Perfect price discrimination, 416–417 Perfectly elastic demand, 114, 193 Perfectly elastic supply, 124, 194 Perfectly inelastic demand, 114, 193 Perfectly inelastic supply, 124, 194 Personal characteristics, 140, 520 Personal distribution of income, 37, 43 Personal economic policy, 14 Personal income taxes, 196–197 Physical capital, 42, 520 Pigovian tax, 250–251 Plant size, 363–365 Policy debates, 473–475 Political process, 273 Political support, 172 Pollution air, 249, 251 cap-and-trade ceiling on, 250–251 clean technologies and, 249 Coase theorem and, 248 deadweight loss caused by, 246 external costs of, 245–246 limits, 249 as negative externalities, 244–252 production reduction and, 247 tax on, 249–250 in United States, 249, 251 Pooling equilibrium, 297, 300, 301 Population growth, 501 Positive externality, 242– 243 Positive relationship, 24 Positive statements, 13 Positive theories of income ­redistribution, 526 Post-industrial economy, 45 Poverty, 513 duration of, 514 entrepreneurial ability and, 520 global inequity and, 44 health care and, 306–307 income redistribution and, 526 in United States, 513–514 Predatory pricing, 232, 475– 476 Preferences, 87, 492 Price(s) budget line slope of, 319–320 business’ output, 488 ceiling, 183 changes in, 318 factor, 360–361, 484 factors of production and, 360–361, 488 future, 94 gouging, 160 long run, 440 marginal revenue and, 404–405 market demand and, 85, 386 market equilibrium influenced by, 98–99 Microsoft, 423 in monopolistic competition, 432–433, 438 oil/metal, 500 output and, 406–407, 409 percent change in, 112–113 in perfect competition, 374 predatory, 232 predicting changes in, 99 regulations, 156 of related goods, 86 relative, 320 of resources, 94 scarce resources and, 138 total revenue and orange, 122 Price cap, 168 Price cap regulation, 425 Price ceiling, 168 Price-discriminating monopoly, 402 Price discrimination in airline industry, 415–418 buyers and, 414–415 consumer surplus and, 414–415 efficiency and, 418 profiting by, 415–416 Price elasticity of demand, 112 in agriculture, 122 applying, 122 calculating, 116–117 consumers and, 131 I-9 food spending and, 119 gasoline prices and, 121 in global economy, 119 goods and, 112–113, 131 income and, 119 influences on, 114–116 interpreting, 117 midpoint method in, 112–113 price change in, 112, 116 quantity demanded changes and, 113 ranges of, 115 total revenue and, 120–121 Price elasticity of supply, 124 calculating, 126–127 influences on, 124–126 range of, 125 Price floor, 174 in agriculture, 181 labor market with, 183 wage rates and, 174 Price-setting strategies, 402 Price support, 181– 183 Price taker, 373 Principle of minimum ­differentiation, 274 Prisoners’ dilemma, 465 equilibrium in, 466–467 game theory and, 465–467 payoffs of, 466 rules of, 465 strategies of, 466 Private benefits, 254–255 Private costs, 244, 279 Private good, 266 Private information, 292 Private property, 282–283 Private provision, 272 Procter & Gamble, 469 Producer surplus, 150 import quotas influencing, 227–229 imports/exports influencing, 220 international trade and, 225–226 rent ceilings and, 171–172 supply and, 150 tariffs influencing, 224–226 taxes and, 192 total surplus and, 153 Product curve, 360, 361 Product development, 444 Product differentiation, 432, 442, 445 www.downloadslide.net I-10 INDEX Production See also Factors of ­production under, 155, 255 in advanced economies, 41 changes in shoe, 34 complement in, 94 in developing economies, 41 domestic, 225 efficient/inefficient, 60–61, 72–74, 141 factor prices of, 360–361, 488 in global economy, 40 goods and services changes in, 43 negative externalities in, 242 over, 155, 274–275 pollution and reduction of, 247 positive externalities in, 242–243 public provisions and, 273 quotas, 283 shale gas, 69 short-run, 349–353 substitute in, 93–94 technological change in, 389–391 in United States economy, 33 Production efficiency, 60– 61 Production possibilities frontier, 58–59, 141 attainable/unattainable ­combinations in, 60 budget line similar to, 317 economic growth and, 68, 69 efficient/inefficient production in, 60–61, 72–74, 141 opportunity costs and slope of, 65 tradeoffs/free lunches in, 61–62 Productivity, 71, 94 Profit-maximizing decisions, 374–377, 439 Profit-maximizing output, 407 Profit, 37 See also Economic profits business decisions maximizing, 374–377, 439 businesses maximizing, 344 cost and, 344, 346 entrepreneurship seeking, 36 import quota bringing, 229 long run, 440 maximizing, 423, 444 monopolies maximizing, 156, 407 normal, 345–346 price discrimination for, 415–416 shutdown decisions and, 377–378 taxes on, 199 zero economic, 382, 440 Progressive tax, 197, 207 Property rights, 247– 248, 282–283 Proportional income taxes, 522 Proportional tax, 197 Protection, arguments for, 231–235 Public franchise, 401–402 Public good, 267 efficient quantity of, 272 lighthouse as, 268 marginal benefit of, 270–271 marginal cost of, 270 Public health, 307 Public provision, 256 with efficient outcome, 256, 273–274 efficient production and, 273 overproduction and, 274–275 private subsidy compared to, 257 Quality advertising signals of, 448–449 of education, 259 in monopolistic competition, 432–433 Quantity demanded, 83, 88, 113 Quantity supplied, 90, 95 Quotas See also Import quotas common resources and, 284 production, 283 Rate of return regulation, 424 Rational choice, 9–10, 11 Rational ignorance, 274– 275 Rawls, John, 525 Reagan, Ronald, 50 Real flows, 46–47 Record stores, 390, 391 Regressive tax, 197 Regulation, 420 deadweight loss caused by, 157 earnings sharing, 425 efficient, 420–421 in international trade, 229 of monopoly, 420–425 of natural monopolies, 421–425 price, 156 price cap, 424–425 rate of return, 424 second-best, 421–425 Relationships inverse/negative, 25 linear/positive, 24 maximum/minimum points in, 26 slope of, 27 variables in, 21, 28, 29 Relative price, 320 Relevant comparisons, 442 Rent, 37 Rent ceiling, 168 black market and, 169–170 consumer/producer surplus and, 171–172 deadweight loss and, 171 efficiency/inefficiency of, 171–172 fairness of, 172 political support for, 172 shortages created by, 169 Rent income, 37, 201 Rent seeking, 235, 411 deadweight loss and, 412 equilibrium, 412 monopolies created by, 411–412 Repeated games, 470 Resale price maintenance, 473– 474 Research games, 468–469 Resource allocation command system and, 139 consumers and, 161 contests and, 139 efficiency in, 141–144 fairness of, 161 first-come, first-served and, 139–140 force used in, 140–141 lotteries in, 140 majority rule and, 139 methods of, 138–141 personal characteristics in, 140 Resources, 66, 82, 94 See also Common resources; Natural resources; Nonrenewable natural resources; Scarce resources Revenues See also Total revenue economic profits and concepts of, 373–374 marginal, 373–374, 404–406 in perfect competition, 374 from tariffs, 225 Rival, 266 www.downloadslide.net INDEX Robinson-Patman Act of 1936, 473–474 Running shoes, 448 Saban, Nick, 493 Sala-i-Martin, Xavier, 44 Samsung, 471 Scarce resources, 138 Scarcity, 2, 8, 59 Scatter diagram, 22– 23 Scientific method, 12 Screening, 302– 303 Search activity, 170 Self-interest, 4– Seller’s decisions, 294 Selling costs consumers encountering, 448 demand and, 447 total costs and, 446 Separating equilibrium, 297 Services See Goods and services 7-Eleven, 365 Shale gas production, 69 Shepperson, John, 160 Sherman Act, 473–474 Shoe production, 34 Shortage, 169 Short run, 348 economic loss in, 384, 439 economic profit in, 382–383 equilibrium in bad times, 384 equilibrium in good times, 383 equilibrium/normal times, 382 market supply in, 381 Short-run costs average cost and, 357–358 curve, 360 marginal cost and, 356 in total costs, 355–356 Short-run production, 349–353 Short-run supply curve, 378–379 Shutdown decisions, of businesses, 377–378 Shutdown point, 377 Signal, 448 Signaling, 296 Simon, Julian, 501 Single-price monopoly, 402, 404–407, 415 Slope, 27 calculating, 27 PPF, 65 prices and budget line, 319–320 of relationships, 27 Smith, Adam, 13, 153, 329 Smoot-Hawley Act, 223 Smoothie bars, 72–74, 355–358 Social benefits, 254–255 Social costs, 279–280 Social interest, 4– Social interest theory, 420 Social science, 12, 13 Social Security programs, 14, 48, 522 Social Security tax, 200, 202–203, 299 Solar panels, 103 Song downloads, 330–331 Specialization of capital, 363 of labor, 71 productivity gains from, 71 trade gains from, 74–75 Spence, Michael, 309 Sprint, 477 SSI See Supplemental Security Income program Stability, 234 Standard of living, 511 State governments, 48 Stiglitz, Joseph, 309 Strategies, 466 Subsidy, 156, 181, 229, 232, 257 deadweight loss and, 229 export, 229 farmers receiving, 181–182 from governments, 181–182, 422 private, 257 Subsidized services, 523 Substitute in production, 93– 94 Substitute, 86, 114, 400 Sugar beets, 182 Supplemental Security Income ­program (SSI), 523 Supply, 90 change in, 93–95, 102, 104–105 consumers and, 96 decisions, 376–377, 379 demand and, 100–105 demand’s opposite direction change with, 105 demand’s same direction change with, 104 elastic/inelastic, 124, 194 individual, 92 labor market, 490, 491–492 I-11 law of, 90, 96, 101, 103, 377 marginal costs and, 149 market, 92, 381, 491 market equilibrium and, 100, 102 in markets, 294–295 of natural resources, 499–500 price elasticity of, 124–127 producer surplus and, 150 unit elastic, 124 of used cars, 294–295 Supply curve, 91 Supply schedule, 91 Sustainable use, 278–279 TANF See Temporary Assistance for Needy Families Tariff, 223 deadweight loss and, 226 governmental revenue from, 225 producer surplus influenced by, 224–226 in United States, 223 Taxable income, 196 Taxes, 156 on capital income, 199, 200 Congress and, 200 deadweight loss caused by, 191–192 efficiency of, 191–192 elasticity of demand and, 193 elasticity of supply and, 194 employment and, 198 income from, 196–197 land income and, 199, 201 on pollution, 249–250 producer surplus and, 192 on profits, 199 progressive, 197, 207 in United States, 196 Tax Foundation, 204 Tax Freedom Day, 204 Tax incidence, 190– 192 Technology abatement, 247 clean, 249 demand for labor influenced by, 488 perfect competition and, 360 production changes of, 389–391 short-run cost curve and, 360 Temporary Assistance for Needy Families (TANF), 523, 526 www.downloadslide.net I-12 INDEX Time-series graph, 22– 23 T-Mobile, 477 Total cost, 355 average, 357, 365 average curve of, 358, 359, 382, 406 curve, 356 selling costs and, 446 short-run costs in, 355–356 total revenue/economic profit and, 375 Total fixed cost, 355 Total product, 349– 351 Total revenue, 120 marginal revenue and, 404–405 orange prices and, 122 price elasticity of demand and, 120–121 total cost/economic profit and, 375 Total revenue test, 121 Total surplus, 153 Total utility, 322 marginal utility and, 323, 325, 329 maximizing, 324–326 Total variable cost, 355 Trade gains, 74–75 Tradeoff, 8, 61– 62 Tragedy of the commons, 278, 283 Training, 492 Transactions costs, 157 Trends, 22 T-shirts, 216, 224–226 Tuition, 101 Tying arrangements, 475 Underproduction, 155, 255 Unemployment, 12, 175 Unemployment compensation, 523 United States air pollution in, 249, 251 antitrust laws in, 475–476 average incomes and, 44 economy of, 33, 45 education and, 259, 518 education influencing income in, 512 goods and services deficits of, goods and services produced in, 33 health care in, 306 high-speed rail networks in, 276 imports/exports of, 33, 215, 216, 217 income taxes in, 204 insurance markets in, 299 international trade of, 50–51, 214 ITQs working in, 285 labor in, 35, 58, 492 Lorenz curves in, 509, 511 minimum wage in, 177 monopolistic competition and, 436 natural gas shale in, 69 oligopoly in, 458 post-industrial economy of, 45 poverty in, 513–514 tariffs in, 223 taxes in, 196 used car market in, 296–297 wealth distribution in, 508, 509 welfare challenge in, 526 Unit elastic demand, 114 Unit elastic supply, 124 Unrelated variables, 26 Used cars, 292–297 Utilitarianism, 525 Utility, 322 birth of, 323 diminishing marginal, 322 marginal, 322–327, 332 total, 322–326, 329 Utility-maximizing rule, 324 Value, 329–330 Value of marginal product, 485– 486, 493, 516 Variable plant, 348 Variables, 21, 26, 28, 29 Verizon, 477 Vertical equity, 207 Voluntary export restraints, 229 von Neumann, John, 465 Voucher, 258, 259, 309 Wage gap, 495 Wage rate job choices and, 499 in labor market, 490, 492, 516–518 labor quantity and, 200 labor skill differentials and, 517 price floor and, 174 Wages, 37 career choices and, 45 explicit cost of, 345 income from, 37 and labor markets, 492 labor union and, 494–495 minimum, 177 Wal-Mart, 36, 365 Walton, Sam, 36 Water, 318, 324–327, 341 Wealth distribution, 508, 509 Wealth of Nations (Smith), 13, 153 Welch, Finis, 177 Welfare benefits, 48 Welfare programs, 523, 526 Wind power, 66 World Trade Organization (WTO), 223 Zero economic profit, 382, 440 Zero marginal costs, 423 Zuckerberg, Mark, 36, 520 www.downloadslide.net Photo Credits Chapter 1: p 1: Kali9/Getty Images; p. 2: © The New Yorker Collection 1985 Frank Modell from Cartoonbank com All rights reserved p top: Owen Franken/Alamy; p bottom: Andia/Alamy; p 4: Wavebreak Media/Thinkstock; p top: Qi Qi Jx/AP Images; p bottom: Christian Prandl/Imagebroker/Alamy; p top: Stockbyte/Getty Images; p bottom: Manuel Balce Ceneta/AP Images; p. 8: Jeff Greenberg/Alamy; p 9: David R Frazier/Alamy; p 11 left: Yuri Arcurs/Shutterstock; p 11 right: Ron Buskirk/Alamy; p 13: Classic Image/ Alamy; p 15: European Pressphoto Agency (EPA)/Alamy Chapter 2: p 31: Keith Draycott/ FlickrVision/Getty Images; p 33 first: David Joel/Getty Images; p 33 second: Monkey Business Images/ Shutterstock; p 33 third: Justaa/ Fotolia; p 33 fourth: Joe Sohm/ VisionsofAmerica/Getty Images; p. 36 top left: Stockbyte/Getty Images; p 36 top right: Jean Shweitzer/ Shutterstock; p 36 bottom left: Ryan McVay/Getty Images; p 36 bottom right: Rob Melnychuk/Getty Images; p 41: Acestock/Alamy; p 43 top left: Dave and Les Jacobs/Blend Images/ Corbis; p 43 top right: Design Pics/ Ron Nickel/Getty Images; p 43 middle left: Muzaffer Akarca/Getty Images; p 43 middle right: Peter Stuckings/Getty Images; p 43 bottom left: Panorama/Alamy; p 43 bottom right: Keren Su/Alamy Chapter 3: p 57: Derrell McCain/ Alamy; p 70: Steve Vidler/ SuperStock; p 71 top: Jim West/ Alamy; p 71 bottom: Irin-k/ Shutterstock; p 72 top: Pearson Education, Inc.; p 72 bottom: Jack Hollingsworth/Corbis Chapter 4: p 81: Danny Moloshok/ Reuters; p 82 left: Ocean/ Corbis; p 82 middle: Howard Grey/Getty Images; p 82 right: Pearson Education, Inc.; p 103: Elenathewise/Fotolia Chapter 5: p 111: Bikeriderlondon/ Shutterstock; p 119 left: Glow Cuisine/Glow Images; p 119 right: Jenny Matthews/Alamy; p 122 top: Wayne Eastep/Getty Images; p 122 middle: Johan Ordonez/Newscom; p 122 ­bottom: Newscom; p 126: Scott David Patterson/Shutterstock Chapter 6: p 137: Mark Boster/ Newscom; p 138: BSIP SA/Alamy; p 139 top: US Army Photo/ Alamy; p 139 second: Frontpage/ Shutterstock; p 139 third: Julian Finney/Getty Images; p 139 bottom: Anya Ponti/Shutterstock; p 140 top: Iofoto/Shutterstock; p. 140 second: Neil Tingle/Alamy; p 140 third: Sandra Cunningham/Shutterstock; p 140 bottom: Natalia Bratslavsky/ Shutterstock; p 154 left: © The New Yorker Collection 1985 Mike Twohy from Cartoonbank.com All rights reserved Chapter 7: p 167: Danita Delimont/ Alamy; p 172: Stephen B Goodwin/ Shutterstock; p 177: Stephen Coburn/Shutterstock; p 182: USDA/Alamy Chapter 8: p 189: Saul Loeb/AFP/ Getty Images; p 190: Marjorie Kamys Cotera/Bob Daemmrich Photography/Alamy; p 200: Mandel NganAFP/Getty Images; p. 207: Purestock/Getty Images Chapter 9: p 213: Peter Parks/ AFP/Getty Images; p 215 top: John Froschauer/AP Images; p. 213 ­bottom: Anna Sheveleva/ Shutterstock; p 219 top left: Chris O’Meara/AP Images; p 219 top right: Joerg Boethling/Alamy; p 219: bottom left: Sokolovsky/ Shutterstock; p 213 bottom right: Shawn Baldwin/Bloomberg via Getty Images; p 231 top: Paulo M.F Pires/Fotolia; p 231 bottom: Kumar A Mahesh/AP Images; p. 232: ArtisticPhoto/Shutterstock; p 233 top: Richard Graulich/The Palm Beach Post/ZUMA Press/Alamy; p. 233 bottom: Gregg Vignal/Alamy Chapter 10: p 241: Danita Delimont/Alamy; p 242 left: Charles Smith/Corbis; p 242 right: Natureworld/Alamy; p 243 left: Ulrich Baumgarten/Getty Images; p 243 right: Bildagentur-online/ Schickert/Alamy; p 249: Mustafa Dogan/Shutterstock; p 259: Courtesy of Caroline Hoxby Chapter 11: p 265: Nick David/ Alamy; p, 268: Richard Semik/ PHB.cz/Shutterstock; p 269 top left: Guy Cali/Corbis; p 269 top right: PubImages/Newscom; p 269 ­bottom left: Jacom Stephens/Getty Images; p 269 bottom right: Mike Brake/Shutterstock; p 278: Fine Art Photographic Library/Art Resource; p 279: Jeff Rotman/Alamy Chapter 12: p 291: Myrleen Pearson/Alamy; p 291: Michael Kleinfeld/Newscom; p 293: Spencer Grant/PhotoEdit, Inc.; p. 296: Harry Lands/Alamy; p 302 top: Don Mason/Getty Images; p. 302 ­bottom: Hakan Caglav/Getty Images; p. 309: Courtesy of Laurence Kotlikoff and Boston University Chapter 13: p 315: Stocksearch/ Alamy; p 318: Denys Prykhodov/ Fotolia; p 323 left: Image Asset Management Ltd./Alamy; p 323 right: Hulton Archive/Getty Images; p 326: Yuri Arcurs/Getty Images; p. 340: Alliance/Fotolia Chapter 14: p 343: Frances Roberts/ Alamy; p 363: Friedrich Stark/Alamy C-1 www.downloadslide.net C-2 Photo Credits Chapter 15: p 371: Tuan Tran/Getty Images; p 373 top: Shutterstock; p 373 bottom: Gale Verhague/ Dreamstime; p 387: Geraint Lewis/ Alamy; p 388: Michael Neelon/ Alamy; p 390: Ryan McVay/Getty Images: p 391: © 2013 Ashley Landis/Landis Images Chapter 16: p 399: Chris Gibson/ Alamy; p 400: Judy Waytiuk/ Alamy; p 414: Craig F Walker/The Denver Post/Getty Images; p 418 left: William Hamilton; p 424: Scott Gries/Getty Images Chapter 17: p 431: Bloomberg/ Getty Images; p 432: Pavel L Photo/ Shutterstock; p 444: Chris Park/ Invision for EA Sports/AP Images Chapter 18: p 455 left: SeongJoon Cho/Bloomberg/Getty Images; p 455 right: Justin Sullivan/Getty Images; p 456: Rachel Youdelman/ Pearson Education, Inc.; p 459: Studiomode/Alamy; p 460 top & bottom: AFP/Getty Images; p. 463: Alexander Klein/AFP/Getty Images/Newscom Chapter 19: p 483: Bill Ingram/ The Palm Beach Post/ZUMA Press/Alamy; p 490 top: Pearson Education, Inc.; p 490 bottom: Shutterstock Chapter 20: p 507: Janine Wiedel Photolibrary/Alamy www.downloadslide.net The Pearson Series in Economics Abel/Bernanke/Croushore Macroeconomics* Fort Sports Economics Bade/Parkin Foundations of Economics* Froyen Macroeconomics Berck/Helfand The Economics of the ­Environment Fusfeld The Age of the Economist 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 Bruce Public Finance and the ­American Economy Carlton/Perloff Modern Industrial ­Organization Case/Fair/Oster Principles of Economics* Chapman Environmental Economics: Theory, Application, and Policy Cooter/Ulen Law & Economics Daniels/VanHoose International Monetary & Financial 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 *denotes MyEconLab titles Klein Mathematical Methods for Economics Krugman/Obstfeld/Melitz International Economics: Theory & Policy* Laidler The Demand for Money Gerber International Economics* González-Rivera Forecasting for Economics and Business Gordon Macroeconomics* Leeds/von Allmen The Economics of Sports Leeds/von Allmen/Schiming Economics* Greene Econometric Analysis Lynn Economic Development: Theory and Practice for a Divided World Gregory Essentials of Economics Miller Economics Today* Understanding Modern 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 Holt Markets, Games, and ­Strategic Behavior Hubbard/O’Brien/Rafferty Macroeconomics* Hughes/Cain American Economic History Husted/Melvin International Economics Keat/Young/Erfle Managerial Economics Rohlf Introduction to Economic Reasoning Roland Development Economics Scherer Industry Structure, Strategy, and Public Policy Sherman Market Regulation Mills/Hamilton Urban Economics Stock/Watson Introduction to ­Econometrics Mishkin The Economics of Money, Banking, and Financial Markets* Studenmund Using Econometrics: A ­Practical Guide Murray Econometrics: A Modern Introduction O’Sullivan/Sheffrin/Perez Economics: Principles, ­Applications and Tools* Perloff Microeconomics* Johnson-Lans A Health Economics Primer Roberts The Choice: A Fable of Free Trade and Protection Miller/Benjamin/North The Economics of Public Issues Parkin Economics* Jehle/Reny Advanced Microeconomic Theory Riddell/Shackelford/­ Stamos/Schneider Economics: A Tool for Critically Understanding Society Schiller The Economics of Poverty and Discrimination Macroeconomics: Policy and Practice* Money, Banking, and the Financial System* Pindyck/Rubinfeld Microeconomics* Miller/Benjamin The Economics of Macro Issues The Economics of Money, Banking, and Financial Markets, Business School Edition* Hubbard/O’Brien Economics* Phelps Health Economics Microeconomics: Theory and Applications with Calculus* Perloff/Brander Managerial Economics and Strategy* Tietenberg/Lewis Environmental and Natural Resource Economics Environmental Economics and Policy Todaro/Smith Economic Development 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 Visit www.myeconlab.com to learn more www.downloadslide.net 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 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 3.3 3.0 3.1 3.0 2.7 2.6 2.7 2.6 2.6 2.8 3.8 3.3 3.1 2.7 2.5 2.6 2.7 2.2 2.4 2.2 1.6 2.0 1.8 1.7 1.7 1.7 2.3 4.5 15.1 10.1 6.5 7.7 4.2 3.4 14.5 1.7 2.3 4.6 15.2 10.0 6.5 7.9 4.1 3.4 14.4 1.6 2.2 4.6 15.8 9.9 6.5 7.8 4.1 3.4 14.3 1.5 2.1 4.6 16.1 10.0 6.5 7.7 4.1 3.4 14.0 1.4 2.1 4.6 15.5 9.7 6.5 7.8 4.0 3.4 14.3 1.4 2.1 4.6 15.4 9.7 6.5 7.9 3.9 3.4 14.2 1.4 2.1 4.7 15.0 9.3 6.5 7.9 3.9 3.5 14.4 1.5 2.1 4.8 13.5 9.2 6.5 8.0 3.9 3.6 14.7 1.4 2.2 4.8 13.2 8.9 6.5 8.1 3.9 3.6 15.1 1.3 2.2 4.9 13.4 8.7 6.6 7.9 3.9 3.7 15.0 1.4 2.1 4.9 13.5 8.4 6.6 7.8 3.9 3.6 14.7 2.0 2.0 4.9 12.9 8.3 6.9 7.6 3.9 3.6 14.9 2.1 2.3 4.5 12.2 8.4 7.0 7.8 3.7 3.7 15.2 2.1 2.4 4.6 12.7 8.5 6.7 7.9 3.8 3.7 15.0 2.2 2.3 4.6 13.2 8.5 6.6 7.8 3.8 3.7 15.0 2.2 2.3 4.8 13.3 8.0 6.6 7.7 3.8 3.8 15.2 2.3 2.1 4.9 13.1 8.2 6.8 7.5 3.8 3.8 15.4 3.3 2.2 4.7 12.2 7.9 6.7 7.1 3.7 3.9 16.0 3.9 2.3 4.3 12.0 7.8 6.6 7.0 3.5 4.0 16.1 3.6 2.6 4.0 11.0 7.6 6.4 7.0 3.3 4.2 16.7 2.9 2.7 3.9 10.9 7.7 6.3 7.2 3.3 4.3 17.3 2.7 2.7 4.1 11.5 7.1 6.4 7.3 3.3 4.1 17.2 2.5 2.7 4.2 10.9 6.9 6.4 7.3 3.3 4.2 17.5 1.6 2.6 4.4 10.5 6.9 6.3 7.4 3.3 4.2 18.0 1.5 2.7 4.4 10.4 7.0 6.0 7.3 3.2 4.2 18.0 4.5 2.9 4.6 3.0 4.7 3.0 4.8 3.1 4.9 3.3 4.8 3.4 4.9 3.6 5.0 3.9 5.0 4.0 5.1 4.1 5.1 4.1 5.2 4.2 5.3 4.5 5.3 4.5 5.6 4.5 5.7 4.6 5.9 4.6 6.2 4.8 6.3 4.9 6.6 5.2 6.9 5.4 7.1 5.3 7.5 5.3 7.9 5.5 8.1 5.9 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.9 2.9 2.8 2.8 2.8 2.8 2.9 2.9 3.0 3.0 3.0 3.0 3.1 3.2 3.1 3.1 3.2 3.2 2.9 13.7 2.9 13.7 2.8 13.5 2.8 13.6 2.8 14.2 2.7 14.5 2.7 14.6 2.7 15.2 2.6 15.3 2.6 15.1 2.5 14.6 2.5 14.8 2.4 15.1 2.4 14.7 2.3 14.4 2.4 13.8 2.4 13.5 2.5 13.7 2.4 13.6 2.4 14.2 2.5 13.9 2.4 13.7 2.5 13.8 2.6 13.9 2.6 13.9 40.5 38.5 38.6 38.5 37.9 37.7 37.5 37.0 36.8 36.9 36.9 36.4 36.0 36.1 35.9 35.7 35.6 35.2 35.2 34.7 34.9 35.1 34.9 34.7 34.8 7.1 0.9 4.5 23.1 64.4 6.6 0.9 4.5 22.9 65.0 6.1 0.9 4.6 23.4 65.0 5.5 0.8 4.6 24.3 64.8 5.1 0.8 4.4 24.1 65.6 4.8 0.8 4.5 24.0 65.9 4.5 0.8 4.7 23.8 66.2 4.4 0.8 4.6 22.7 67.5 4.3 0.7 4.7 21.6 68.6 4.2 0.7 4.8 21.5 68.7 4.1 0.7 4.9 21.9 68.4 4.0 0.8 4.7 21.3 69.2 4.0 0.8 4.2 19.7 71.2 3.8 0.8 4.1 19.8 71.5 3.6 0.8 4.3 19.8 71.5 3.5 0.9 4.5 19.7 71.4 3.4 0.9 4.6 19.7 71.4 3.4 1.0 4.5 18.9 72.3 3.4 1.1 4.3 18.6 72.7 3.4 1.1 4.0 17.4 74.0 3.4 0.9 4.0 16.9 74.8 3.2 0.9 4.3 17.1 74.6 3.0 0.8 4.5 16.6 75.1 2.9 0.7 4.5 16.0 75.9 2.9 0.6 4.5 15.7 76.3 2.46 13.59 2.53 13.76 2.63 14.05 2.73 14.18 2.85 14.39 3.02 14.63 3.21 14.82 3.40 14.91 3.62 15.11 3.90 15.60 4.14 15.70 4.44 15.45 4.73 15.07 5.07 15.31 5.44 15.47 5.88 15.62 6.34 15.56 6.85 15.42 7.44 15.32 7.87 15.26 8.20 15.29 8.49 15.29 8.74 15.25 8.92 15.26 9.14 15.25 715 3,948 4.3 3.2 834 4,536 4.4 2.8 911 4,865 4.5 2.6 873 4,535 5.1 2.2 879 4,441 5.5 2.5 904 4,378 6.2 1.8 876 4,042 7.0 2.0 753 3,303 8.0 2.6 885 3,692 7.4 2.2 950 3,800 7.2 2.8 924 3,505 7.4 1.9 759 2,642 8.6 –0.4 803 2,558 8.8 –0.4 975 2,944 8.4 2.8 894 2,543 8.0 1.7 821 2,181 8.7 1.6 844 2,072 9.6 1.3 891 2,006 11.9 2.7 933 1,921 14.2 4.4 885 1,715 13.8 7.1 1,191 2,221 12.0 7.8 1,179 2,123 12.7 8.8 1,328 2,318 11.4 7.9 1,793 3,067 9.0 6.9 2,278 3,799 9.4 6.7 165 169 183 206 221 255 287 290 308 352 395 436 447 512 576 653 736 807 927 950 1,009 1,122 1,225 1,302 1,416 182 192 204 231 260 288 309 340 371 404 434 488 571 609 656 726 804 923 1,041 1,152 1,252 1,346 1,473 1,572 1,654 –18 –23 –21 –25 –40 –33 –22 –49 –63 –52 –39 –52 –124 –96 –81 –73 –68 –116 –114 –202 –242 –224 –248 –271 –237 254 257 261 264 267 290 278 283 303 322 341 344 395 477 549 607 640 712 789 925 1,137 1,307 1,507 1,741 1,890 What we produce Percentage of gross domestic product  1  2  3  4  5  6  7  8  9 10 11 12 13 14 15 16 Agriculture, forestry, fishing, and hunting Mining Utilities Construction Durable goods manufacture Nondurable goods manufacture Wholesale trade Retail trade Transportation and warehousing Information Finance, insurance, real estate, rental, and leasing Professional and business services Educational services, health care, and social assistance Arts, entertainment, recreation, accommodation, and food services Other services, except government Government How we produce 17 Average weekly hours Employment (percentage of total) 18 Agriculture 19 Mining 20 Construction 21 Manufacturing 22 Services For whom we produce 23 Wage rate (dollars per hour) 24 Real wage rate (2009 dollars per hour) 25 Stock price index (Dow Jones) 26 Real stock price index (2009 dollars) 27 Interest rate Aaa (percent per year) 28 Real interest rate (percent per year) Government in the economy 29 Government receipts (billions of dollars) 30 Government expenditures (billions of dollars) 31 Government surplus(+)/deficit(–) (billions of dollars) 32 Government debt (billions of dollars) www.downloadslide.net 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 3.3 3.1 2.7 2.5 2.6 2.7 2.2 2.4 2.2 1.6 2.0 1.8 1.7 1.7 2.0 2.0 4.9 12.9 8.3 6.9 7.6 3.9 3.6 14.9 2.1 2.3 4.5 12.2 8.4 7.0 7.8 3.7 3.7 15.2 2.1 2.4 4.6 12.7 8.5 6.7 7.9 3.8 3.7 15.0 2.2 2.3 4.6 13.2 8.5 6.6 7.8 3.8 3.7 15.0 2.2 2.3 4.8 13.3 8.0 6.6 7.7 3.8 3.8 15.2 2.3 2.1 4.9 13.1 8.2 6.8 7.5 3.8 3.8 15.4 3.3 2.2 4.7 12.2 7.9 6.7 7.1 3.7 3.9 16.0 3.9 2.3 4.3 12.0 7.8 6.6 7.0 3.5 4.0 16.1 3.6 2.6 4.0 11.0 7.6 6.4 7.0 3.3 4.2 16.7 2.9 2.7 3.9 10.9 7.7 6.3 7.2 3.3 4.3 17.3 2.7 2.7 4.1 11.5 7.1 6.4 7.3 3.3 4.1 17.2 2.5 2.7 4.2 10.9 6.9 6.4 7.3 3.3 4.2 17.5 1.6 2.6 4.4 10.5 6.9 6.3 7.4 3.3 4.2 18.0 1.5 2.7 4.4 10.4 7.0 6.0 7.3 3.2 4.2 18.0 5.2 4.2 5.3 4.5 5.3 4.5 5.6 4.5 5.7 4.6 5.9 4.6 6.2 4.8 6.3 4.9 6.6 5.2 6.9 5.4 7.1 5.3 7.5 5.3 7.9 5.5 8.1 5.9 2.8 2.8 2.9 2.9 3.0 3.0 3.0 3.0 3.1 3.2 3.1 3.1 3.2 3.2 2.5 14.8 2.4 15.1 2.4 14.7 2.3 14.4 2.4 13.8 2.4 13.5 2.5 13.7 2.4 13.6 2.4 14.2 2.5 13.9 2.4 13.7 2.5 13.8 2.6 13.9 2.6 13.9 36.4 36.0 36.1 35.9 35.7 35.6 35.2 35.2 34.7 34.9 35.1 34.9 34.7 34.8 4.0 0.8 4.7 21.3 69.2 4.0 0.8 4.2 19.7 71.2 3.8 0.8 4.1 19.8 71.5 3.6 0.8 4.3 19.8 71.5 3.5 0.9 4.5 19.7 71.4 3.4 0.9 4.6 19.7 71.4 3.4 1.0 4.5 18.9 72.3 3.4 1.1 4.3 18.6 72.7 3.4 1.1 4.0 17.4 74.0 3.4 0.9 4.0 16.9 74.8 3.2 0.9 4.3 17.1 74.6 3.0 0.8 4.5 16.6 75.1 2.9 0.7 4.5 16.0 75.9 2.9 0.6 4.5 15.7 76.3 4.44 15.45 4.73 15.07 5.07 15.31 5.44 15.47 5.88 15.62 6.34 15.56 6.85 15.42 7.44 15.32 7.87 15.26 8.20 15.29 8.49 15.29 8.74 15.25 8.92 15.26 9.14 15.25 759 2,642 8.6 –0.4 803 2,558 8.8 –0.4 975 2,944 8.4 2.8 894 2,543 8.0 1.7 821 2,181 8.7 1.6 844 2,072 9.6 1.3 891 2,006 11.9 2.7 933 1,921 14.2 4.4 885 1,715 13.8 7.1 1,191 2,221 12.0 7.8 1,179 2,123 12.7 8.8 1,328 2,318 11.4 7.9 1,793 3,067 9.0 6.9 2,278 3,799 9.4 6.7 436 447 512 576 653 736 807 927 950 1,009 1,122 1,225 1,302 1,416 488 571 609 656 726 804 923 1,041 1,152 1,252 1,346 1,473 1,572 1,654 –52 –124 –96 –81 –73 –68 –116 –114 –202 –242 –224 –248 –271 –237 344 395 477 549 607 640 712 789 925 1,137 1,307 1,507 1,741 1,890 www.downloadslide.net 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 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1.5 1.7 1.6 1.5 1.6 1.4 1.5 1.2 1.5 1.3 1.1 1.0 1.0 1.0 0.9 1.0 1.2 1.0 0.9 1.0 1.1 1.0 1.1 1.2 1.1 1.5 2.5 4.4 10.5 7.1 6.2 7.2 3.2 4.0 18.0 1.4 2.5 4.4 10.3 7.1 6.1 7.1 3.0 4.1 17.9 1.5 2.5 4.2 9.6 7.1 6.0 6.9 3.0 4.1 18.1 1.3 2.6 3.8 9.2 7.1 6.1 6.8 3.0 4.1 18.5 1.2 2.5 3.7 9.1 7.0 6.0 6.8 3.0 4.1 18.8 1.1 2.5 3.8 9.0 6.8 6.0 6.9 3.1 4.2 18.9 1.1 2.4 3.9 9.2 6.7 6.3 7.1 3.2 4.2 18.7 1.0 2.4 4.0 9.1 6.8 6.2 7.1 3.1 4.2 19.0 1.1 2.2 4.1 9.0 6.4 6.3 7.1 3.1 4.3 19.0 1.1 2.0 4.2 9.0 6.3 6.3 7.1 3.1 4.2 19.3 0.9 1.9 4.4 8.9 6.2 6.3 7.1 3.1 4.4 19.3 0.9 1.8 4.6 8.6 6.0 6.2 7.0 3.1 4.7 19.6 1.1 1.7 4.7 8.4 5.8 6.2 6.9 3.0 4.2 20.1 1.2 1.7 4.8 7.4 5.7 6.0 6.8 2.9 4.4 20.9 1.0 1.7 4.6 7.2 5.5 5.8 6.9 2.8 4.7 20.9 1.2 1.7 4.6 6.9 5.5 5.7 6.9 2.9 4.5 20.8 1.3 1.8 4.7 6.9 5.6 5.8 6.7 2.9 4.7 20.3 1.5 1.6 4.9 7.0 5.5 5.7 6.6 2.9 4.6 20.6 1.7 1.8 4.9 6.9 5.4 5.8 6.5 2.9 4.4 20.7 1.8 1.8 4.7 6.7 5.4 5.8 6.3 2.9 4.5 20.4 2.2 1.8 4.3 6.3 5.1 5.8 5.9 2.9 4.5 20.4 1.6 1.9 3.9 5.6 5.4 5.5 6.1 2.8 4.3 21.1 1.7 2.0 3.6 6.0 5.3 5.5 6.0 2.9 4.2 20.8 1.9 2.0 3.5 6.0 5.4 5.6 6.0 3.0 4.3 20.3 1.8 1.9 3.6 6.4 5.5 5.7 6.1 3.0 4.4 20.2 8.3 5.9 8.6 6.2 8.9 6.5 8.7 6.9 8.9 7.1 9.0 7.1 9.0 7.1 9.3 7.1 9.7 7.0 10.1 6.9 10.5 6.8 10.8 6.8 11.2 6.8 11.4 7.1 11.3 7.4 11.3 7.6 11.4 7.6 11.6 7.6 11.7 7.6 12.1 7.7 12.5 8.1 12.1 8.8 12.2 8.8 12.5 8.7 12.4 8.6 3.3 3.4 3.4 3.4 3.5 3.5 3.4 3.4 3.5 3.6 3.7 3.8 3.8 3.8 3.9 3.8 3.9 3.8 3.8 3.9 3.8 3.8 3.8 3.9 4.0 2.6 13.8 2.6 13.7 2.7 13.9 2.6 14.3 2.6 14.2 2.7 14.0 2.7 13.6 2.7 13.4 2.7 13.1 2.7 12.7 2.8 12.5 2.8 12.3 2.8 12.2 2.6 12.4 2.7 12.7 2.6 12.9 2.5 12.7 2.5 12.6 2.5 12.5 2.5 12.5 2.4 13.0 2.5 13.7 2.5 13.6 2.5 13.2 2.4 12.9 34.6 34.5 34.3 34.1 34.2 34.3 34.5 34.3 34.3 34.5 34.5 34.4 34.3 34.0 33.9 33.7 33.7 33.7 33.9 33.8 33.6 33.1 33.4 33.6 33.7 2.8 0.6 4.6 15.6 76.5 2.7 0.6 4.5 15.3 76.9 2.7 0.6 4.4 14.9 77.4 2.8 0.6 4.1 14.5 78.1 2.7 0.5 3.9 14.2 78.7 2.6 0.5 4.0 13.9 79.0 2.8 0.5 4.1 13.8 78.8 2.8 0.4 4.2 13.8 78.7 2.7 0.4 4.4 13.6 78.9 2.6 0.4 4.5 13.4 79.0 2.6 0.4 4.7 13.4 78.9 2.5 0.4 4.9 13.0 79.2 1.8 0.4 5.0 12.6 80.2 1.7 0.4 5.0 12.0 80.9 1.7 0.4 4.9 11.2 81.8 1.7 0.4 4.9 10.5 82.5 1.6 0.4 5.0 10.3 82.7 1.6 0.4 5.2 10.0 82.8 1.5 0.4 5.3 9.8 82.9 1.4 0.5 5.2 9.5 83.4 1.5 0.5 4.9 9.2 83.9 1.5 0.5 4.3 8.5 85.3 1.6 0.5 4.0 8.3 85.7 1.6 0.5 4.0 8.4 85.5 1.5 0.6 4.0 8.4 85.6 9.44 15.21 9.80 15.20 10.20 15.26 10.51 15.22 10.78 15.26 11.05 15.28 11.34 15.35 11.65 15.45 12.04 15.68 12.51 16.02 13.02 16.49 13.49 16.85 14.02 17.12 14.55 17.37 14.97 17.60 15.38 17.73 15.70 17.61 16.13 17.53 16.75 17.67 17.43 17.91 18.09 18.23 18.63 18.63 19.08 18.85 19.46 18.86 19.76 18.82 2,061 3,322 9.7 6.0 2,510 3,894 9.3 5.2 2,679 4,008 9.3 5.4 2,929 4,241 8.8 5.3 3,284 4,649 8.1 5.7 3,525 4,874 7.2 4.7 3,795 5,137 8.0 5.7 4,499 5,967 7.6 5.4 5,744 7,481 7.4 5.4 7,443 8,632 9,531 10,934 7.3 6.5 5.5 5.4 10,483 13,091 7.0 5.5 10,724 13,095 7.6 5.2 10,206 12,184 7.1 4.7 9,215 10,834 6.5 4.9 9,007 10,382 5.7 3.6 10,316 11,573 5.6 2.8 10,547 11,465 5.2 2.0 11,410 12,033 5.6 2.4 13,178 13,539 5.6 2.8 11,244 11,331 5.6 3.6 8,886 8,886 5.3 4.5 10,669 10,541 4.9 3.7 11,958 11,587 4.6 2.6 12,965 12,348 3.7 1.9 1,517 1,642 1,727 1,777 1,862 1,968 2,114 2,238 2,405 2,586 2,764 2,940 3,169 3,156 3,000 3,071 3,295 3,696 4,035 4,234 4,078 3,716 3,905 4,089 4,281 1,735 1,868 2,023 2,129 2,303 2,374 2,445 2,557 2,650 2,726 2,802 2,943 3,088 3,306 3,524 3,756 3,971 4,253 4,466 4,770 5,134 5,564 5,725 5,754 5,788 –218 –226 –297 –352 –441 –407 –331 –319 –244 –140 –37 –3 81 –150 –524 –685 –676 –557 –431 –536 –1,056 –1,848 –1,820 –1,665 –1,507 2,052 2,191 2,412 2,689 3,000 3,248 3,433 3,604 3,734 3,772 3,721 3,632 3,410 3,320 3,540 3,913 4,296 4,592 4,829 5,035 5,803 7,545 9,019 10,128 11,414 What we produce Percentage of gross domestic product  1  2  3  4  5  6  7  8  9 10 11 12 13 14 15 16 Agriculture, forestry, fishing, and hunting Mining Utilities Construction Durable goods manufacture Nondurable goods manufacture Wholesale trade Retail trade Transportation and warehousing Information Finance, insurance, real estate, rental, and leasing Professional and business services Educational services, health care, and social assistance Arts, entertainment, recreation, accommodation, and food services Other services, except government Government How we produce 17 Average weekly hours Employment (percentage of total) 18 Agriculture 19 Mining 20 Construction 21 Manufacturing 22 Services For whom we produce 23 Wage rate (dollars per hour) 24 Real wage rate (2009 dollars per hour) 25 Stock price index (Dow Jones) 26 Real stock price index (2009 dollars) 27 Interest rate Aaa (percent per year) 28 Real interest rate (percent per year) Government in the economy 29 Government receipts (billions of dollars) 30 Government expenditures (billions of dollars) 31 Government surplus(+)/deficit(–) (billions of dollars) 32 Government debt (billions of dollars) www.downloadslide.net 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1.0 1.0 1.0 0.9 1.0 1.2 1.0 0.9 1.0 1.1 1.0 1.1 1.2 1.1 0.9 1.8 4.6 8.6 6.0 6.2 7.0 3.1 4.7 19.6 1.1 1.7 4.7 8.4 5.8 6.2 6.9 3.0 4.2 20.1 1.2 1.7 4.8 7.4 5.7 6.0 6.8 2.9 4.4 20.9 1.0 1.7 4.6 7.2 5.5 5.8 6.9 2.8 4.7 20.9 1.2 1.7 4.6 6.9 5.5 5.7 6.9 2.9 4.5 20.8 1.3 1.8 4.7 6.9 5.6 5.8 6.7 2.9 4.7 20.3 1.5 1.6 4.9 7.0 5.5 5.7 6.6 2.9 4.6 20.6 1.7 1.8 4.9 6.9 5.4 5.8 6.5 2.9 4.4 20.7 1.8 1.8 4.7 6.7 5.4 5.8 6.3 2.9 4.5 20.4 2.2 1.8 4.3 6.3 5.1 5.8 5.9 2.9 4.5 20.4 1.6 1.9 3.9 5.6 5.4 5.5 6.1 2.8 4.3 21.1 1.7 2.0 3.6 6.0 5.3 5.5 6.0 2.9 4.2 20.8 1.9 2.0 3.5 6.0 5.4 5.6 6.0 3.0 4.3 20.3 1.8 1.9 3.6 6.4 5.5 5.7 6.1 3.0 4.4 20.2 10.8 6.8 11.2 6.8 11.4 7.1 11.3 7.4 11.3 7.6 11.4 7.6 11.6 7.6 11.7 7.6 12.1 7.7 12.5 8.1 12.1 8.8 12.2 8.8 12.5 8.7 12.4 8.6 3.8 3.8 3.8 3.9 3.8 3.9 3.8 3.8 3.9 3.8 3.8 3.8 3.9 4.0 2.8 12.3 2.8 12.2 2.6 12.4 2.7 12.7 2.6 12.9 2.5 12.7 2.5 12.6 2.5 12.5 2.5 12.5 2.4 13.0 2.5 13.7 2.5 13.6 2.5 13.2 2.4 12.9 34.4 34.3 34.0 33.9 33.7 33.7 33.7 33.9 33.8 33.6 33.1 33.4 33.6 33.7 2.5 0.4 4.9 13.0 79.2 1.8 0.4 5.0 12.6 80.2 1.7 0.4 5.0 12.0 80.9 1.7 0.4 4.9 11.2 81.8 1.7 0.4 4.9 10.5 82.5 1.6 0.4 5.0 10.3 82.7 1.6 0.4 5.2 10.0 82.8 1.5 0.4 5.3 9.8 82.9 1.4 0.5 5.2 9.5 83.4 1.5 0.5 4.9 9.2 83.9 1.5 0.5 4.3 8.5 85.3 1.6 0.5 4.0 8.3 85.7 1.6 0.5 4.0 8.4 85.5 1.5 0.6 4.0 8.4 85.6 13.49 16.85 14.02 17.12 14.55 17.37 14.97 17.60 15.38 17.73 15.70 17.61 16.13 17.53 16.75 17.67 17.43 17.91 18.09 18.23 18.63 18.63 19.08 18.85 19.46 18.86 19.76 18.82 10,483 13,091 7.0 5.5 10,724 13,095 7.6 5.2 10,206 12,184 7.1 4.7 9,215 10,834 6.5 4.9 9,007 10,382 5.7 3.6 10,316 11,573 5.6 2.8 10,547 11,465 5.2 2.0 11,410 12,033 5.6 2.4 13,178 13,539 5.6 2.8 11,244 11,331 5.6 3.6 8,886 8,886 5.3 4.5 10,669 10,541 4.9 3.7 11,958 11,587 4.6 2.6 12,965 12,348 3.7 1.9 2,940 3,169 3,156 3,000 3,071 3,295 3,696 4,035 4,234 4,078 3,716 3,905 4,089 4,281 2,943 3,088 3,306 3,524 3,756 3,971 4,253 4,466 4,770 5,134 5,564 5,725 5,754 5,788 –3 81 –150 –524 –685 –676 –557 –431 –536 –1,056 –1,848 –1,820 –1,665 –1,507 3,632 3,410 3,320 3,540 3,913 4,296 4,592 4,829 5,035 5,803 7,545 9,019 10,128 11,414 ... printed in initial caps or all caps Library of Congress Cataloging-in-Publication Data Bade, Robin   Foundations of microeconomics/ Robin Bade, Michael Parkin. —7th ed   pages cm   Includes index... Market for College Education This page intentionally left blank Foundations of MICROEconomics Robin Bade Michael Parkin University of Western Ontario Seventh Edition Boston Columbus Indianapolis New... job at the University of Essex, England’s most exciting new university of the 1960s, and at the age of 30 became one of the youngest full professors He is a past president of the Canadian Economics