Survey of Economics

Part I. Introduction to Economics

Chapter 1 Foundations of Economics

• Scarcity: Its why you cant always get what you want.
• Specialization: It Brings You More of What You Want
• Opportunity Costs and the Production Possibilities Frontier

• The Shape of the Production Possibilities Frontier
• Economic Growth the Production Possibilities Frontier

• Q&A How do I know whether to make the PPF curved or straight?
• The Three Fundamental Economic Questions

• What to Produce
• How to Produce It
• For Whom to Produce

• Categories of Economics

• Positive and Normative Economics
• Microeconomics and Macroeconomics

• Summary
• Key Terms
• Problems for Review

Chapter 1A Understanding Graphs

• Coordinate Graphs

• Slopes
• Areas

• Other Types of Graphs

• Bar Charts
• Pie Charts
• Scatter Diagrams

• Summary
• Key Terms
• Problems for Review

Chapter 2 Markets and the Economy

• Factors of Production

• Land
• Labor
• Capital
• Entrepreneurship

• The Participants in an Economy

• Households
• Firms

• Q&A What is a nonprofit organization?

• Government

• The Circular Flow

• Government and the Circular Flow

• The Goal of Efficiency

• What Should Be Produced?
• For Whom Should It Be Produced?
• How Should It Be Produced?

• Economic Systems

• Traditional Economies
• Market Economies
• Command Economies
• Mixed Economies

• Summary
• Key Terms
• Problems for Review

Chapter 3 Demand

• The Demand Schedule

• Diminishing Marginal Utility

• The Demand Graph

• Smooth Demand Curves

• Q&A I buy more $60 Polo brand polo shirts than $15 Walmart brand polo shirts. Doesn

• Changes in Demand versus Movements along the Demand Curve

• Demand Shifters

• Tastes
• Expectations
• Income
• The Prices of Related Goods
• The Number of Consumers

• Consumer Surplus
• Steps to Solving Demand Problems
• Summary
• Key Terms
• Problems for Review

Chapter 4 Supply

• The Supply Schedule
• The Supply Graph

• The Rising Cost of Supplying One More
• Marginal Cost and Supply
• Changes in Supply versus Movements along the Supply Curve

• Q&A Stores sometimes offer lower prices when consumers buy a larger quantity. Does that contradict the law of supply?
• Supply Shifters

• Input costs
• Expectations
• Natural Disasters and Weather
  Prices of Related Goods and Services
• The Number of Firms

• Producer Surplus
• Steps to Solving Supply Problems
• Summary
• Key Terms
• Problems for Review

Chapter 5 Market Equilibrium

• Market Equilibrium
• Price Controls

• Price Ceilings

• Q&A Why are some things that we can

• Price Floors

• Shifts in Supply and Demand

• An Increase in Demand
• A Decrease in Demand
• An Increase in Supply
• A Decrease in Supply
• Double Shifts

• Key Terms
• Problems for Review

Chapter 6 Elasticity

• The Price Elasticity of Demand

• Elastic, Inelastic, and Unit-Elastic Demand
• Total Revenue and the Price Elasticity of Demand
• Perfectly Inelastic Demand
• Perfectly Elastic Demand

• The Price Elasticity of Supply
• Q&A Is the price elasticity of demand equal to the slope of a demand curve?
• The Cross-Price Elasticity of Demand
• Apply What You
• Summary
• Key Terms
• Problems for Review

Chapter 7 Consumer Behavior

• Marginal Utility and Total Utility
• Budget Constraints
• Q&A If I get more utility out of my first poster than out of my second or third, shouldn
• The Optimal Consumption Rule
• The Substitution Effect and the Income Effect
• Lessons from Behavioral Economics

• Consumers Want Balance
• Consumers Want Options, But Not Too Many
• Consumers Want Fairness
• Consumers Make Mistakes

• Summary
• Key Terms
• Problems for Review

Chapter 8 Production Costs

• Profit Maximization

• Accounting Profit and Economic Profit

• The Production Function

• Fixed Inputs and Variable Inputs
• Marginal Product
• Diminishing Marginal Product

• The Cost-Minimizing Combination of Inputs
• Q&A If I get more utility out of my first poster than out of my second or third, shouldn
• A Closer Look at Costs

• Fixed Cost and Variable Cost
• Average Total Cost
• Marginal Cost
• Summarizing Costs with Tables and Curves
• The Irrelevance of Sunk Costs

• Economies and Diseconomies of Scale
• Summary
• Key Terms
• Problems for Review

Chapter 9 Perfect Competition

• How Competition Affects Markets

• Many Buyers and Seller
• A Standardized Product
• Full Information
• Easy Entry and Exit for Firms

• Prices and Profits in Perfectly Competitive Markets

• Firms as Price Takers
• Demand and Marginal Revenue

• Profit Maximization

• Choosing the Optimal Quantity of Output
• Short-Run Profit or Loss
• Long-Run Equilibrium

• Q&A Why would firms remain in a market in which they earn no profit?
• The Shutdown Decision

• The Firm

• The Efficiency of Perfect Competition
• Summary
• Key Terms
• Problems for Review

Chapter 10 Market Power

• Sources of Market Power

• Legal Barriers to Entry
• Control of Resources
• Strategic Barriers
• Economies of Scale

• Monopolies

• A Monpolist
• Efficiency and Market Power
• Price Discrimination

• Q&A How exactly do perfect price discriminators determine the highest price customers are willing to pay? And how, as a customer, can I avoid paying too much?
• Oligopolies

• Games Oligopolists Play

• Cartels
• Monopolistic Competition
• Summary
• Key Terms
• Problems for Review

Chapter 11 Factor Markets

• The Derived Demand for Factors of Production

• A Firm
• A Market

• The Supply of Labor

• An individual
• A Market

• Equilibrium in the Labor Market
• Why Wage Rates Differ

• Compensating Wage Differentials
• Employment Discrimination

• Income Inequality and Ways to Reduce It

• Minimum Wage Laws

• Q&A Aside from minimum wages, what are some of the other programs designed to help poor workers and their families?
• Markets for Other Factors
• Summary
• Key Terms
• Problems for Review

Chapter 12 Market Failure and Government Failure

• Market Failure: Sources and Remedies

• Positive Externalities
• Negative Externalities

• Q&A How exactly does the government put limits on things such as pollution and fishing?

• Imperfect Information
• A Lack of Competition
• Free Riders

• Government Failure: Sources and Remedies

• Imperfect Information
• Different Goals and Perspectives
• Bureaucratic Inefficiencies
• Remedies for Government Failure

• Summary
• Key Terms
• Problems for Review

Chapter 13 Measuring an Economy

• Measures of Economic Progress

• Gross Domestic Product

• Q&A When a good is made this year and sold next year, when is it included in GDP?

• GDP and the Quality of Life
• Alternative Measures to GDP

• Unemployment

• The Unemployment Rate
• Types of Unemployment
• Full Employment and the Natural Rate of Unemployment

• Inflation and Its Effects
• Nominal Values versus Real Values
• The Consumer Price Index
• Summary
• Key Terms
• Problems for Review

Chapter 14 Aggregate Demand and Aggregate Supply

• Aggregate Demand

• Why the Aggregate Demand Curve Slopes Downward
• Factors that Shift the Aggregate Demand Curve

• Q&A Increases in consumption, investment, and net exports were discussed as reasons for movements along the aggregate demand curve. Now they
• Multiplier Effects and Aggregate Demand

• The Marginal Propensities to Consume and Save
• The Spending Multiplier
• The Balanced Budget Multiplier
• Leakages

• Short-Run Aggregate Supply

• The Shape of the Short-Run Aggregate Supply Curve
• Factors that Shift the Short-Run Aggregate Supply Curve

• Macroeconomic Equilibrium
• Long-Run Aggregate Supply and Economic Growth
• Summary
• Key Terms
• Problems for Review

Chapter 15 Fiscal Policy

• Government Expenditures, Revenues, and Taxes

• Budget Surpluses, Deficits, and the Federal Debt

• Schools of Economic Thought

• Classical Theory
• Keynesian Theory
• Monetarist Theory

• Areas of Consensus and Disagreement
• Q&A What caused the Great Recession?
• Types of Fiscal Policy and Their Effects

• Expansionary Fiscal Policy
• Contractionary Fiscal Policy
• Automatic Stabilizers

• Potential Problems with Fiscal Policy

• Timing
• Politics
• Crowding Out

• Supply-Side Fiscal Policy
• Summary
• Key Terms
• Problems for Review

Chapter 16 Money and Banking

• The Functions of Money

• Medium of Exchange
• Store of Value
• Unit of Account

• What Makes Something Money?

• The Ideal Characteristics of Money

• Types of Money

• Commodity Money
• Paper Money and the Gold Standard
• Fiat Money
• New Forms of Money
• What Isn

• Q&A Will digital alternatives replace cash entirely?
• The Time Value of Money
• Measures of the Money Supply

• M1
• M2

• Banks and Thrifts

• The Role of Commercial Banks in the Economy
• Related Financial Institutions
• Bank and Thrift Failures

• How Banking Creates Money
• Summary
• Key Terms
• Problems for Review

Chapter 17 Monetary Policy

• The Federal Reserve System
• Tools of Monetary Policy

• Open Market Operations
• The Discount Rate
• Reserve Requirements
• Strengths and Limitations
• New Tools for Severe Problems

• Q&A Who pays for the Fed
• The Quantity Theory of Money
• The Market for Money

• Money Demand
• Money Supply and Equilibrium
• The Effects of Monetary Policy

• Summary
• Key Terms
• Problems for Review

Chapter 18 Economic Growth and Development

• Economic Growth and Development

• Global Comparisons
• Economic Growth and the Production Possibilities Frontier
• Potential Output

• Strategies for Achieving Economic Growth

• More Physical Capital
• More Human Capital
• More Money
• More Research and Development
• More Foreign Involvement

• Q&A What is a "banana republic"?

• More Domestic Loans

• Challenges for Developing Countries

• Crime and Corruption
• Geography
• Weak Institutions
• Unfit Leadership
• Governance

• Progress in Economic Development [LO needed]
• Summary
• Key Terms
• Problems for Review

Chapter 19 International Trade and Finance

• The Benefits of an Open Economy

• Comparative Advantage
• Absolute Advantage
• Mutually Beneficial Trade

• The Balance of Payments
• Q&A How can I identify the terms of trade that would make both sides better off from trade?

• The Balance of Trade
• Trade Deficits

• Barriers to Trade

• Tariffs
• Quotas

• Foreign Exchange Markets

• Equilibrium in a Foreign Exchange Market
• Why Currencies Appreciate and Depreciate

• Summary
• Key Terms
• Problems for Review