Microeconomics, Fifth Edition PDF by N Gregory Mankiw and Mark P Taylor

By

Microeconomics, Fifth Edition

By N Gregory Mankiw and Mark P Taylor

Microeconomics, Fifth Edition

Contents:

About the authors vii

Preface viii

Acknowledgements xi

PART 1

Introduction to Economics 1

1 What is economics? 1

The economy and economic systems 1

How people make decisions 3

How people interact 6

How the economy as a whole works 9

2 Thinking like an economist 15

Introduction 15

Economic methodology 15

Schools of thought 25

The economist as policy advisor 26

Why economists disagree 27

PART 2

The Theory of Competitive Markets 33

3 The market forces of supply and demand 33

The assumptions of the competitive market model 33

Demand 35

Shifts versus movements along the demand

curve 37

Supply 40

Supply and demand together 44

Prices as signals 47

Analyzing changes in equilibrium 48

Elasticity 53

The price elasticity of demand 53

Other demand elasticities 60

Price elasticity of supply 62

Applications of supply and demand

elasticity 67

4 Background to demand: Consumer choices 74

The standard economic model 74

The budget constraint: What the consumer can afford 76

Preferences: What the consumer wants 80

Optimization: What the consumer chooses 86

Conclusion: Do people really behave this way? 98

Behavioural approaches to consumer behaviour 98

5 Background to supply: Firms in competitive markets 105

The costs of production 105

Production and costs 106

The various measures of cost 109

Costs in the short run and in the long run 115

Summary 116

Returns to scale 117

What is a competitive market? 123

Profit maximization and the competitive firm’s supply curve 125

The supply curve in a competitive market 132

Conclusion: Behind the supply curve 137

6 Consumers, producers and the efficiency

of markets 141

Consumer surplus 141

Producer surplus 146

Market efficiency 150

PART 3

Interventions in Markets 159

7 Supply, demand and government policies 159

Controls on prices 159

Taxes 163

Subsidies 170

The tax system 171

The deadweight loss of taxation 172

Administrative burden 178

The design of the tax system 179

Taxes and equity 181

8 Public goods, common resources and

merit goods 189

The different kinds of goods 189

Public goods 190

Common resources 194

Merit goods 197

Conclusion 199

9 Market failure and externalities 204

Market failure 204

Externalities 204

Externalities and market inefficiency 206

Private solutions to externalities 210

Public policies towards externalities 213

Public/private policies towards externalities 216

Government failure 220

Conclusion 225

PART 4

Firm Behaviour and Market

Structures 231

10 Firms’ production decisions 231

Isoquants and isocosts 231

The least-cost input combination 236

Conclusion 238

11 Market structures I: monopoly 242

Imperfect competition 242

Why monopolies arise 243

How monopolies make production

and pricing decisions 247

The welfare cost of monopoly 252

Price discrimination 254

Public policy towards monopolies 258

Conclusion: the prevalence of monopoly 261

12 Market structures II: monopolistic competition 267

Competition with differentiated products 268

Advertising and branding 272

Conclusion 276

13 Market structures III: oligopoly 280

Characteristics of oligopoly 280

Game theory and the economics of cooperation 284

Entry barriers in oligopoly 296

Public policy towards oligopolies 297

Conclusion 299

14 Market structures IV: Contestable markets 304

The nature of contestable markets 304

The limitations of contestability 308

Summary 310

PART 5

Factor Markets 315

15 The economics of factor markets 315

The marginal product theory of

distribution 315

The demand for labour 315

The supply of labour 319

Equilibrium in the labour market 323

Other theories of the labour market 325

Marxist labour theory 325

Feminist economics and the labour market 326

Monopsony 327

Wage differentials 329

The economics of discrimination 334

The other factors of production: Land and

capital 337

Economic rent 340

Conclusion 341

PART 6

Inequality 347

16 Income inequality and poverty 347

The measurement of inequality 348

The political philosophy of redistributing

income 355

Policies to reduce poverty 359

Conclusion 362

PART 7

Trade 367

17 Interdependence and the gains from

trade 367

The production possibilities frontier 367

International trade 372

The principle of comparative advantage 376

The determinants of trade 379

The winners and losers from trade 380

Restrictions on trade 384

Criticisms of comparative advantage theory 391

Other theories of international trade 392

Conclusion 396

PART 8

Heterodox Economics 401

18 Information and behavioural

economics 401

Principal and agent 401

Asymmetric information 402

Behavioural economics 408

Conclusion 412

19 Heterodox theories in economics 416

Introduction 416

Institutional economics 419

Feminist economics 422

Complexity economics 425

Conclusion 428

Glossary 432

Index 438

Credits 447

List of formulae 448

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