Principles of Microeconomics for AP® Courses 2e

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Principles of Microeconomics for AP® Courses 2e Chapter 1: Welcome to Economics! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.1 What Is Economics, and Why Is It Import... ant? . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1.2 Microeconomics and Macroeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.3 How Economists Use Theories and Models to Understand Economic Issues . . . . . . . . . . 15 1.4 How To Organize Economies: An Overview of Economic Systems . . . . . . . . . . . . . . . 18 Chapter 2: Choice in a World of Scarcity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1 How Individuals Make Choices Based on Their Budget Constraint . . . . . . . . . . . . . . . 28 2.2 The Production Possibilities Frontier and Social Choices . . . . . . . . . . . . . . . . . . . . 33 2.3 Confronting Objections to the Economic Approach . . . . . . . . . . . . . . . . . . . . . . . 38 Chapter 3: Demand and Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services . . . . . . . . . . . . . 46 3.2 Shifts in Demand and Supply for Goods and Services . . . . . . . . . . . . . . . . . . . . . 52 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process . . . . . . . . . . . . . . 61 3.4 Price Ceilings and Price Floors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.5 Demand, Supply, and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Chapter 4: Labor and Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.1 Demand and Supply at Work in Labor Markets . . . . . . . . . . . . . . . . . . . . . . . . . 84 4.2 Demand and Supply in Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 4.3 The Market System as an Efficient Mechanism for Information . . . . . . . . . . . . . . . . . 98 Chapter 5: Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 5.1 Price Elasticity of Demand and Price Elasticity of Supply . . . . . . . . . . . . . . . . . . . 108 5.2 Polar Cases of Elasticity and Constant Elasticity . . . . . . . . . . . . . . . . . . . . . . . 113 5.3 Elasticity and Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 5.4 Elasticity in Areas Other Than Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Chapter 6: Consumer Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 6.1 Consumption Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 6.2 How Changes in Income and Prices Affect Consumption Choices . . . . . . . . . . . . . . 141 6.3 Labor-Leisure Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 6.4 Intertemporal Choices in Financial Capital Markets . . . . . . . . . . . . . . . . . . . . . . 151 Chapter 7: Production, Costs and Industry Structure . . . . . . . . . . . . . . . . . . . . . . . . 163 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit . . . . . . . . . . . . . . . 165 7.2 Production in the Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 7.3 Costs in the Short Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 7.4 Production in the Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 7.5 Costs in the Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 Chapter 8: Perfect Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 8.1 Perfect Competition and Why It Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 8.2 How Perfectly Competitive Firms Make Output Decisions . . . . . . . . . . . . . . . . . . . 197 8.3 Entry and Exit Decisions in the Long Run . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 8.4 Efficiency in Perfectly Competitive Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Chapter 9: Monopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 9.1 How Monopolies Form: Barriers to Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price . . . . . . . . . . . . . . . . 228 Chapter 10: Monopolistic Competition and Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . 243 10.1 Monopolistic Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 10.2 Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Chapter 11: Monopoly and Antitrust Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 11.1 Corporate Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 11.2 Regulating Anticompetitive Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 11.3 Regulating Natural Monopolies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 11.4 The Great Deregulation Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 Chapter 12: Environmental Protection and Negative Externalities . . . . . . . . . . . . . . . . . 283 12.1 The Economics of Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 12.2 Command-and-Control Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 12.3 Market-Oriented Environmental Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 12.4 The Benefits and Costs of U.S. Environmental Laws . . . . . . . . . . . . . . . . . . . . . 293 12.5 International Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 12.6 The Tradeoff between Economic Output and Environmental Protection . . . . . . . . . . . 297 Chapter 13: Positive Externalities and Public Goods . . . . . . . . . . . . . . . . . . . . . . . . 309 13.1 Why the Private Sector Underinvests in Innovation . . . . . . . . . . . . . . . . . . . . . 311 13.2 How Governments Can Encourage Innovation . . . . . . . . . . . . . . . . . . . . . . . . 314 13.3 Public Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Chapter 14: Poverty and Economic Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 14.1 Drawing the Poverty Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 14.2 The Poverty Trap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 14.3 The Safety Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 14.4 Income Inequality: Measurement and Causes . . . . . . . . . . . . . . . . . . . . . . . . 338 14.5 Government Policies to Reduce Income Inequality . . . . . . . . . . . . . . . . . . . . . . 344 Chapter 15: Labor Markets and Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355 15.1 Market Power on the Supply Side of Labor Markets: Unions . . . . . . . . . . . . . . . . . 356 15.2 Employment Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 15.3 Immigration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Chapter 16: Information, Risk, and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 16.1 The Problem of Imperfect Information and Asymmetric Information . . . . . . . . . . . . . 378 16.2 Insurance and Imperfect Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 Chapter 17: Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 17.1 How Businesses Raise Financial Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 17.2 How Households Supply Financial Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 402 17.3 How to Accumulate Personal Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Chapter 18: Public Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 18.1 Voter Participation and Costs of Elections . . . . . . . . . . . . . . . . . . . . . . . . . . 426 18.2 Special Interest Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428 18.3 Flaws in the Democratic System of Government . . . . . . . . . . . . . . . . . . . . . . . 431 Chapter 19: International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 19.1 What Happens When a Country Has an Absolute Advantage in All Goods . . . . . . . . . 440 19.2 Intra-industry Trade between Similar Economies . . . . . . . . . . . . . . . . . . . . . . . 445 19.3 The Benefits of Reducing Barriers to International Trade . . . . . . . . . . . . . . . . . . 448 19.4 What Happens When a Country Has an Absolute Advantage in All Goods . . . . . . . . . 450 Chapter 20: Globalization and Protectionism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 20.1 Protectionism: An Indirect Subsidy from Consumers to Producers . . . . . . . . . . . . . . 462 20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions . . . . . . . . 469 20.3 Arguments in Support of Restricting Imports . . . . . . . . . . . . . . . . . . . . . . . . . 472 20.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally . . . . . . . . 477 20.5 The Tradeoffs of Trade Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 A | The Use of Mathematics in Principles of Economics . . . . . . . . . . . . . . . . . . . . . . . 489 [Show More]

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