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• About the Authors
• Dedication
• Authors’ Acknowledgments
• Contents at a Glance
• Table of Contents
• Introduction
• About This Book
• Conventions Used in This Book
• What You’re Not to Read
• Foolish Assumptions
• How This Book Is Organised
• Icons Used in This Book
• Where to Go from Here
• Part I: Economics: The Science of How People Deal with Scarcity
• Chapter 1: What Does Economics Study? And Why Should You Care?
• Considering a Little Economic History
• Sending Macroeconomics and Microeconomics to Separate Corners
• Framing Economics as the Science of Scarcity
• Zooming Out: Macroeconomics and the Big Picture
• Getting up Close and Personal: Microeconomics
• Understanding How Economists Use Models and Graphs
• Chapter 2: Cake or Ice Cream? Tracking Consumer Choices
• Considering a Model of Human Behaviour
• Maximising Happiness Is the Objective
• Red Light: Examining Your Limitations
• Making Your Final Choice
• Exploring Limitations and Violations of the Economist’s Choice Model
• Chapter 3: Producing the Right Stuff in the Right Way to Maximise Human Happiness
• Reaching the Limit: Determining What’s Possible to Produce
• Determining What Should Be Produced
• Encouraging Technology and Innovation
• Part II: The Science of Economic Growth and Stability
• Chapter 4: Measuring the Macroeconomy: How Economists Keep Track of
• Using GDP to Track the Economy
• Introducing the GDP Equation
• Understanding How International Trade Affects the Economy
• Chapter 5: Inflation Frustration: Why More Money Isn’t Always a Good Thing
• Buying an Inflation: The Risks of Too Much Money
• Measuring Inflation: Price Indexes
• Pricing the Future: Nominal and Real Interest Rates
• Chapter 6: Understanding Why Recessions Happen
• Examining the Business Cycle
• Striving for Full-Employment Output
• Returning to Y*: The Natural Result of Price Adjustments
• Responding to Economic Shocks: Short-Run and Long-Run Effects
• Heading toward Recession: Getting Stuck with Sticky Prices
• Achieving Equilibrium with Sticky Prices: The Keynesian Model
• Chapter 7: Fighting Recessions with Monetary and Fiscal Policy
• Stimulating Demand to End Recessions
• Generating Inflation: The Risk of Too Much Stimulation
• Figuring Out Fiscal Policy
• Dissecting Monetary Policy
• Part III: The Science of Consumer and Firm Behaviour
• Chapter 8: Supply and Demand Made Easy
• Making Sense of Markets
• Deconstructing Demand
• Sorting Out Supply
• Interacting Supply and Demand to Find Market Equilibrium
• Adjusting to New Market Equilibriums When Supply or Demand Changes
• Constructing Impediments to Market Equilibrium
• Chapter 9: Getting to Know Homo Ecoonomicus, the Utility-Maximising Consumer
• Knowing the Name of the Game: Constrained Optimisation
• Finding a Common Denominator to Measure Happiness: Utility
• Getting Less from More: Diminishing Marginal Utility
• Choosing among Many Options When Facing a Limited Budget
• Deriving Demand Curves from Diminishing Marginal Utility
• Chapter 10: The Core of Capitalism: The Profit-Maximising Firm
• Maximising Profits Is a Firm’s Goal
• Facing Competition
• Analysing a Firm’s Cost Structure
• Comparing Marginal Revenues with Marginal Costs
• Pulling the Plug: When Producing Nothing Is Your Best Bet
• Chapter 11: Why Economists Love Free Markets and Competition
• The Beauty of Competitive Free Markets: Ensuring That Benefits Exceed Costs
• When Free Markets Lose Their Freedom: Dealing with Deadweight Losses
• Hallmarks of Perfect Competition: Zero Profits and Lowest Possible Costs
• Chapter 12: Monopolies: How Badly Would You Behave If You Had No Competition?
• Examining Profit-Maximising Monopolies
• Comparing Monopolies with Competitive Firms
• Considering Examples of Good Monopolies
• Regulating Monopolies
• Chapter 13: Oligopoly and Monopolistic Competition: Middle Grounds
• Choosing to Compete or Collude
• Cartel Behaviour: Trying to Imitate Monopolists
• Understanding the Prisoner’s Dilemma Model
• Applying the Prisoner’s Dilemma to Cartels
• Regulating Oligopolies
• Studying a Hybrid: Monopolistic Competition
• Chapter 14: Property Rights and Wrongs
• Allowing Markets to Reach Socially Optimal Outcomes
• Examining Externalities: The Costs and Benefits Others Feel from Our Actions
• Taking in the Tragedy of the Commons
• Chapter 15: Market Failure: Asymmetric Information and Public Goods
• Facing Up to Asymmetric Information
• Providing Public Goods
• Part IV: The Part of Tens
• Chapter 16: Ten (Or so) Famous Economists
• Adam Smith
• David Ricardo
• Karl Marx
• Alfred Marshall
• John Maynard Keynes
• Kenneth Arrow and Gerard Debreu
• Milton Friedman
• Paul Samuelson
• Robert Solow
• Gary Becker
• Robert Lucas
• Chapter 17: Ten Seductive Economic Fallacies
• The Lump of Labour Fallacy
• The World Is Facing an Overpopulation Problem
• The Fallacy of Confusing Sequence with Causation
• Protectionism Is the Best Solution to Foreign Competition
• The Fallacy of Composition
• If It’s Worth Doing, Do It 100 Per Cent
• Free Markets Are Dangerously Unstable
• Low Foreign Wages Mean That Rich Countries Can’t Compete
• Tax Rates Don’t Affect Work Effort
• Forgetting That Policies Have Unintended Consequences Too
• Chapter 18: Ten Economic Ideas to Hold Dear
• Society Is Better Off When People Pursue Their Own Interests
• Free Markets Require Regulation
• Economic Growth Depends on Innovation
• Freedom and Democracy Make Us Richer
• Education Raises Living Standards
• Protecting Intellectual Property Rights Promotes Innovation
• Weak Property Rights Cause Many Environmental Problems
• International Trade Is a Good Thing
• Free Enterprise Has a Hard Time Providing Public Goods
• Preventing Inflation Is Easy(ish)
• Appendix: Glossary
• Index