Essential Foundations of Economics Plus MyLab Economics with Pearson eText -- Access Card Package (The Pearson Series in Economics)

For courses in Economics. Guide readers through the economic principles that will influence their financial decisions Essential Foundations of Economics , 8th Edition introduces readers to the economic principles they can use to navigate the financial decisions of their futures. Each chapter concentrates on a manageable number of ideas, usually 3 to 4, with each reinforced several times throughout the text. This patient approach helps guide individuals through unfamiliar terrain and focus them on the most important concepts. The text does four core things to help readers grasp and apply economic principles: it motivates with compelling issues and questions, focuses on core ideas, offers concise points, and encourages learning with activities and practice questions. After completing this text, readers will have the foundational knowledge of how the economy works and can apply it to their lives going forward. Also available with MyLab Economics MyLabTM Economics is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts. Note: You are purchasing a standalone product; MyLab does not come packaged with this content. Students, if interested in purchasing this title with MyLab, ask your instructor for the correct package ISBN and Course ID. Instructors, contact your Pearson representative for more information. If you would like to purchase both the physical text and MyLab, search for: 0134641671 / 9780134641676 Essential Foundations of Economics Plus MyLab Economics with Pearson eText -- Access Card Package, 8/e Package consists of: 0134491971 / 9780134491974 Essential Foundations of Economics 0134522397 / 9780134522395 MyLab Economics with Pearson eText -- Access Card -- for Essential Foundations of Economics Cover Title Page Copyright Page About the Authors Brief Contents Contents Part 1 Introduction Chapter 1 Getting Started Chapter Checklist 1.1 Definition and Questions Scarcity Economics Defined What, How, and For Whom? Can the Pursuit of Self-Interest Be in the Social Interest? Checkpoint 1.1 1.2 The Economic Way of Thinking A Choice Is a Tradeoff Cost: What You Must Give Up Benefit: What You Gain Rational Choice How Much? Choosing at the Margin Choices Respond to Incentives Checkpoint 1.2 1.3 Economics as a Life Skill Economics as a Decision Tool Economics as a Social Science Economics as an Aid to Critical Thinking Checkpoint 1.3 Chapter Summary Chapter Checkpoint Appendix: Making and Using Graphs Basic Idea Interpreting Data Graphs Interpreting Graphs Used in Economic Models The Slope of a Relationship Relationships Among More Than Two Variables Appendix Checkpoint Eye on the Benefit and Cost of School: Did you Make the Right Decision? Eye on Your Life: Your Time Allocation Eye on the Past: Adam Smith and the Birth of Economics as a Social Science Chapter 2 The U.S. and Global Economies Chapter Checklist 2.1 What, How, and for Whom? What Do We Produce? How Do We Produce? For Whom Do We Produce? Checkpoint 2.1 2.2 The Global Economy The People The Economies What in the Global Economy How in the Global Economy For Whom in the Global Economy Checkpoint 2.2 2.3 The Circular Flows Households and Firms Markets Real Flows and Money Flows Governments Governments in the Circular Flow Circular Flows in the Global Economy Checkpoint 2.3 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: What We Produce Eye on the Past: Changes in What We Produce Eye on the U.S. Economy: Changes in How We Produce in the Information Economy Eye on the Dreamliner: Who Makes the Dreamliner? Eye on the Global Economy: Differences in How We Produce Eye on Your Life: The U.S. and Global Economies in Your Life Eye on the Past: Growing Government Eye on the Global Economy: The Ups and Downs in International Trade Chapter 3 The Economic Problem Chapter Checklist 3.1 Production Possibilities Production Possibilities Frontier How the PPF Illustrates Scarcity and Its Consequences Checkpoint 3.1 3.2 Opportunity Cost The Opportunity Cost of a Smartphone Opportunity Cost and the Slope of the PPF Opportunity Cost Is a Ratio Increasing Opportunity Costs Are Everywhere Your Increasing Opportunity Cost Checkpoint 3.2 3.3 Economic Growth Checkpoint 3.3 3.4 Specialization and Trade Absolute Advantage and Comparative Advantage Comparative Advantage: A Model Achieving Gains from Trade The Economy’s Production Possibilities Frontier Checkpoint 3.4 Chapter Summary Chapter Checkpoint Eye on Your Life: Your Production Possibilities Frontier Eye on the Environment: Is Wind Power Free? Eye on the U.S. Economy: Expanding Our Production Possibilities Eye on the Global Economy: Hong Kong’s Rapid Economic Growth Eye on the U.S. Economy: No One Knows How to Make a Pencil Eye on Your Life: Your Comparative Advantage CHapter 4 Demand and Supply Chapter Checklist Competitive Markets 4.1 Demand The Law of Demand Demand Schedule and Demand Curve Individual Demand and Market Demand Changes in Demand Change in Quantity Demanded Versus Change in Demand Checkpoint 4.1 4.2 Supply The Law of Supply Supply Schedule and Supply Curve Individual Supply and Market Supply Changes in Supply Change in Quantity Supplied Versus Change in Supply Checkpoint 4.2 4.3 Market Equilibrium Price: A Market’s Automatic Regulator Predicting Price Changes: Three Questions Effects of Changes in Demand Effects of Changes in Supply Effects of Changes in Both Demand and Supply Checkpoint 4.3 Chapter Summary Chapter Checkpoint Eye on Your Life: Understanding and Using Demand and Supply Eye on the Global Economy: The Markets for Cocoa and Chocolate Eye on the Price of Coffee: Why Did the Price of Coffee Rise in 2014? Part 2 A Closer Look at Markets Chapter 5 Elasticities of Demand and Supply Chapter Checklist 5.1 The Price Elasticity of Demand Percentage Change in Price Percentage Change in Quantity Demanded Comparing the Percentage Changes in Price and Quantity Elastic and Inelastic Demand Influences on the Price Elasticity of Demand Computing the Price Elasticity of Demand Interpreting the Price Elasticity of Demand Number Elasticity Along a Linear Demand Curve Total Revenue and the Price Elasticity of Demand Checkpoint 5.1 5.2 The Price Elasticity of Supply Elastic and Inelastic Supply Influences on the Price Elasticity of Supply Computing the Price Elasticity of Supply Checkpoint 5.2 5.3 Cross Elasticity and Income Elasticity Cross Elasticity of Demand Income Elasticity of Demand Checkpoint 5.3 Chapter Summary Chapter Checkpoint Eye on the Global Economy: Price Elasticities of Demand Eye on Elasticity at the Coffee Shop: What Do You Do When Starbucks Raises the Price of a Latte? EYE on the U.S. Economy: Two Applications of the Price Elasticity of Demand Eye on Your Life: Your Price Elasticities of Demand Chapter 6 Efficiency and Fairness of Markets Chapter Checklist 6.1 Allocation Methods and Efficiency Resource Allocation Methods Using Resources Efficiently Checkpoint 6.1 6.2 Value, Price, and Consumer Surplus Demand and Marginal Benefit Consumer Surplus Checkpoint 6.2 6.3 Cost, Price, and Producer Surplus Supply and Marginal Cost Producer Surplus Checkpoint 6.3 6.4 Are Markets Efficient? Marginal Benefit Equals Marginal Cost Total Surplus Is Maximized The Invisible Hand Market Failure Sources of Market Failure Alternatives to the Market Checkpoint 6.4 6.5 Are Markets Fair? It’s Not Fair If the Rules Aren’t Fair It’s Not Fair If the Result Isn’t Fair Compromise Checkpoint 6.5 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: The Invisible Hand and e-Commerce Eye on Price Gouging: Should Price Gouging Be illegal? Eye on Your Life: Allocation Methods, Efficiency, and Fairness Chapter 7 Government Actions in Markets Chapter Checklist 7.1 Taxes on Buyers and Sellers Tax Incidence Taxes and Efficiency Incidence, Inefficiency, and Elasticity Incidence, Inefficiency, and the Elasticity of Demand Incidence, Inefficiency, and the Elasticity of Supply Checkpoint 7.1 7.2 Price Ceilings A Rent Ceiling Are Rent Ceilings Efficient? Are Rent Ceilings Fair? If Rent Ceilings Are So Bad, Why Do We Have Them? Checkpoint 7.2 7.3 Price Floors The Minimum Wage Is the Minimum Wage Efficient? Is the Minimum Wage Fair? If the Minimum Wage Is So Bad, Why Do We Have It? Checkpoint 7.3 7.4 Production quotas Production Quota: An Example Checkpoint 7.4 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: The Federal Minimum Wage Eye on Price Regulation: Can Congress Repeal the Law of Market Forces? Eye on the Global Economy: Production Quotas Eye on Your Life: Price Ceilings and Price Floors You Encounter Chapter 8 Global Markets in Action Chapter Checklist 8.1 How Global Markets Work International Trade Today What Drives International Trade? Why the United States Imports T-Shirts Why the United States Exports Airplanes Checkpoint 8.1 8.2 Winners, Losers, and Net Gains From Trade Gains and Losses from Imports Gains and Losses from Exports Checkpoint 8.2 8.3 International Trade Restrictions Tariffs Import Quotas Other Import Barriers Export Subsidies Checkpoint 8.3 8.4 The Case Against Protection Three Traditional Arguments for Protection Four Newer Arguments for Protection Why Is International Trade Restricted? Checkpoint 8.4 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: U.S. Exports and Imports Eye on Globalization: Who Wins and Who Loses from Globalization? Eye on the Past: The History of U.S. Tariffs Eye on Your Life: International Trade Chapter 9 Externalities: Pollution, Education, and Healthcare Chapter Checklist Externalities in our Daily Lives Negative Production Externalities Positive Production Externalities Negative Consumption Externalities Positive Consumption Externalities 9.1 Negative Externalities: Pollution Private Costs and Social Costs Production and Pollution: How Much? Establish Property Rights Mandate Clean Technology Tax or Cap and Price Pollution Checkpoint 9.1 9.2 Positive Externalities: Education and Healthcare Private Benefits and Social Benefits Government Actions in the Face of External Benefits Economic Problems in Healthcare Markets Checkpoint 9.2 Chapter Summary Chapter Checkpoint Eye on Your Life: Externalities in Your Life Eye on the U.S. Economy: U.S. Air Pollution Trends Eye on Climate Change: How Can We Limit Carbon Emissions? Eye on the U.S. Economy: Healthcare in the United States: A Snapshot Part 3 Prices, Profits, and Industry Performance Chapter 10 Production and Cost Chapter Checklist 10.1 Economic Cost and Profit The Firm’s Goal Accounting Cost and Profit Opportunity Cost Economic Profit Checkpoint 10.1 Short Run and Long Run 10.2 Short-Run Production Total Product Marginal Product Average Product Checkpoint 10.2 10.3 Short-Run Cost Total Cost Marginal Cost Average Cost Why the Average Total Cost Curve Is U-Shaped Cost Curves and Product Curves Shifts in the Cost Curves Checkpoint 10.3 10.4 Long-Run Cost Plant Size and Cost The Long-Run Average Cost Curve Checkpoint 10.4 Chapter Summary Chapter Checkpoint Eye on Your Life: Your Average and Marginal Grades Eye on Retailers’ Costs: Which Store Has the Lower Costs: Walmart or 7-Eleven? Chapter 11 Perfect Competition Chapter Checklist Market Types Perfect Competition Other Market Types 11.1 A Firm’s Profit-Maximizing Choices Price Taker Revenue Concepts Profit-Maximizing Output Marginal Analysis and the Supply Decision Temporary Shutdown Decision The Firm’s Short-Run Supply Curve Checkpoint 11.1 11.2 Output, Price, and Profit in the Short Run Market Supply in the Short Run Short-Run Equilibrium in Normal Times Short-Run Equilibrium in Good Times Short-Run Equilibrium in Bad Times Checkpoint 11.2 11.3 Output, Price, and Profit in the Long Run Entry and Exit The Effects of Exit Change in Demand Technological Change Is Perfect Competition Efficient? Is Perfect Competition Fair? Checkpoint 11.3 Chapter Summary Chapter Checkpoint Eye on Record Stores: Where Have All the Record Stores Gone? Eye on Your Life: The Perfect Competition That You Encounter Chapter 12 Monopoly Chapter Checklist 12.1 Monopoly and How it Arises No Close Substitute Barrier to Entry Monopoly Price-Setting Strategies Checkpoint 12.1 12.2 Single-Price Monopoly Price and Marginal Revenue Marginal Revenue and Elasticity Output and Price Decision Checkpoint 12.2 12.3 Monopoly and Competition Compared Output and Price Is Monopoly Efficient? Is Monopoly Fair? Rent Seeking Checkpoint 12.3 12.4 Price Discrimination Price Discrimination and Consumer Surplus Profiting by Price Discriminating Perfect Price Discrimination Price Discrimination and Efficiency Checkpoint 12.4 12.5 Monopoly Regulation Efficient Regulation of a Natural Monopoly Second-Best Regulation of a Natural Monopoly Checkpoint 12.5 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: Information-Age Monopolies Eye on the U.S. Economy: Airline Price Discrimination Eye on Microsoft: Are Microsoft’s Prices Too High? Eye on Your Life: Monopoly in Your Everyday Life Chapter 13 Monopolistic Competition and Oligopoly Chapter Checklist 13.1 Monopolistic Competition: Output and Price Describing Monopolistic Competition Identifying Monopolistic Competition Output and Price in Monopolistic Competition Monopolistic Competition and Perfect Competition Checkpoint 13.1 13.2 Innovation and Advertising Design and Quality Decisions Advertising The Demand for Advertising The Supply of Advertising Equilibrium and Efficiency in the Advertising Market Checkpoint 13.2 13.3 Oligopoly Collusion Duopoly in Airplanes The Duopolists’ Dilemma Checkpoint 13.3 13.4 Game Theory What Is a Game? The Prisoners’ Dilemma The Duopolists’ Dilemma Advertising and Research Games in Oligopoly Repeated Games Is Oligopoly Efficient? Checkpoint 13.4 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: Examples of Monopolistic Competition Eye on Smartphones: Which Smartphone? Eye on Your Life: Some Selling Costs You Pay Eye on Your Life: A Game You Might Play Eye on the Wireless Oligopoly: Which Wireless Service? Part 4 Monitoring the Macroeconomy Chapter 14 GDP: A Measure of Total Production and Income Chapter Checklist 14.1 GDP, Income, and Expenditure GDP Defined Circular Flows in the U.S. Economy Expenditure Equals Income Checkpoint 14.1 14.2 Measuring U.S. GDP The Expenditure Approach The Income Approach GDP and Related Measures of Production and Income Real GDP and Nominal GDP Calculating Real GDP Using the Real GDP Numbers Checkpoint 14.2 14.3 The Uses and Limitations of Real GDP The Standard of Living Over Time Tracking the Course of the Business Cycle The Standard of Living Among Countries Goods and Services Omitted from GDP Other Influences on the Standard of Living Checkpoint 14.3 Chapter Summary Chapter Checkpoint Appendix: Measuring Real GDP The Problem with Base Year Prices Value Production in the Prices of Adjacent Years Appendix Checkpoint Eye on the U.S. Economy: Is a Computer Program an Intermediate Good or a Final Good? Eye on Booms and Busts: How Do We Track Economic Booms and Busts? Eye on Your Life: Making GDP Personal Eye on the Global Economy: Which Country Has the Highest Standard of Living? Chapter 15 Jobs and Unemployment Chapter Checklist 15.1 Labor Market Indicators Current Population Survey Population Survey Criteria Three Labor Market Indicators Alternative Measures of Unemployment Checkpoint 15.1 15.2 Labor Market Trends and Fluctuations Unemployment Rate The Participation Rate Alternative Measures of Unemployment Checkpoint 15.2 15.3 Unemployment and Full Employment Frictional Unemployment Structural Unemployment Cyclical Unemployment “Natural” Unemployment Unemployment and Real GDP Checkpoint 15.3 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: The Current Population Survey Eye on the Global Economy: Unemployment and Labor Force Participation Eye on the U.S. Economy: How Long Does it Take to Find a Job? Eye on Full Employment: Are We Back at Full Employment? Eye on Your Life: Your Labor Market Status and Activity Chapter 16 The CPI and the Cost of Living Chapter Checklist 16.1 The Consumer Price Index Reading the CPI Numbers Constructing the CPI The CPI Market Basket The Monthly Price Survey Calculating the CPI Measuring Inflation and Deflation The Price Level, Inflation, and Deflation in the United States Checkpoint 16.1 16.2 The CPI and Other Price Level Measures Sources of Bias in the CPI The Magnitude of the Bias Two Consequences of the CPI Bias Alternative Consumer Price Indexes Checkpoint 16.2 16.3 Nominal and Real Values Dollars and Cents at Different Dates Nominal and Real Values in Macroeconomics Nominal GDP and Real GDP Nominal Wage Rate and Real Wage Rate Nominal Interest Rate and Real Interest Rate Checkpoint 16.3 Chapter Summary Chapter Checkpoint Eye on the Past: 700 Years of Inflation and Deflation Eye on the U.S. Economy: Measuring and Forecasting Inflation: The Sticky-Price CPI Eye on the U.S. Economy: Deflating the GDP Balloon Eye on the Past: The Nominal and Real Wage Rates of Presidents of the United States Eye on Box Office Hits: Which Movie Really Was the Biggest Box Office Hit? Eye on Your Life: A Student’s CPI Part 5 Understanding the Macroeconomy Chapter 17 Potential GDP and Economic Growth Chapter Checklist Macroeconomic Approaches and Pathways The Three Main Schools of Thought Today’s Consensus The Road Ahead 17.1 Potential GDP The Production Function The Labor Market Checkpoint 17.1 17.2 The Basics of Economic Growth Calculating Growth Rates The Magic of Sustained Growth Checkpoint 17.2 17.3 Labor Productivity Growth Labor Productivity Saving and Investment in Physical Capital Expansion of Human Capital and Discovery of New Technologies Combined Influences Bring Labor Productivity Growth What Keeps Labor Productivity Growing? Economic Growth and the Distribution of Income Checkpoint 17.3 17.4 Achieving Faster Growth Preconditions for Economic Growth Policies to Achieve Faster Growth How Much Difference Can Policy Make? Checkpoint 17.4 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: The Lucas Wedge and the Okun Gap Eye on the Global Economy: Potential GDP in the United States and the European Union Eye on the U.S. Economy: Why Do Americans Earn More and Produce More Than Europeans? Eye on the Past: How Fast Has Real GDP per Person Grown Eye on the U.S. Economy: U.S. Growth Is Slowing Eye on the U.S. Economy: U.S. Labor Productivity Growth Since 1960 Eye on the U.S. Economy: The Changing Shares in the Gains from Economic Growth Eye on Your Life: How You Influence and Are Influenced by Economic Growth Eye on Rich and Poor Nations: Why Are Some Nations Rich and Others Poor? Chapter 18 Money and Inflation Chapter Checklist 18.1 What is Money? Definition of Money The Functions of Money Money Today Official Measures of Money: M1 and M2 Checks, Credit Cards, Debit Cards, and Mobile Wallets An Embryonic New Money: E-Cash Checkpoint 18.1 18.2 The Banking System Commercial Banks Thrift Institutions Money Market Funds The Federal Reserve The Structure of the Federal Reserve The Fed’s Policy Tools How the Fed’s Policy Tools Work Checkpoint 18.2 18.3 Regulating the Quantity of Money Creating Deposits by Making Loans How Open Market Operations Change the Monetary Base The Multiplier Effect of an Open Market Operation The Money Multiplier Checkpoint 18.3 18.4 Money, the Price Level, and Inflation The Velocity of Circulation and Equation of Exchange Checkpoint 18.4 Chapter Summary Chapter Checkpoint Eye on Your Life: Money and Your Role in Its Creation Eye on Creating Money: How Does the Fed Create Money and Regulate Its Quantity? Eye on the U.S. Economy: What Causes Inflation? Chapter 19 Aggregate Supply and Aggregate Demand Chapter Checklist 19.1 Aggregate Supply Aggregate Supply Basics Changes in Aggregate Supply Checkpoint 19.1 19.2 Aggregate Demand Aggregate Demand Basics Changes in Aggregate Demand The Aggregate Demand Multiplier Checkpoint 19.2 19.3 Explaining Economic Trends and Fluctuations Macroeconomic Equilibrium Three Types of Macroeconomic Equilibrium Economic Growth and Inflation Trends The Business Cycle Inflation Cycles Deflation and the Great Depression Checkpoint 19.3 Chapter Summary Chapter Checkpoint Eye on the U.S. Economy: U.S. Economic Growth, Inflation, and the Business Cycle Eye on Your Life: Using the AS-AD Model Eye on the Business Cycle: Why Did the U.S. Economy Go into Recession in 2008? Chapter 20 Fiscal Policy and Monetary Policy Chapter Checklist 20.1 The Federal Budget and Fiscal Policy The Federal Budget Budget Balance and Debt Cyclical and Structural Budget Balances A Fiscal Policy Challenge Generational Accounting Discretionary Fiscal Policy: Demand-Side Effects A Successful Fiscal Stimulus Discretionary Fiscal Policy: Supply-Side Effects Limitations of Discretionary Fiscal Policy Automatic Fiscal Policy Schools of Thought and Cracks in Today’s Consensus Checkpoint 20.1 20.2 The Federal Reserve and Monetary Policy The Monetary Policy Process The Federal Funds Rate Target The Ripple Effects of the Fed’s Actions Monetary Stabilization in the AS-AD Model Limitations of Monetary Stabilization Policy Checkpoint 20.2 Chapter Summary Chapter Checkpoint Eye on the Past: Federal Tax Revenues, Outlays, Deficits, and Debt Eye on the U.S. Economy: The U.S. Structural and Cyclical Budget Balances Eye on the U.S. Economy: Fiscal and Generational Imbalances Eye on the Global Economy: The U.S. Budget in Global Perspective Eye on Fiscal Stimulus: Can Fiscal Stimulus End a Recession? Eye on the Fed in A Crisis: Did the Fed Save Us From Another Great Depression? Eye on Your Life: Fiscal Policy and Monetary Policy and How They Affect You Glossary Index Credits