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PART 1 : INTRODUCTION 1
CHAPTER 1
What's to Love about Economics? Virtues of the Economic way of Thinking 1
CHAPTER 2
Why Did the Cashier Let Biff Henderson Eat All the Free Mints? An Introduction to the Power of Incentives 9
PART 2 : SUPPLY AND DEMAND 17
CHAPTER 3
The Coffee Market's Hot; Why Are Bean Prices Not? Insights into Supply and Demandn 17
CHAPTER 4
Why Was the Great Newspaper Heist So Easy? Diminishing Marginal Utility and the Price Elasticity of Demand 26
PART 3 : MARKETS AND DECISIONS 33
CHAPTER 5
How Can Economics Influence Your Choice of a Spouse? Supply:l Demand:l and Price Signals in the Marriage Market 33
CHAPTER 6
Is Adam Smith Rolling over in His Grave? Perfect Competition:l EfficiencY:l and the Father of Modern Economics 40
PART 4 : PRODUCTION 49
CHAPTER 7
Why Are There More Members of a Band Than Professors in a Class?
Diminishing Marginal Returns and the Demand for Labor 49
CHAPTER 8
Could the Future Cost of Energy Change Life as We Know It? Production Costs and the Inescapable Demand for Energy 55
PART 5 : CONSUMER CHOICE 63
CHAPTER 9
Why Is Cash the Ultimate Gift? Optimal Consumption, Deadweight Loss, and the Virtues of Flexible Spending 63
CHAPTER 10
Why Should We Pay for What We Throw Away? Incentives for Efficiency from PayPer- Unit Pricing 70
PART 6 : EFFICIENCY 75
CHAPTER 11
Why Not Split the Check? A Briefing on Market Failure 75
CHAPTER 12
How Gullible Are We? Information Problems and Their Applications to Schools of Economic Thought 83
PART 7 : MARKET POWER 91
CHAPTER 13
What's Behind the Music Industry's Woes? The Sound of Market Power 91
CHAPTER 14
Wal-Mart: Friend or Foe? Economies of Scale, Low Prices, Low WUges, and Thinking outside the Box 98
PART 8 : RISK, UNCERTAINTY, AND THE MARKET 105
CHAPTER 15
What Is the Value of Human Life? Reasons and Methods for Placing Finite Values on Unidentified Human Lives 105
CHAPTER 16
Do Potential Criminals Contemplate Their Fates? Making Incentives Matter in the Face of Risk and Uncertainty 111
PART 9 : PUBLIC POLICY 119
CHAPTER 17
Should Damage Awards in Lawsuits Be Capped? Benefits and Costs of Limiting the Burden of Litigation 119
CHAPTER 18
What's to Love about Taxes? Free Riding on Public Goods> Deadweight Loss> and the Lesser of Two Evils 126
PART 10 : TECHNOLOGY AND INNOVATION 133
CHAPTER 19
Will Technology Put Us All Out of Work? Unemployment> Creative Destruction> and Quality of Life 133
CHAPTER 20
Do Pharmaceutical Patents Cost Lives or Save Them? Balancing Incentives for Innovation with Prices More Disease Victims Can Afford 140
PART 11 : THE MACROECONOMY 149
CHAPTER 21
Why Do We Neglect Leisure and Cheer for Divorce? The Divergence of Gross Domestic Product and Measures of Well-Being 149
CHAPTER 22
Does the Money Supply Matter? Money> the Fed> and the Debate over Optimal Monetary Policy 157
PART 12 : GROWTH AND EMPLOYMENT 167
CHAPTER 23
What's to Like a~out Outsourcing? The Influence of International Labor Markets 167
CHAPTER 24
Do Tree Huggers Deter Growth and Employment? Myths> Labor Markets> and Environmentalism 173
PART 13 : MACROECONOMIC POLICY 181
CHAPTER 25
How Much Debt Is Too Much? Expenditure Smoothing, Ricardian Equivalence, Crowding Out, and Investments for the Future 181
CHAPTER 26
What Is the Role of Government? Political-Economic Systems, Snags in Private Solutions, and Remedies with a Role for Government 189
PART 14: INTERNATIONAL ECONOMICS 199
CHAPTER 27
Is Globalization a Bad Word? Comparative Advantage, Culture Clashes, and Organizations Meant to Make the Most of Global Markets 199
CHAPTER 28
Why Are Some Nations Rich and Others Poor? Growth Models, Miracles, and the Determinants of Economic Development 208
PART 15 : GLOBAL ISSUES 217
CHAPTER 29
Pollution: How Might Economics Help Save the Planet? Cap-and- Trade Programs as a Market Solution to Problems Large and Small 217
CHAPTER 30
Immigration : How Welcoming Should Lady Liberty Be? The Costs and Benefits of Relatively Open Borders 224
GLOSSARY 233
INDEX 243