Principles Of Microeconomics, Ninth Edition
By N. Gregory Mankiw
Contents:
Preface: To the Instructor v
Preface: To the Student xxiii
PART I Introduction 1
CHAPTER 1
Ten Principles of Economics 1
1-1 How People Make Decisions 2
1-1a Principle 1: People Face Trade-Offs 2
1-1b Principle 2: The Cost of Something Is What You Give Up to Get It 3
1-1c Principle 3: Rational People Think at the Margin 4
1-1d Principle 4: People Respond to Incentives 5
1-2 How People Interact 6
1-2a Principle 5: Trade Can Make Everyone Better Off 7
1-2b Principle 6: Markets Are Usually a Good Way to
Organize Economic Activity 7
FYI: Adam Smith and the Invisible Hand 8
CASE STUDY: Adam Smith Would Have Loved Uber 9
1-2c Principle 7: Governments Can Sometimes Improve Market Outcomes 9
1-3 How the Economy as a Whole Works 11
1-3a Principle 8: A Country’s Standard of Living Depends
on Its Ability to Produce Goods and Services 11
1-3b Principle 9: Prices Rise When the Government Prints Too Much Money 11
1-3c Principle 10: Society Faces a Short-Run Trade-Off
between Inflation and Unemployment 12
1-4 Conclusion 13
Chapter in a Nutshell 14
Key Concepts 14
Questions for Review 14
Problems and Applications 14
Quick Quiz Answers 15
CHAPTER 2
Thinking Like an Economist 17
2-1 The Economist as Scientist 18
2-1a The Scientific Method: Observation, Theory, and More Observation 18
2-1b The Role of Assumptions 19
2-1c Economic Models 19
2-1d Our First Model: The Circular-Flow Diagram 20
2-1e Our Second Model: The Production Possibilities Frontier 21
2-1f Microeconomics and Macroeconomics 24
2-2 The Economist as Policy Adviser 25
2-2a Positive versus Normative Analysis 25
IN THE NEWS: Why Tech Companies Hire Economists 26
2-2b Economists in Washington 27
2-2c Why Economists’ Advice Is Not Always Followed 28
2-3 Why Economists Disagree 29
2-3a Differences in Scientific Judgments 29
2-3b Differences in Values 30
2-3c Perception versus Reality 30
ASK THE EXPERTS: Ticket Resale 32
2-4 Let’s Get Going 32
Chapter in a Nutshell 33
Key Concepts 33
Questions for Review 33
Problems and Applications 34
Quick Quiz Answers 34
APPENDIX Graphing: A Brief Review 35
Graphs of a Single Variable 35
Graphs of Two Variables: The Coordinate System 36
Curves in the Coordinate System 37
Slope 39
Cause and Effect 41
CHAPTER 3
Interdependence and the Gains from Trade 45
3-1 A Parable for the Modern Economy 46
3-1a Production Possibilities 46
3-1b Specialization and Trade 48
3-2 Comparative Advantage: The Driving Force of Specialization 50
3-2a Absolute Advantage 50
3-2b Opportunity Cost and Comparative Advantage 50
3-2c Comparative Advantage and Trade 52
3-2d The Price of the Trade 52
FYI: The Legacy of Adam Smith and David Ricardo 53
3-3 Applications of Comparative Advantage 54
3-3a Should LeBron James Mow His Own Lawn? 54
3-3b Should the United States Trade with Other Countries? 54
3-4 Conclusion 55
ASK THE EXPERTS: Trade between China and the United States 55
IN THE NEWS: Economics within a Marriage 56
Chapter in a Nutshell 56
Key Concepts 57
Questions for Review 57
Problems and Applications 58
Quick Quiz Answers 59
PART II How Markets Work 61
CHAPTER 4
The Market Forces of Supply and Demand 61
4-1 Markets and Competition 62
4-1a What Is a Market? 62
4-1b What Is Competition? 62
4-2 Demand 63
4-2a The Demand Curve: The Relationship between
Price and Quantity Demanded 63
4-2b Market Demand versus Individual Demand 64
4-2c Shifts in the Demand Curve 65
CASE STUDY: Two Ways to Reduce Smoking 68
4-3 Supply 69
4-3a The Supply Curve: The Relationship between
Price and Quantity Supplied 69
4-3b Market Supply versus Individual Supply 70
4-3c Shifts in the Supply Curve 71
4-4 Supply and Demand Together 73
4-4a Equilibrium 73
4-4b Three Steps to Analyzing Changes in Equilibrium 75
IN THE NEWS: Price Increases after Disasters 80
4-5 Conclusion: How Prices Allocate Resources 81
ASK THE EXPERTS: Price Gouging 82
Chapter in a Nutshell 82
Key Concepts 83
Questions for Review 83
Problems and Applications 84
Quick Quiz Answers 85
CHAPTER 5
Elasticity and Its Application 87
5-1 The Elasticity of Demand 88
5-1a The Price Elasticity of Demand and Its Determinants 88
5-1b Computing the Price Elasticity of Demand 89
5-1c The Midpoint Method: A Better Way to Calculate
Percentage Changes and Elasticities 90
5-1d The Variety of Demand Curves 91
FYI: A Few Elasticities from the Real World 91
5-1e Total Revenue and the Price Elasticity of Demand 93
5-1f Elasticity and Total Revenue along a Linear Demand Curve 94
5-1g Other Demand Elasticities 96
5-2 The Elasticity of Supply 97
5-2a The Price Elasticity of Supply and Its Determinants 97
5-2b Computing the Price Elasticity of Supply 98
5-2c The Variety of Supply Curves 98
5-3 Three Applications of Supply, Demand, and Elasticity 100
5-3a Can Good News for Farming Be Bad News for Farmers? 101
5-3b Why Did OPEC Fail to Keep the Price of Oil High? 103
5-3c Does Drug Interdiction Increase or Decrease
Drug-Related Crime? 104
5-4 Conclusion 106
Chapter in a Nutshell 106
Key Concepts 107
Questions for Review 107
Problems and Applications 107
Quick Quiz Answers 108
CHAPTER 6
Supply, Demand, and Government Policies 109
6-1 Controls on Prices 110
6-1a How Price Ceilings Affect Market Outcomes 110
CASE STUDY: Lines at the Gas Pump 112
CASE STUDY: Rent Control in the Short Run and the Long Run 113
ASK THE EXPERTS: Rent Control 114
6-1b How Price Floors Affect Market Outcomes 114
CASE STUDY: The Minimum Wage 116
ASK THE EXPERTS: The Minimum Wage 117
6-1c Evaluating Price Controls 118
6-2 Taxes 119
6-2a How Taxes on Sellers Affect Market Outcomes 119
IN THE NEWS: Should the Minimum Wage Be $15 an Hour? 120
6-2b How Taxes on Buyers Affect Market Outcomes 122
CASE STUDY: Can Congress Distribute the Burden of a Payroll Tax? 124
6-2c Elasticity and Tax Incidence 125
CASE STUDY: Who Pays the Luxury Tax? 126
6-3 Conclusion 127
Chapter in a Nutshell 127
Key Concepts 128
Questions for Review 128
Problems and Applications 128
Quick Quiz Answers 130
PART III Markets and
Welfare 131
CHAPTER 7
Consumers, Producers, and the Efficiency of Markets 131
7-1 Consumer Surplus 132
7-1a Willingness to Pay 132
7-1b Using the Demand Curve to Measure Consumer Surplus 133
7-1c How a Lower Price Raises Consumer Surplus 134
7-1d What Does Consumer Surplus Measure? 135
7-2 Producer Surplus 137
7-2a Cost and the Willingness to Sell 137
7-2b Using the Supply Curve to Measure Producer Surplus 138
7-2c How a Higher Price Raises Producer Surplus 140
7-3 Market Efficiency 141
7-3a The Benevolent Social Planner 141
7-3b Evaluating the Market Equilibrium 142
CASE STUDY: Should There Be a Market for Organs? 145
ASK THE EXPERTS: Supplying Kidneys 145
IN THE NEWS: How Ticket Resellers Help Allocate Scarce Resources 146
7-4 Conclusion: Market Efficiency and Market Failure 147
Chapter in a Nutshell 148
Key Concepts 148
Questions for Review 149
Problems and Applications 149
Quick Quiz Answers 150
CHAPTER 8
Application: The Costs of Taxation 151
8-1 The Deadweight Loss of Taxation 152
8-1a How a Tax Affects Market Participants 152
8-1b Deadweight Losses and the Gains from Trade 155
8-2 The Determinants of the Deadweight Loss 157
CASE STUDY: The Deadweight Loss Debate 158
8-3 Deadweight Loss and Tax Revenue as Taxes Vary 160
CASE STUDY: The Laffer Curve and Supply-Side Economics 161
ASK THE EXPERTS: The Laffer Curve 162
8-4 Conclusion 163
Chapter in a Nutshell 163
Key Concept 164
Questions for Review 164
Problems and Applications 164
Quick Quiz Answers 165
CHAPTER 9
Application: International Trade 167
9-1 The Determinants of Trade 168
9-1a The Equilibrium without Trade 168
9-1b The World Price and Comparative Advantage 169
9-2 The Winners and Losers from Trade 170
9-2a The Gains and Losses of an Exporting Country 170
9-2b The Gains and Losses of an Importing Country 171
9-2c The Effects of a Tariff 173
FYI: Import Quotas: Another Way to Restrict Trade 175
9-2d The Lessons for Trade Policy 175
9-2e Other Benefits of International Trade 176
IN THE NEWS: Trade as a Tool for Economic Development 178
9-3 The Arguments for Restricting Trade 178
9-3a The Jobs Argument 178
9-3b The National-Security Argument 179
9-3c The Infant-Industry Argument 180
9-3d The Unfair-Competition Argument 180
9-3e The Protection-as-a-Bargaining-Chip Argument 180
CASE STUDY: Trade Agreements and the World Trade Organization 181
ASK THE EXPERTS: Tariffs and Trade Deals 181
IN THE NEWS: The Trade Policies of President Trump 182
9-4 Conclusion 183
Chapter in a Nutshell 184
Key Concepts 184
Questions for Review 185
Problems and Applications 185
Quick Quiz Answers 186
PART IV The Economics of the Public Sector 187
CHAPTER 10
Externalities 187
10-1 Externalities and Market Inefficiency 189
10-1a Welfare Economics: A Recap 189
10-1b Negative Externalities 190
10-1c Positive Externalities 191
CASE STUDY: Technology Spillovers, Industrial Policy,
and Patent Protection 192
10-2 Public Policies toward Externalities 193
10-2a Command-and-Control Policies: Regulation 193
ASK THE EXPERTS: Vaccines 194
10-2b Market-Based Policy 1: Corrective Taxes and Subsidies 194
CASE STUDY: Why Is Gasoline Taxed So Heavily? 195
10-2c Market-Based Policy 2: Tradable Pollution Permits 197
IN THE NEWS: What Should We Do about Climate Change? 198
ASK THE EXPERTS: Carbon Taxes 200
10-2d Objections to the Economic Analysis of Pollution 200
10-3 Private Solutions to Externalities 201
10-3a The Types of Private Solutions 201
10-3b The Coase Theorem 202
10-3c Why Private Solutions Do Not Always Work 203
IN THE NEWS: The Coase Theorem in Action 204
10-4 Conclusion 204
Chapter in a Nutshell 205
Key Concepts 206
Questions for Review 206
Problems and Applications 206
Quick Quiz Answers 207
CHAPTER 11
Public Goods and Common Resources 209
11-1 The Different Kinds of Goods 210
11-2 Public Goods 212
11-2a The Free-Rider Problem 212
11-2b Some Important Public Goods 213
CASE STUDY: Are Lighthouses Public Goods? 214
11-2c The Difficult Job of Cost–Benefit Analysis 215
CASE STUDY: How Much Is a Life Worth? 215
11-3 Common Resources 217
11-3a The Tragedy of the Commons 217
11-3b Some Important Common Resources 218
ASK THE EXPERTS: Congestion Pricing 218
CASE STUDY: Why the Cow Is Not Extinct 219
IN THE NEWS: Social Media as a Common Resource 220
11-4 Conclusion: The Importance of Property Rights 221
Chapter in a Nutshell 222
Key Concepts 222
Questions for Review 222
Problems and Applications 223
Quick Quiz Answers 224
CHAPTER 12
The Design of the Tax System 225
12-1 An Overview of U.S. Taxation 226
12-1a Taxes Collected by the Federal Government 227
12-1b Taxes Collected by State and Local Governments 229
12-2 Taxes and Efficiency 230
12-2a Deadweight Losses 231
CASE STUDY: Should Income or Consumption Be Taxed? 231
12-2b Administrative Burden 232
12-2c Marginal Tax Rates versus Average Tax Rates 233
12-2d Lump-Sum Taxes 233
ASK THE EXPERTS: Top Marginal Tax Rates 233
12-3 Taxes and Equity 234
12-3a The Benefits Principle 235
12-3b The Ability-to-Pay Principle 235
CASE STUDY: How the Tax Burden Is Distributed 236
12-3c Tax Incidence and Tax Equity 238
CASE STUDY: Who Pays the Corporate Income Tax? 238
12-4 Conclusion: The Trade-Off between Equity and Efficiency 239
Chapter in a Nutshell 240
Key Concepts 240
Questions for Review 240
Problems and Applications 241
Quick Quiz Answers 241
PART V Firm Behavior and
the Organization of
Industry 243
CHAPTER 13
The Costs of Production 243
13-1 What Are Costs? 244
13-1a Total Revenue, Total Cost, and Profit 244
13-1b Costs as Opportunity Costs 244
13-1c The Cost of Capital as an Opportunity Cost 245
13-1d Economic Profit versus Accounting Profit 246
13-2 Production and Costs 247
13-2a The Production Function 247
13-2b From the Production Function to the Total-Cost Curve 249
13-3 The Various Measures of Cost 250
13-3a Fixed and Variable Costs 251
13-3b Average and Marginal Cost 251
13-3c Cost Curves and Their Shapes 252
13-3d Typical Cost Curves 254
13-4 Costs in the Short Run and in the Long Run 256
13-4a The Relationship between Short-Run and Long-Run
Average Total Cost 256
13-4b Economies and Diseconomies of Scale 257
FYI: Lessons from a Pin Factory 258
13-5 Conclusion 258
Chapter in a Nutshell 259
Key Concepts 260
Questions for Review 260
Problems and Applications 260
Quick Quiz Answers 262
CHAPTER 14
Firms in Competitive Markets 263
14-1 What Is a Competitive Market? 264
14-1a The Meaning of Competition 264
14-1b The Revenue of a Competitive Firm 264
14-2 Profit Maximization and the Competitive Firm’s Supply Curve 266
14-2a A Simple Example of Profit Maximization 266
14-2b The Marginal-Cost Curve and the Firm’s Supply Decision 268
14-2c The Firm’s Short-Run Decision to Shut Down 270
14-2d Spilt Milk and Other Sunk Costs 271
CASE STUDY: Near-Empty Restaurants and Off-Season Miniature Golf 272
14-2e The Firm’s Long-Run Decision to Exit or Enter a Market 272
14-2f Measuring Profit in Our Graph for the Competitive Firm 274
14-2g A Brief Recap 275
14-3 The Supply Curve in a Competitive Market 276
14-3a The Short Run: Market Supply with a Fixed Number of Firms 276
14-3b The Long Run: Market Supply with Entry and Exit 276
14-3c Why Do Competitive Firms Stay in Business If They Make Zero Profit? 278
14-3d A Shift in Demand in the Short Run and Long Run 279
14-3e Why the Long-Run Supply Curve Might
Slope Upward 279
14-4 Conclusion: Behind the Supply Curve 281
Chapter in a Nutshell 282
Key Concepts 282
Questions for Review 282
Problems and Applications 283
Quick Quiz Answers 285
CHAPTER 15
Monopoly 287
15-1 Why Monopolies Arise 288
15-1a Monopoly Resources 289
15-1b Government-Created Monopolies 289
15-1c Natural Monopolies 290
15-2 How Monopolies Make Production and Pricing Decisions 291
15-2a Monopoly versus Competition 291
15-2b A Monopoly’s Revenue 292
15-2c Profit Maximization 294
15-2d A Monopoly’s Profit 296
FYI: Why a Monopoly Does Not Have a Supply Curve 297
CASE STUDY: Monopoly Drugs versus Generic Drugs 297
15-3 The Welfare Cost of Monopolies 299
15-3a The Deadweight Loss 299
15-3b The Monopoly’s Profit: A Social Cost? 301
15-4 Price Discrimination 302
15-4a A Parable about Pricing 302
15-4b The Moral of the Story 303
15-4c The Analytics of Price Discrimination 304
15-4d Examples of Price Discrimination 305
IN THE NEWS: Price Discrimination Reaches the Supreme Court 306
15-5 Public Policy toward Monopolies 308
15-5a Increasing Competition with Antitrust Laws 308
15-5b Regulation 309
ASK THE EXPERTS: Mergers 310
15-5c Public Ownership 310
15-5d Doing Nothing 311
15-6 Conclusion: The Prevalence of Monopolies 311
Chapter in a Nutshell 312
Key Concepts 313
Questions for Review 313
Problems and Applications 313
Quick Quiz Answers 316
CHAPTER 16
Monopolistic Competition 317
16-1 Between Monopoly and Perfect Competition 318
16-2 Competition with Differentiated Products 320
16-2a The Monopolistically Competitive Firm in the Short Run 320
16-2b The Long-Run Equilibrium 322
16-2c Monopolistic versus Perfect Competition 323
16-2d Monopolistic Competition and the
Welfare of Society 324
16-3 Advertising 326
16-3a The Debate over Advertising 326
CASE STUDY: How Advertising Affects Prices 327
16-3b Advertising as a Signal of Quality 328
16-3c Brand Names 329
16-4 Conclusion 331
Chapter in a Nutshell 332
Key Concepts 332
Questions for Review 332
Problems and Applications 332
Quick Quiz Answers 333
CHAPTER 17
Oligopoly 335
17-1 Markets with Only a Few Sellers 336
17-1a A Duopoly Example 336
17-1b Competition, Monopolies, and Cartels 336
17-1c The Equilibrium for an Oligopoly 338
17-1d How the Size of an Oligopoly Affects the Market Outcome 339
ASK THE EXPERTS: Market Share and Market Power 340
17-2 The Economics of Cooperation 341
17-2a The Prisoners’ Dilemma 341
17-2b Oligopolies as a Prisoners’ Dilemma 342
CASE STUDY: OPEC and the World Oil Market 343
17-2c Other Examples of the Prisoners’ Dilemma 344
17-2d The Prisoners’ Dilemma and the Welfare of Society 345
17-2e Why People Sometimes Cooperate 346
CASE STUDY: The Prisoners’ Dilemma Tournament 346
17-3 Public Policy toward Oligopolies 347
17-3a Restraint of Trade and the Antitrust Laws 347
CASE STUDY: An Illegal Phone Call 348
17-3b Controversies over Antitrust Policy 349
CASE STUDY: The Microsoft Case 351
IN THE NEWS: Is Amazon the Next Antitrust Target? 352
17-4 Conclusion 353
Chapter in a Nutshell 354
Key Concepts 354
Questions for Review 354
Problems and Applications 354
Quick Quiz Answers 356
PART VI The Economics of
Labor Markets 357
CHAPTER 18
The Markets for the Factors of Production 357
18-1 The Demand for Labor 358
18-1a The Competitive Profit-Maximizing Firm 358
18-1b The Production Function and the Marginal Product of Labor 359
18-1c The Value of the Marginal Product and the Demand for Labor 361
18-1d What Causes the Labor-Demand Curve to Shift? 362
FYI: Input Demand and Output Supply: Two Sides of the Same Coin 363
18-2 The Supply of Labor 364
18-2a The Trade-Off between Work and Leisure 364
18-2b What Causes the Labor-Supply Curve to Shift? 365
18-3 Equilibrium in the Labor Market 366
ASK THE EXPERTS: Immigration 366
18-3a Shifts in Labor Supply 366
18-3b Shifts in Labor Demand 368
CASE STUDY: Productivity and Wages 369
FYI: Monopsony 370
18-4 The Other Factors of Production: Land and Capital 370
18-4a Equilibrium in the Markets for Land and Capital 371
FYI: What Is Capital Income? 372
18-4b Linkages among the Factors of Production 372
CASE STUDY: The Economics of the Black Death 373
IN THE NEWS: The Winners and Losers from Immigration 374
18-5 Conclusion 374
Chapter in a Nutshell 376
Key Concepts 376
Questions for Review 376
Problems and Applications 376
Quick Quiz Answers 378
CHAPTER 19
Earnings and Discrimination 379
19-1 Some Determinants of Equilibrium Wages 380
19-1a Compensating Differentials 380
19-1b Human Capital 380
CASE STUDY: The Increasing Value of Skills 381
ASK THE EXPERTS: Inequality and Skills 382
19-1c Ability, Effort, and Chance 382
CASE STUDY: The Benefits of Beauty 383
19-1d An Alternative View of Education: Signaling 383
19-1e The Superstar Phenomenon 384
19-1f Above-Equilibrium Wages: Minimum-Wage Laws,
Unions, and Efficiency Wages 385
IN THE NEWS: Schooling as a Public Investment 386
19-2 The Economics of Discrimination 387
19-2a Measuring Labor-Market Discrimination 387
CASE STUDY: Is Emily More Employable than Lakisha? 389
19-2b Discrimination by Employers 389
CASE STUDY: Segregated Streetcars and the Profit Motive 390
19-2c Discrimination by Customers and Governments 391
CASE STUDY: Discrimination in Sports 391
19-2d Statistical Discrimination 392
19-3 Conclusion 393
Chapter in a Nutshell 394
Key Concepts 394
Questions for Review 394
Problems and Applications 395
Quick Quiz Answers 395
CHAPTER 20
Income Inequality and Poverty 397
20-1 Measuring Inequality 398
20-1a U.S. Income Inequality 398
20-1b Inequality Around the World 399
FYI: Incomes of the Super-Rich 400
20-1c The Poverty Rate 400
20-1d Problems in Measuring Inequality 403
IN THE NEWS: Are We Winning the War on Poverty? 404
CASE STUDY: Alternative Measures of Inequality 404
20-1e Economic Mobility 405
20-2 The Political Philosophy of Redistributing Income 406
20-2a Utilitarianism 407
20-2b Liberalism 408
20-2c Libertarianism 409
20-3 Policies to Reduce Poverty 410
20-3a Minimum-Wage Laws 410
20-3b Welfare 411
20-3c Negative Income Tax 411
20-3d In-Kind Transfers 412
20-3e Antipoverty Programs and Work Incentives 413
IN THE NEWS: International Differences in Income Redistribution 414
20-4 Conclusion 416
Chapter in a Nutshell 416
Key Concepts 416
Questions for Review 417
Problems and Applications 417
Quick Quiz Answers 418
PART VII Topics for Further Study 419
CHAPTER 21
The Theory of Consumer Choice 419
21-1 The Budget Constraint: What a Consumer Can Afford 420
21-1a Representing Consumption Opportunities in a Graph 420
21-1b Shifts in the Budget Constraint 421
21-2 Preferences: What a Consumer Wants 423
21-2a Representing Preferences with Indifference Curves 423
21-2b Four Properties of Indifference Curves 424
21-2c Two Extreme Examples of Indifference Curves 426
21-3 Optimization: What a Consumer Chooses 428
21-3a The Consumer’s Optimal Choices 428
21-3b How Changes in Income Affect the Consumer’s Choices 429
FYI: Utility: An Alternative Way to Describe Preferences and Optimization 430
21-3c How Changes in Prices Affect the Consumer’s Choices 430
21-3d Income and Substitution Effects 432
21-3e Deriving the Demand Curve 433
21-4 Three Applications 435
21-4a Do All Demand Curves Slope Downward? 435
CASE STUDY: The Search for Giffen Goods 436
21-4b How Do Wages Affect Labor Supply? 436
CASE STUDY: Income Effects on Labor Supply: Historical
Trends, Lottery Winners, and the Carnegie Conjecture 439
21-4c How Do Interest Rates Affect Household Saving? 440
21-5 Conclusion: Do People Really Think This Way? 443
Chapter in a Nutshell 443
Key Concepts 444
Questions for Review 444
Problems and Applications 444
Quick Quiz Answers 445
CHAPTER 22
Frontiers of Microeconomics 447
22-1 Asymmetric Information 448
22-1a Hidden Actions: Principals, Agents, and Moral Hazard 448
FYI: Corporate Management 449
22-1b Hidden Characteristics: Adverse Selection and the Lemons Problem 450
22-1c Signaling to Convey Private Information 450
CASE STUDY: Gifts as Signals 451
22-1d Screening to Uncover Private Information 452
22-1e Asymmetric Information and Public Policy 452
22-2 Political Economy 453
22-2a The Condorcet Voting Paradox 453
22-2b Arrow’s Impossibility Theorem 454
22-2c The Median Voter Is King 455
22-2d Politicians Are People Too 457
22-3 Behavioral Economics 458
22-3a People Aren’t Always Rational 458
22-3b People Care about Fairness 459
22-3c People Are Inconsistent over Time 460
ASK THE EXPERTS: Behavioral Economics 461
IN THE NEWS: Using Deviations from Rationality 462
22-4 Conclusion 464
Chapter in a Nutshell 464
Key Concepts 464
Questions for Review 465
Problems and Applications 465
Quick Quiz Answers 466