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   Subject Index     (for Names Index, select this link)

Accounting profit. See Profit
Acquisitions, 294. See also Merger
   cost, 303, 475
Advertising, 274, 277, 308, 325, 333, 334, 532, 533, 580, 583
   Adverse selection, 334, 335, 584. See Information
   and Competition. See Competition
   dental insurance, 319 320
   Lemons problem, 317 320
AFL-CIO, 371
Age and transitivity. See Transitivity and Age
Agriculture
   corn yield, 353
   dry beans, 33 34
   government aid, 542, 565
   in Canada. See Canada
   parity prices, 48
   peanuts, 245 246
   potatoes, 33 34, 62
   price supports, 48 49, 213, 245 246
   strawberries, 33 34
   tobacco, 26, 62, 277, 545, 581
Alcohol, 131. See also Liquor
   externalities, 535. See also Sin taxes
   taxes, 511
Alliances: weakest link or best shot? 528 529
Amazon versus eBay (see eBay versus Amazon)
American Civil War. See United States, Civil War
Analytic Optimum Principle, 99, 103
Animals, economic behavior of
   ants, foraging, 100
   rats, 106 107
   Robinson Crusoe, 424 425
Anticomplementarity and complementarity. See Complementarity and anticomplementarity
Anticomplements. See Complementarity and anticomplementarity; Substitutes
Antitrust, 246 247, 294. See also Monopoly
Appropriative activity, 529, 531, 533, 535. See also Rent-seeking
   Bidding for the Radio Spectrum, 443
   Preclusive competition, 530
Art Appreciation, 484
Auctions, 443, 531
   Bidding for Radio Spectrum. See Appropriate activity
   Dutch, 444, 449
   English, 444, 445, 449
   Online. See eBay versus Amazon
   Sealed-bid first price, 444, 445, 449
   Sealed-bid second price, 444, 445, 449
Autarky, 416, 425, 434, 435, 436, 438, 439, 449, 450, 461, 464, 588 589
   price ratio, 416, 418 420, 426, 428, 436, 438, 439, 452. See also Exchange
Author versus publisher, 228 231
Automobiles, 133, 212, 258, 265, 267
Average Common Cost (ACC), 183
Average Cost (AC), 53, 56, 57, 63, 166, 167, 168, 169, 171, 172, 180, 186, 187, 188, 235, 253, 345, 576.
     See also Long-run and Short-run
   variable (AVC), 171 173, 188, 192 193, 217, 219, 344 345, 576, 577
Average Revenue (AR), 50, 55, 167 168, 169, 253
Average Separable Cost (ASC), 183

Backward bending supply, 381, 382
Bads, 72, 83, 124, 376, 457. See also Goods
Barter, 216, 440, 441, 442, 443, 449
Baseball, Monopsony in Professional, 365 366
Beer taxes. See Taxes and Taxation
Benevolence, 89
Bertrand
   equilibrium, 295
   solution, 293, 299. See also Duopoly
Best Shot, 525, 526 527, 528 529. See also Weakest-link versus best-shot
Beta, 353
   Capital Asset Pricing Model, 485. See also Capital Asset Pricing Model
Betting
   racetrack, 230 231, 483
Bidding for faculty offices, 18 19
Bidding for the Radio Spectrum. See also Appropriative activity and Rent-seeking
Biological economics, 86 88, 89
Black Death, 392. See also United Kingdom
Black markets, 48, 61, 153, 160, 216, 219, 575
   trekking, 47 48
Block pricing. See Monopoly
Bonds, 83, 159, 423, 443, 456, 459, 481, 482, 483, 484
Borrowing and lending, 461, 466, 468. See also Budget line; Investment; Saving
Bread, demand for, 117, 237
Brides, in Kenya, 76 77
Britain. See United Kingdom
Broad economics, 13, 20, 23, 24
Budget line, 94, 95, 96, 108, 122
   borrowing-lending, 459
   labor supply, 376 382
   rationing, 95, 144 150
   slope, 95, 104, 105
Business firm, 22, 158, 186, 343. See also Corporation; Firm

Canada
   agricultural production, 354
   fishery, 517 518
   minimum wage, 369
   return to education, 479
   shopping hours in Quebec, 261 262
Capital, 397, 398, 400, 405, 456
   appreciation or depreciation, 400 402, 404
   human, 398, 399. See also Human Capital
   markets, 490
   in the slave-owning South, 399 400
Capital Asset Pricing Model (CAPM), 485
   beta, 485
   market portfolio, 485
Cardinal magnitude, 73, 90
Cardinal utility, 73 77, 78, 79, 91, 309, 549
   and consumer optimum, 97 99
Carryover, 33
Cars. See Automobiles
Cartels, 222 231, 233, 244 248, 265
   Antitrust and Prices, 246 247
   OPEC, 247 248. See also OPEC
   Peanut
   product quality, 265
   Webb Pomerene Act, 245
CEO Compensation, 164
Certainty
   equivalent, 310, 315 316, 334, 583
   line, 312 315
Charity, 85 86
   and income, 86
Chicken game. See Game theory
Children
   biological factors, 87 89
Choices, 70
   consumption, 94
Cigarettes, 102. See also Tobacco
   demand for, 134 135
   externalities, 511 512, 535. See also Externalities
   taxes, 510 511
Civil War, American, 399 400, 413 414, 554. See United States
Climate, 34
Coase Theorem, 510 511, 513 514, 527, 529, 534
   conflict, 556, 564
   and Shopping Malls, 514 515
Cobb Douglas. See Production function
Coffee
   demand, 141 142
   versus Tea. See Tea versus Coffee
Collusion. See Duopoly; Oligopoly
Commodities. See Goods
Commodity Credit Corporation (CCC), 48 49
Comparative statics, method of, 31, 64
   algebra, 37
Comparison, Axiom of, 70, 71 72, 73, 81, 90, 92
Compensated emancipation, 399 400
Competition, 201
   and Advertising, 273 274
   appropriative. See Monopolistic competition
   compared to monopoly, 250
   exchange. See Exchange
   firms. See Firm
   international, 393
   monopolistic. See Monopolistic competition
   Oligopoly. See Oligopolistic competition
   perfect, 167, 193, 222, 238, 450, 539 564
   political, 539 564
   preclusive. See Appropriative Activity
   price, 293 294, 295, 298 299, 305, 306
   product quality, 259 262
   pure, 165 175, 182, 259, 276
   quantity, 289 293, 295, 297 298, 299
   rent-seeking. See Monopolistic competition
Competitive equilibrium. See Exchange and Monopoly
Competitive market, 276
   equilibrium, 415
   model, 367 369
Complementarity and anticomplementarity
   in consumption, 104 105
   in production, 358 360, 372
Complements. See consumption, also Complementarity and anticomplementarity
Conflict, 552, 553, 555, 556, 564
   and cooperation, 550 552, 563
   game theory, 557 563, 564. See also Game theory
   international, 553 554
   litigation, 555 556
   political, 541 550
   Raid or Trade? 554 555. See also War
Consumer Surplus, 203, 204, 205 207, 500 501, 530, 578
   and Lotto, 205
   monopoly, 232 233, 235, 236, 508, 578
   price ceiling
   quota, 210, 211
   tax, 207 212, 218
Consumption. See also Demand; Investment; Public goods; Saving
   as an economic activity, 22
   complements, 104, 105 106, 123, 124, 125
   efficiency conditions, 506, 507 508
   Marginal Rate of Substitution (MRSC), 100 104, 125, 144 149, 415, 424, 448. See also Marginal Rate of Substitution (MRS)
   Opportunity set, 94, 95, 99, 126
   Optimum, 94 96, 97 104, 122, 124
     Analytical Optimum Principle, 99, 103. See also Cardinal Utility; Ordinary Utility
     Balance equation, 97, 98, 102, 124, 125
     Balance inequality, 98
     Consumption Optimum Condition, 426
     corner solution, 96, 97, 98, 103, 121, 122, 124, 572
     interior solution, 96 97, 98 99, 103 104, 122, 124, 572
     multiple constraints, 101, 144 149
     variation with income. See Income Expansion Path (IEP)
     variation with price. See Price Expansion Path (PEP)
   subsidy, 120 122
   substitutes. See Complements and anticomplements
Consumption Optimum Condition. See Consumption
Contract Curve, 501. See also Edgeworth box
Cooperation, 550 552, 555, 563, 564. See also Conflict
Coordination game. See Game theory
Copyright, 328 329, 332. See also Intellectual property rights; Patents
Corn yields. See Agriculture; Missouri corn
Corner solution. See Consumption
Corporate governance, 162 163
Corporation, 160. See also Business firm; Firm
   economic role. See Firm
   ownership and control, 160 163
     stockholders, 158 159, 160 165, 486, 564
   takeover, 161 163. See also Mergers
Corruption, 538 539. See also Government; Growth
Cost
   Average. See Average Cost (AC)
     Common and separable. See Average common cost; Average Separable Cost (ASC)
   diminishing returns, 180 182, 186. See also Diminishing returns
   electricity, 166 167, 188, 189
   fixed. See Fixed cost
   function, 171, 176, 343 345
   long-run. See Long-run
   Marginal. See Marginal Cost (MC); Marginal Common Cost (MCC); Marginal Separable Cost (MSC)
   production function, 343 345
   short-run. See Short-run
   sunk, 173
   Total. See Total Cost
   transaction, 416 420, 427 430, 461, 588
   Variable. See Variable Cost (VC)
     Total; Total Variable Cost
Cotton Spindles, 197
Cournot equilibrium, 290, 295
Cournot Nash solution, 290, 292, 297. See also Duopoly, Game theory
Cournot solution, 290 292, 304, 305, 523. See also Duopoly; Game theory; Oligopoly
Crime and Criminals, 16 17, 25
Cultures and preferences, 82 83
Customization in the U.S. economy. See Monopolistic competition
Cycling paradox, 545 546

Deadweight loss, 209, 211, 212, 217. See also Efficiency
Demand
   aggregate full, 419 420
   choke price, 37, 38, 126, 143, 152, 210, 249, 581
   constant elasticity, 138 139, 141 142, 152
   constant slope, 138 139, 141, 152, 573
   curve, 29 30, 36 37, 52, 61, 62, 132 133, 152, 153, 223
     fitting, 137 142
     horizontal product, 345
     kinked, 300 302, 304, 305
     linear, 139, 143, 152, 300, 573
     market, 118 120, 124, 125, 192
     nonlinear, 152, 574
     and Price Expansion Path (PEP), 112 115, 123, 124, 572
     shift in, 30 32, 37 43, 62, 115, 206 207
   equation, 36, 37, 45, 225
   for bread. See United Kingdom
   for coffee, 141 142
   for factor services. See Factor services
   for Opium, 133 134
   general function, 114, 139 142
   Giffen good, 114, 117 118. See also Giffen good
   Law of, 29, 114, 116, 124, 132, 133, 135, 151, 572
   price, 204, 236, 243
   price effect, 115 118
   price elasticity, 133, 152, 573, 574
     determinants, 142 144
   shift in, 30 32, 592
   substitutes (anticomplements), 104 107
   tax, effect of, 39 43, 62
   transaction. See Transaction
Demand and Supply. See Supply and Demand
Demography, 392
Determinants of voter turnout, 544
Diminishing returns
   Laws of, 165, 180 181, 186, 235, 340 343, 352, 373, 374, 585
   long-run, 176 182
Diminishing returns (cont.)
   and rising costs, 180 182
   short-run, 176 181
Discrimination, price, 238, 297, 520 521, 579, 592
   Block pricing, 241 243, 253. See also Multi-part pricing
   market segmentation, 238 241, 253, 254, 255, 579
   monopolistic, 238 243
   Multi-part pricing, 241 243, 255, 579. See also Block pricing
   perfect, 238, 243, 253, 254
Diseconomies of scale. See also Economies of scale
   external, 199, 200
   internal, 218
Distribution of income
   functional, 397 402
Division of labor, 440, 442, 443, 448, 478
   international, 6, 393
Division of output among plants, 174 175
Do minimum-wage laws reduce employment? 369 370
Dowry. See Marriage
Drugs, 44, 46, 133 134, 136 137, 255, 331 332, 450. See also Opium; Pharmaceuticals
Duopoly, 288 300. See also Oligopoly
   Bertrand solution, 293, 297 304. See also Bertrand
   collusion, 305, 582
   Cournot Nash solution, 290, 292, 297
   meet-or-release, 296 297
   most-favored customer, 295 297
   Reaction curves, 290 291, 297 299, 305, 522, 534, 583
   Stackelberg solution, 229, 293

eBay versus Amazon, 446 447
Ecologist, economist, and statistician, 6
Economic blockade and American Civil War, 413
Economic man, 9 16, 20
Economic profit. See Profit
Economies of scale, 166, 268, 540. See also Diseconomies of scale
   internal, 199, 218
   external, 199, 200, 201
   and Survivor Principle, 202 203
Economists, 538
   disagreements, 5 6, 21
   income, 9
Edgeworth box, 412, 416, 449, 450, 451, 533, 534
   contract curve, 412, 501 502
   efficiency and equity, 498
   efficient allocations, 501 503
   pure exchange, 410 416
   region of mutual advantage, 411 412, 414, 448, 501 502
Education
   college, 8, 478
   earnings, 8. See also Investment
   human capital, 398, 456
   medical, 396
   subsidy versus voucher, 120 122
   rate of return, 478 479
   rational ignorance, 544
   training in economics, 8
Efficiency, 498, 533. See also Public goods; Welfare economics
   efficient allocations. See Edgeworth box
   Invisible Hand, Theorem of, 506, 514, 533. See also Invisible Hand
   versus equity, 498 500, 502 503
Elasticity of demand. See also Demand
   along demand curve, 136
   cross, 136 137
   determinants of, 142 144
   Engel curve, 128 132, 152, 153, 573
   for opium, 133 134
   for pharmaceuticals, 136 137
   Marginal Revenue, 579
Elasticity of supply, 195, 577
Electricity
   costs. See Cost
   economies of scale, 166 167, 181 182, 188
Employee compensation at Safelite, 388 389
Employment. See Unemployment
Endowment, 376, 377, 410 412, 417, 429, 448, 451
   wealth, 459, 460, 466
Engel Curve, 110 111, 123, 124, 153, 572, 573
   elasticity of demand, 128 132
   income elasticity, 110, 129, 130 131, 152
England. See United Kingdom
Entrepreneur, 158 165
Entry and exit
   effect, 197 198, 585
   deterrence. See Game theory
   and factor demand, 363 364, 373
   potential, 227
Envy. See Equity
Equilibrium. See also Exchange
   borrowing-lending, 459 461, 466, 492
   competitive. See Monopoly
   saving-investment, 487 490, 492
   supply and demand, 28 49, 391
Equity, 498, 502 503
   Envy-free allocations, 503, 533
   versus efficiency. See Efficiency
Excess burden. See Marginal excess burden
Exchange, 24, 25. See also Investment; Saving; Transaction costs
   American Civil War, 413 414
   autarky, 416, 426, 428, 450, 588 589
   as an economic activity, 23
   competitive equilibrium, 422
   efficiency, 501 502, 578
   Fundamental Theorem of Exchange, 203, 217, 410
   Market experiments, 420 423
   money, 415, 422, 440 442, 448, 450, 501 502, 590
   production, 423 430
   pure, 588, 590
     Edgeworth box, 410 416
   supply and demand, 416 423
Exhaustible resources. See Oil
Expected gain, 308 309
Expected utility, 308 310
Expected value, 308 309
Experiments
   economics students, xiv, 14 15
   oligopoly, 292
   lost letter, 14 15
   perfect and imperfect markets. See Market experiment
Exports and imports. See Imports and exports
External economies and diseconomies, 199 201, 217, 218, 224, 232. See also Diseconomies of scale; Economies of scale
Externalities, 199, 200, 201, 508 512, 534 535, 538, 542, 550, 593
   cigarettes, 593
   Coase Theorem, 513 514, 515
   external economies and diseconomies, 217, 577
   network, 248 253
   pollution and smog, 513

Factor Balance Equation. See Inputs
Factor Employment Condition. See Inputs
Factor market, 25, 345 346, 372, 374, 376, 404, 568, 585, 586
   equilibrium, 375 403
   monopoly, 395
   monopsony, 364 366
Factor services, 568
   demand for, 339 362
Factors of production. See Inputs
Fads and cascades in television programming, 327 328
Family, 378 379, 463 464
Finance, 28, 478, 485. See also Portfolio selection
Firm. See also Business firm; Cost; Corporation; Inputs; Monopoly; Profit
   competitive, 165, 168, 170, 172, 178, 182, 192, 193, 200, 217, 222, 253, 577, 584. See also Maximum-profit condition
   economic role, 22, 158
   entry and exit, 197 198, 364, 373, 585
   goals of, 186, 187, 575
   Producer Surplus, 203 207, 578
   survival, 201 203
Fishery, 517 518
Fixed cost, 56, 165, 171, 172, 173, 179, 186, 187, 273, 344, 345, 575
Football, 305
Footraces and effort, 384 385
Foraging, 9, 59 61, 100
Fossil fuels, 181 182. See also Electricity
France, 412, 439, 528 529, 548, 558
Free trade, 6, 20, 538
Fundamental Theorem of Exchange. See Exchange

Gamble, 313, 315, 333, 334, 483, 583, 584. See also Insurance; Risk; Uncertainty
Game theory, 283 285
   Battle of the Sexes, 557 558, 559, 560
   Bertrand solution, 299
   Chicken game, 324, 331, 557, 558, 559, 560
   and conflict, 557 563, 564
   Coordination game, 281, 283
   Cournot solution, 290 292, 293, 305, 582
   dominant equilibrium, 285, 288, 304
   entry deterrence, 284, 285, 293
   Land or Sea game, 83, 280, 284, 557, 558, 559
   mixed strategies, 286 288, 305, 559, 583
     in tennis, 287 288, 305
   Nash equilibrium, 285 286, 288, 290, 304, 526, 527
   Nash solution, 582
   Nash Cournot Solution, 290, 292, 297
   perfect equilibrium, 288, 304, 557, 561, 582 583
   Prisoners’ Dilemma, 281 283, 284, 296, 304, 305, 557, 559, 581
   protocols, 280, 283, 304, 557, 558
   and public goods, 282 286, 526 529
   pure strategies, 283 286, 288, 304
     sequential, 124, 285, 288, 295, 304, 305, 557, 559, 582
     simultaneous, 285 286, 288, 304, 527, 557, 559, 560
   ransom, payment of, 561 563, 596
   solution concepts, 283 286, 304, 557
   Threat solution, 293, 294, 305
Gasoline, waiting lines, 150 151. See also OPEC
Germany, 47 48, 102, 111, 144, 393, 528 529, 548, 558
   repressed inflation, 216
   taxes. See Taxes and Taxation
Giffen good, 113, 117, 118, 120, 126
Gifts, Christmas, 109 110
Goods, 22, 72, 77 78, 83 86, 572
   and bads, 72, 83 86, 91, 124, 405
   Giffen. See Giffen good
   inferior. See Inferior good
   luxury. See Luxury
   necessities, 111, 131, 142. See Necessities
   neuter, 83 85, 91, 405
   normal superior, 108, 114, 123, 126. See Normal superior good
   objects of choice, 22 23
   public. See Public goods
   superior, 108 109, 110, 111, 115 117, 123, 129, 151, 152
   ultrasuperior, 108 109
Government, 21, 22, 48 49, 120, 123, 125, 565, 576, 592, 595. See also Public choice
   aid to agriculture. See Agriculture
   failure, 538 543, 565. See also Corruption
   intervention, 538, 542, 595
Great Britain. See United Kingdom
Growth
   and corruption. See Corruption
   versus investment. See investment

Handicaps and signals, 390
Happiness and income, 75 76, 91. See also Income
Herd behavior, 325 328. See also Information
Hicks decomposition, 115 117, 124
Hindrances to trade, 207 217
Housework, 378 379, 586
Housing
   Crises in San Francisco, 213
   Insufficient in New York, 215
   ownership, 439 440
   vouchers, 122
Human capital, 398, 399, 473
   education and training, 398, 456. See also Education
   Interrupted careers and the discounted value of knowledge. See Investment

Ignorance and Uncertainty. See Uncertainty
Immigration, 374, 394
Importance Fallacy, 143
Imports and exports, 5, 20, 412 413. See also Cartels; Trade
   effect on domestic price, 211 212, 413
   new supply source, 38 39, 65
   quotas. See also Hindrances to trade
     import, 210 212
     supply, 209 210, 211, 215, 217
   tariffs, 219, 418, 451, 542
In-state versus out-of-state, 541
Incentive effect, 388
Incentive effects of welfare and Social Security, 382 385
Income elasticities in New Zealand, 130 131
Income Expansion Path (IEP), 107 110, 124, 125, 126, 379, 572, 573
Income sources of the wealthy in Britain. See United Kingdom
Incomes
   budget line, 94 96
   changes in, 33, 107, 573
   distribution. See Distribution of income
   and happiness, 75 76, 91
   effect of price change, 115 118, 123, 124, 125, 142, 573
   effect on consumption, 107 111, 380
   effect on expenditure on good, 33
   effect on labor supply, 379 382
   elasticity of demand, 128 132, 151, 152 153, 242
   functional distribution. See Distribution of income
   Sources for the wealthy in Britain. See United Kingdom
Increasing returns, 429 430
Indifference curves, 78, 79 83, 90, 91, 571
   concave and convex, 81 82, 90, 91, 574, 588
   consumer optimum, 572
   coverage, 80 81, 90
   negative slope, 79 80, 90
   nonintersection, 80, 90
Individuals, xiii, 4, 9, 22, 23, 24, 70
Industry. See also Competition; Demand; Supply
   demand for inputs, 362 364, 372, 373
   entry and exit, 197 198, 363 364, 373, 585
   external economies and diseconomies, 199 201, 217, 218
   supply, 192 201, 217, 577
Inferior good, 108, 109, 110, 124, 125, 572, 573
Inflation, 6
   and interest rates, 479 483, 484, 491, 493
   repressed, 46, 47. See also Price
     in Germany. See Germany
   and taxes, 41, 483
Information. See also Advertising; Public goods
   adverse selection
   asymmetric, 317 325
   cascades, 325 328. See also Herd behavior
   Lemons problems, 317 320, 334, 335, 581. See also Used-car prices
   public good, 323 324
   system, 248 250
   technology, 248 250
   value, 316 317
Inheritance. See Legacies
Innovation, 89 90, 206 207, 265. See also Inventions
Inputs. See also Capital; Labor; Land; Production function
   anticomplementary, 359 361
   complementary, 358 361
   Factor Balance Equation, 356 357, 358
   Factor Employment Condition, 347 348, 349, 358, 361, 365, 372, 373, 585
   firm demand, 345 349, 358 360
   hire price, 218, 343 354, 405, 475, 585, 586
   independent, 358
   industry demand, 362 364
   land, 397 402, 404, 405
   Marginal Rate of Substitution in Resource Supply, 377, 403
   monopsony, 364 366, 395
   multiple, 349 361
   price effect, 194 195, 199, 372
   prices, 193 195, 201
   quality, 386
   single, 340 349, 351
   supply, 376, 390 397
Insurance, 308, 312 313, 316, 333, 334, 583. See also Gamble; Risk; Uncertainty
   dental, 319 320
Intellectual property rights, 328 332. See also Copyrights; Patents
Interest, interest rates and discount rates, 398 402. See also Investment; Present-value; Saving
   compound, 458, 480
   defined, 457 458, 470 471, 492
   degree of isolation, 490
   fundamental determinants, 487 490, 491. See also Time
   long-term and short-term, 457 458
   multiplicity, 482 486
   and prices, 456 458, 480, 491
   real versus monetary, 479 483
   relation to capital value, 400
   risk, 83, 482 483, 484 486, 490. See also Capital
Interior solution. See Consumption
Internet, 65, 249 250. See also Information
Interrupted Careers and the discounted value of knowledge. See Human capital
Inventions, 263 265, 276, 277 278, 328, 333, 580. See also Innovations; Patents
   suppression of, 264, 276, 580, 581
Inventory, 437 438
Investment. See also Present-value
   art appreciation, 484
   borrowing-lending equilibrium, 459 461
   Capital Asset Pricing Model (CAPM), 485
   cost of capital, 485, 491
   education, 8 9, 478 479
   human capital, 456, 473 474
   Internal Rate or Rate of Return (ROR) Rule, 475 479
   Interrupted careers and the discounted value of knowledge, 473 474
   intertemporal, 459, 466, 467, 490 491, 492, 591
   Present-Value Rule, 469 475
   Robinson Crusoe, 456, 464, 465
   saving-investment equilibrium, 456, 464 466
   Separation Theorem, 468 469, 490, 492, 590
   time-endowment, 488 489, 491
   time-preference, 468 469, 487 488, 491, 493, 591
   time-productivity, 487, 489 490, 491, 493, 591
   versus Growth, 467 468
Invisible Hand, 19, 20, 24, 25, 520, 534, 538, 539, 568
   Theorem of, 506 508, 533, 534
Irrational exuberance, 11 12, 346 347
Isocost line, 355, 356, 373
Isoquant, 350, 355, 357, 373
Italy, 102, 439, 528 529, 548

Japan, 47 48, 393, 424, 479, 502
   Japanese Auto Export Cartel, 238, 265

Kenya, 370
   Brides. See Brides
Kinked demand curve. See Demand

Labor; Inputs
   backward bending, 381, 382, 404. See also Nursing services
   Black Death, 359 360
   Income Expansion Path (IEP), 107 111, 379, 403
   Marginal Rate of Substitution in Resource Supply, 377 378
   minimum wage, 21, 366 371, 373, 374, 406
   monopoly, 395 397
   nurses. See Nursing services
   Price Expansion Path (PEP), 380 381, 403
   resource cartels, 395 397, 404
   retirement, 383 384
   slavery, 18, 346 347, 399 400, 405, 587. See also United States
     wage slaves, 18
   supply, 367 369, 586
   unions, 28, 371, 394, 395 396, 404, 558. See also AFL-CLO
   welfare, 378, 382 385, 406
Laissez-faire, 20, 533, 538
Land, 354, 359 360, 397 404, 405, 406. See also Inputs
Land or sea game. See Game theory
Law of Diminishing Returns. See Cost; Diminishing returns
Legacies, 88 89
Legal rules, 33
Leisure, 376 381, 404, 405, 586, 587, 593
Lemons problem, 320. See also Information
Lending and borrowing. See Borrowing and lending; Investment; Saving
Liquor, 43 46, 377. See also Alcohol
   externalities, 511 512
Litigation explosion, 555 556. See also Conflict
Lock-in issue. See Network
Log-rolling, 544 545, 563, 564, 595
   in U.S. Congress, 545
Long-distance telephone service. See Monopoly
Long run
   costs, 176 180, 199
     average (LRAC), 176, 177, 178 179, 180, 181 182, 186, 187, 195, 196, 197
     marginal (LRMC), 178, 181, 187, 188, 195 196, 217
     total (LRTC), 176 178, 186, 196
   shutdown, 172 173, 219
   supply, 195 199, 218, 219
Luxury, 126, 144, 147, 152, 574
   Luxuries versus necessities, 111, 142

Macroeconomics, 23
Management, 158, 161 164
   compensation, 11, 164, 386 389
Managers, 20, 158 165, 187, 575
Marginal and average magnitudes, 50 52, 54 59, 60 61
Marginal and total magnitudes, 50 52, 54 59, 60 61
Marginal Common Cost (MCC), 183 184, 185, 187
Marginal Cost (MC), 49, 56 58, 63, 168 172, 174 175, 178, 180 181, 186 187, 188, 576. See also long-run; short-run
Marginal excess burden, 510 511
Marginal Factor Cost (MFC), 364 365, 372. See also Factor Employment Condition
Marginal product, 171, 341 352, 371 372, 391, 400, 585. See also Value of Marginal Product
Marginal Rate of Substitution in Consumption. See Consumption
Marginal Rate of Substitution in Resource Supply, 377 378. See also Labor
Marginal Rate of Transformation (MRT), 424 425, 448, 506 507
Marginal Revenue (MR), 49, 50, 51 56, 63, 167 170, 224 227, 578
Marginal Revenue Product (MRP), 348 349, 372, 389, 391. See also Inputs
Marginal Separable Cost (MSC), 183 184, 185, 187
Marginal tax, 58 59
Marginal Utility, 75, 90, 91, 97, 100, 125, 572
   diminishing, 75, 76, 97, 125
     income, 309, 332
Marginal Value, 103 104, 124, 204
   efficiency conditions, 507 508
   public goods, 520 521, 592
Market economy, 24, 25, 70, 534, 538 539, 568
Market experiments in economics, 420 423
   using a computerized supply-demand process, 422 423
Market Failures. See Monopoly; Externalities; Public goods
Market interactions, 16 18, 568
Market segmentation. See Discrimination, price
Market system, 18 20
Marketing, 316 317. See also Information
Marriage
   baby booms, 34 35
   brideprice, 35
   dowries, 35
   market, 34 35
   monogamy and polyandry, 35, 594
   polygyny, 536
   squeezes, 34 35
   stratification 35
Mathematical expectation, 308, 333. See also Expected value
Median voter
   and party politics, 548
   Theorem, 546 550, 564
Mercantilists, 20
Merger, 161 162, 294
Microeconomics, 24, 28, 70, 94, 479
Minimum wage laws, 366 370, 371, 373, 374, 406. See also Labor
Missouri corn, 353
Mixed strategy. See Game theory
Modern Art and the Taste for Innovation, 89 90
Modigliani Miller Theorem, 486
Money, 440 443, 449
   and the interest rate, 479 482, 491, 492
   medium of exchange, 440 442, 449, 451
   source of happiness. See Happiness
   store of value, 442, 449, 451, 590
Monopolistic competition, 222, 258, 270 274, 276, 277, 305, 502, 580, 582
   and advertising, 273 274
   compared to monopoly, 270 273
   Customization in U.S. economy, 275
Monopoly. See Marginal Revenue; Marginal Revenue Product; Price discrimination
   block pricing. See Discrimination, price
   cartels, 244 248, 253 254, 579
   compared to monopolistic competition, 270 273
   discriminatory pricing, 238 243, 253 254, 255
   efficiency, 231 234, 253, 254, 580, 593
   factor demand, 348 349, 362
   import quotas, 212
   inventions, 263 265, 276
   long-distance telephone service, 237
   multi-part pricing. See Discrimination, price
   natural, 222, 234, 235, 237, 250, 304, 585
   positive and normative issues, 21, 25
   product quality, 259 265, 276, 277
   product variety, 268 270
   profit maximization, 222 231, 254, 578, 579, 592
   regulation, 234 238, 253, 254
   resource cartels, 404
   solution, 232 233, 234 235, 271, 582
   with a competitive fringe, 231, 232
Monopsony
   in baseball, 365 366
   in factor market, 364 366
   minimum wage, 367 369
Multi-part pricing. See Discrimination, price

Napster story, The, 330
Narrow economics, 12, 20. See also Economic man
Nash Cournot solution. See Cournot Nash solution
Nash equilibrium. See Game Theory
Nash solution. See Game Theory
National Association of Securities Dealers Automated Quotations (NASDAQ)
   versus NYSE. See New York Stock Exchange (NYSE)
Necessities, 111, 131, 142
Networks and network goods
   demand for, 248 250
   effects, 249, 250 253
   externalities, 248 253
   lock-in issue, 250 253
     Qwerty, 251 252
Neuters. See Goods
New Mexico onions, 342 343
New York Stock Exchange (NYSE), 422 423
   versus NASDAQ, 432 433
No-Shutdown Condition, 192, 224
   long-run, 173, 195
   short-run, 172, 186
Nominal and real yields, 482 483
Nonmarket interactions, 16 18
   birthplace, 9
   charity, 17, 85 86
   crime, 16 17
   first-come first-served, 18 19
Normal good. See Goods
Normal superior good. See Goods
Normative analysis, 20 21
   individual freedom, 21
   natural liberty, 20
   social equality, 21
North Atlantic Treaty Organization (NATO). See Alliances: weakest-link or best-shot?
Nuclear power, 181 182. See also Electricity
Numeraire, 94, 102, 103
Nurses
   Nursing Services, 382. See also Backward bending supply

Oil, 254, 406. See also Organization of Petroleum Exporting Countries (OPEC)
   crisis, 6, 150
   entitlements, 58
   OPEC, 32, 247 248
   Standard Oil and John D. Rockefeller, 294 295
Oligopoly, 222, 280, 300 303, 304, 582. See also Duopoly
   collusion, 299 300, 303, 305
   concentration and market prices in Sweden, 303
   Cournot solution, 305, 582
   kinked demand curve, 300 301, 304, 305, 582
   meet-or-release. See Duopoly
   most-favored customer. See Duopoly
   Nash equilibrium, 304, 305
   pioneer oligopoly experiment, 292
   price competition, 299, 302 303, 304, 305
   price rigidity, 301 302
   Prisoners’ Dilemma, 296
   quantity competition, 302, 304
   Reaction curve, 302
Opium, 133 134. See also Demand;
Optimization, 28, 56, 61, 62, 569
Optimum
   consumer, 97 104. See Cardinal utility; Ordinal utility
   finding, 28, 49 61
Ordinal utility, 73 77, 79, 90, 91, 100 104, 571, 572
Organization of Petroleum Exporting Countries (OPEC), 32, 247
   history, 247 248
   oil entitlements, 58

Paperbacks versus hardbacks, 241
Pareto optimality, 498, 501, 533, 534, 558. See also Efficiency
Pareto-preferred, 499, 501, 533, 534, 536, 593, 595
Parity prices. See Agriculture
Patents, 222, 328 332, 334, 335. See also Copyrights, Intellectual Property Rights
Peak versus Off-Peak Operation, 182 186
   water supply, 182 183
Peanuts. See Agriculture
Perfect discrimination. See Discrimination, price
Petroleum. See Oil; Organization of Petroleum Exporting Countries (OPEC)
Pharmaceuticals
   demand elasticity, 136 137
   invention versus utilization, 331 332
Physicians, 396, 404, 555 556
   size of practice, 202 203
Pioneer oligopoly experiment. See Oligopoly
Plants, division of output, 174 175
Politics. See Public Choice
Pollution, 509 510, 514
   smog, 513
Population Bomb, The, 6
Portfolio selection, 83
   risk, 83
Positive analysis, xv, 20 21, 30, 46
Postwar shortages and trekking, 47 48
Potatoes, 33 34, 62
Predatory price-cutting, 294 295, 305, 582
Preferences, 12 13, 83. See also Tastes
   changes in, 24, 30 31
   and culture, 82 83
   for brides among Kipsigis, 76 77
   interdependent, 77
   laws of, 70 72, 90
   of children, 70 71
   preference directions, 73, 78, 79, 91
   Proposition of Rank Ordering of, 71
   sources and content of, 86 90
   stability, 13, 24
   and utility, 72 78, 85
Present Value, 468 479. See also Investment
   defined, 469 471
   multiple periods, 470 472
   Rule, 469 475, 485, 491, 492, 590
   and Social Security, 472 473
Price. See also Competition; Monopoly
   agriculture, 48
   allocation by, 18 20, 416
   as way of rationing goods and resources, 19
   autarky, 416, 418 420, 426, 435, 438 439, 449, 452
   ceilings, 46 49, 58, 61, 63, 64, 213 217, 219, 569, 578. See also Rent control
   choke, 37, 39, 65, 113, 125, 126, 143, 578, 581
   competitive, 165, 174, 175, 182
   demand. See Demand price
   discriminatory. See Discrimination, price
   elasticity of demand, 132 136, 151, 152, 153, 573, 574
     for opium, 133 134
   elasticity of supply, 195
   effect. See Demand; Inputs
   faculty offices, 18 19
   floors, 46 49, 61, 63, 219, 569
     buyer of last resort, 48
   freeze, 46, 216, 217, 219
   gross, 39 43, 44, 61, 62, 63, 208 209, 569, 570
Price (cont.)
   guiding production, 19
   income effect of price change. See Income
   interest rate interpreted as price, 456 458
   and Marginal Revenue, 167 168
   monopoly, 222 227
   net, 39 41, 42 43, 44, 61, 62, 569, 570
   numeraire, 94
   public goods, 519, 520 521
   and quality, 261 262
   quantity solution, 222 226, 228, 233
   ratio of exchange, 29, 101 102
   rigidity, 301 302
   substitution effect of price change, 115 118, 123, 124, 125
   supply. See Supply price
   willingness to pay, 19
Price Expansion Path (PEP), 112 115, 123, 124, 125, 126, 380, 381, 572
Price of rice and price of slaves, 346 347
Price supports, 48 49
   agriculture, 48 49
   parity, 48
   surplus, 48
   productive or redistributive, 542 543
Price-taker, 182, 222, 253
Principal-agent problem, 385 386, 387, 403
Prisoners’ Dilemma. See Game Theory
Prisoners of war, 102 103, 111
Producer Subsidy Equivalents (PSE’s). See Subsidy
Producer Surplus, 203 207, 217, 219
   monopoly, 232 236, 253, 508, 531 532, 578
   quota, 209 212
   rent, 215, 402, 405
   tax, 208 209, 218
Product market, 25, 191 215, 568
Product quality, 258 265, 275 276, 580, 581
   shopping hours in Quebec, 261 262
Product variety, 266 275, 276, 580. See also Variety
   customization, 275
   linear versus circular preferences, 266
   monopolistic competition, 270 274
   and religion, 267 268
   under monopoly, 268 270
Production
   as an economic activity, 22 23, 24, 25
   efficiency conditions, 506 508. See also Firm; Competition; monopoly
   intertemporal. See Investment
Production function. See also Average Product; Input; Marginal Product
   Cobb Douglas, 353 354, 374
   and exchange, 423 430
   isoquant, 350, 355, 373
   Law of diminishing returns, 99, 340 343
   multiple inputs, 350 361
   single input, 340 349
   to cost function, 343 345
Production Optimum Condition   Tangency, 426
Production-Possibility Curve (PPC), 99, 423 424, 449, 588
Professors and publications, 53 54, 64
Profit
   accounting, 160 173, 187, 201, 202, 234
   defined, 160
   economic, 160, 164, 186, 187, 575
   maximum for competitive firm, 165 175, 186
   maximum for monopoly, 222 231, 253, 254
Prohibition, 43 44, 532
Property, 18, 25, 593
Public choice, 538 563
   conflict and cooperation, 550 563
   cycling paradox, 545 546
   log-rolling, 544 545, 563, 564, 595
     in U.S. Congress, 545
   majority and minority, 544 545
   median voter, 546 548, 550, 564
   political competition, 539 541, 564
   special interests, 541 543
   voting, 543 550
Public goods, 518 529, 592
   efficient provision, 333, 518 521, 592
   game theory, 525 529
   information, 323 324, 331, 333, 584
   Prisoners’ Dilemma, 282 283, 526
   voluntary provision, 521 525
   weakest link versus best shot, 525 529
     Alliances, 405, 528 529
Publications
   and professors, 53 54, 64
Publisher. See Author versus publisher

Quality of product. See Product quality
Quantity, 28 32, 36 39, 40 41, 44 45, 46 48, 50 53, 54 56, 61, 62, 63, 65, 569, 570
   competition, 289 293, 297 298, 304
   discount, 64
   gross and net, 44 45
Quotas, 209 212, 215, 217, 244 246. See also Imports and exports; Supply
   fishery, 517 518
Qwerty. See Networks and network goods

Racetrack Betting. See Betting
Raid or Trade. See Conflict
Ransom, should you pay? 561 563
Rate of return (ROR), 398 402, 405, 477, 484, 491. See also Interest rate
   market, 164
   Rule, 475 479, 485, 491
   stocks, 482 484, 485
   Treasury securities, 482
Rationality, 9 12, 23 24, 26, 567, 568 569. See also Selfishness
   criminals, 16 17
   drivers, 10, 568
   economics students. See Selfishness
   international conflict, 553 554
   malingering, 11
Rationing, 19, 144 151, 209, 451
   coupon, 144 146, 152, 219, 451, 574, 577 578, 579, 589
   point, 146 149, 152
   waiting time, 150 151, 153, 219
   wartime, 144 148, 149 150, 152, 154
Rats, 106 107
Redistribution of income, 540, 565, 595
   agriculture, 542 543
Region of Mutual Advantage, 411 412, 414, 448, 501 502, 552, 553. See also Edgeworth box
   Regional Specialization in the United States, 429 430
Regulation
   Monopoly, 234 238, 253, 254
Relatedness, 86 89
Religion: the Value of Variety, 267 268
Rent control, 213 215, 218, 543. See also Price, ceilings
Rent, economic, 402 403, 404, 586
   Producer Surplus, 402, 405
Rent-seeking, 234, 253, 529 532, 533, 534, 535, 551, 552, 565. See also Appropriative activity
   in state capitals, 532 533
Reproductive success, 76 77, 87. See also Brides
Resources, 22, 59, 343, 349, 397 399, 404, 430, 529, 535, 589, 593
   changes in, 33
   exhaustible. See Ecologist, economist, and statistician
   owners/suppliers, 49, 158, 160, 186, 376 385, 403, 404, 405, 406, 568, 586, 592
   specialized, 179 180, 576, 577, 585
   supply to market, 375 397, 403, 404. See also factor market
Restaurant hygiene, 322 323
Restriction of Access, 517 518
   Rising wage-rate inequality, 392 393, 541 543. See also Sources of growing wage inequality
Retirement, 335, 472, 511 512
   and decisions, 383 384
Returns to scale, 250, 327, 371, 374
   constant, 218, 354, 372
   decreasing, 250, 352, 353 354, 372
   increasing, 250, 352, 354, 371
Revenue
   Average. See Average revenue (AR)
   Marginal. See Marginal Revenue (MR)
   Total, 50 53, 55, 63, 160, 165, 168, 222 223, 224, 228, 269, 357 358, 385, 575
   Risk
     aversion, 309 312, 314 316, 332 333, 334, 335, 490, 491, 583
     and executive stock options, 315 316
     and return, 482, 505
   Capital Asset Pricing Model (CAPM), 485
   and discount rates, 486
   premium, 310 312, 334, 583
   and return, 164, 483
   variability, 334, 335, 482, 484 486, 490, 583
Risk-taking, 13
Royal Dutch Shell, 247

Salaries, various professions, 8
San Francisco housing crises, 213
Saving. See also Investment
   borrowing-lending equilibrium, 459 461
   double taxation, 461 464
   growth versus investment: international comparisons, 467 468
   and investment, xv, 456, 464 468, 490, 492, 493
   scholarships and, 463 464
   social security, 472 473, 492
Scale diseconomies. See Diseconomies of scale; Returns to scale
Scale economies. See also Economies of scale; Returns to scale
   in electric power distribution, 166 167, 188
   nuclear versus fossil fuels, 181 182
   and the survivor principle, 202 203
Scale Expansion Path (SEP), 355 358
Scarcity, xiii, 22 23, 144, 213, 550
   and Prices in Medieval Winchester, 32
Scholarships and Saving, 463 464
Scientists, 392
Securities, 456, 482, 485, 486. See also Stocks
Self-interest, 9, 12 16, 19 20, 23 24, 25, 304, 506 508, 539, 550, 568
Selfishness, 24
   economics professors, 15 16
   economics students, 14 15
Separation Theorem, 468 469, 492, 590
Services, 22, 24, 259, 260 261, 276, 398 399, 404, 568, 579, 580
Share-cropping and royalties, 159, 230
Shares. See Stocks
Shipping, 238
Shopping hours in Quebec, 261 262
Short-run
   costs, 176 180, 199.
     average (SRAC), 176, 177, 178, 179, 181, 186, 187
     marginal (SRMC), 176, 178, 181, 187, 189, 195 196, 198, 217, 576
     total (SRTC), 176, 177 178, 186, 196
   shutdown, 172 173, 219
   supply, 192, 194, 195 199, 214, 218, 219
Shortage, 6, 46 48, 213 217, 219, 425. See also Price, ceilings
Shutdown, 172 173
Signalling, 389 390
Signals and Handicaps, 390
Slaves, 18, 346 347, 399 400, 405, 587
Smart ants, 100. See also Animals
Smog, 509, 513
Sniping, 446 447. See also eBay versus Amazon
Social science
   division of labor and, 6
   economics as, 4 9
   economics techniques and, 9
   equilibrium, 23, 28, 569
   preferences and self-interest, 12 13, 23, 24
Social Security, 595
   a good deal?, 472 473, 492
   incentive to work, 382 383
   retirement, 383 384
Sorting effect, 388
Sources of growing wage inequality, 392 394
Special interests
Specialization, 179 180, 578, 588, 589
   in production, 218, 423, 428 429, 431, 433, 440, 448 449
   Regional in United States, 429 430
Stackelberg
   leader, 293, 294, 295, 306
   solution, 229, 292 293, 294. See also Duopoly
Standard Oil, 247
   and John Rockefeller, 294 295
Stepmothers, 87 88
Stock exchange. See New York Stock Exchange
Stockholders. See Corporation, Ownership and control
Stocks
   Capital Asset Pricing Model (CAPM), 485
   Costs of trading   NYSE versus NASDAQ, 432 433
   market. See NASDAQ; NYSE
   option, 164, 315 316, 575
   portfolio, 83, 163, 483, 485
   price, 11 12, 161 163, 164, 315 316, 485, 583, 588
   rate of return, 164, 482 483, 485
   takeovers, 161 163
Storage, 34, 48, 183, 401
Strategies. See Game theory
Strawberries, 33 34, 62. See also Agriculture
Subsidy, 48, 58, 62, 123, 219, 439, 478, 510, 538, 541 543, 545, 573, 578, 580
   cross subsidization, 237
   Producer Subsidy Equivalents (PSEs), 542 543
   versus voucher, 120 122, 124, 125
Substitutes, 82 83, 104, 105, 118, 123, 124, 125, 126, 573, 574. See also Complementary and anticomplementarity
   and complements, 104 107
   and demand elasticity, 136 137, 140 142, 143, 152, 154, 528
Substitution Balance Equation, 101 102, 103 104, 107, 109, 112, 115, 123, 124, 145, 572
Substitution effect, 404, 406, 463, 586, 587
   price change, 115 118, 123, 124, 125, 142, 380 381, 403, 405. See also Hicks decomposition
Substitution, Marginal Rate of (MRS). See Marginal Rate of Substitution
Superior goods. See Goods
Supply. See also Labor supply
   aggregate full, 419 420, 428
   changes in, 30 35
   choke price, 37, 39, 65, 578
   competitive firm, 41, 192 195, 200, 217, 218, 577
   curve, 36, 61, 62, 569, 570, 579, 586
   elasticity, 195, 577
   equation, 36, 37 38, 45
   industry, 193, 194, 195, 198, 200, 217, 218, 577
   interdiction, 43 46, 63
   long-run, 195 199, 214 215, 218
   market, 192 195, 390 391
   new import source, 38 39, 65
   price, 204
   quota, 209 210, 215
   shift in, 31 35, 40, 42 43, 62, 206 207, 569, 570, 587
   short-run, 192 199, 214 215, 218
   transaction, 29 30, 417 420, 427 430, 569, 588
Supply and Demand. See also Demand; Exchange; Supply
   algebra, 36 38
   diagram, 29, 36, 62, 588
   equilibrium, 28 49
   exchange, 416 423, 436, 438 439
   imports and exports, 38 39, 65, 210 212
   taxes, 39 43
   versus transaction, 418, 427 430, 451
   the Water-Diamond Paradox, 205 206
   with production, 391 392, 404, 426, 428
Suppression of Inventions, 263 265, 581
Surplus, Consumer. See Consumer Surplus
Surplus, Producer. See Producer Surplus
Survivorship, 201 203
   Survivor principle, 202 203. See also Economics of scale
Sweden
   concentration and market prices, 303

Takeovers, 161 162, 164
Tariff. See Imports and exports
Tastes, 12 13. See also Preferences
   changes in, 13, 32, 125, 567, 587
   for innovation, 89 90
Taxes and Taxation
   beer and drinking, 13, 41 42
   consumption, 462 463
   double taxation of saving, 461 464
   effect on Consumer and Producer Surplus, 207 217, 218, 578
   effect on price, 39 46, 61, 62, 63, 207 217, 570
   and efficiency, 207 217, 218, 219, 578
   excess burden, 510 511. See also United Kingdom
   and externalities, 510, 593
   gasoline, 219, 510, 511, 535, 581
   income, 22, 25, 58 59, 405, 406, 462 463, 493, 587
   per-unit tax, 39 42, 62, 65, 126, 277, 433 434
   proportionate tax, 42 43, 126
   racetrack betting, 230 231
   sin taxes, 44, 510, 511 512, 535
   single tax, 403, 406
   Social Security taxes. See Social Security
   take-away tax, 44 46
   on transactions, 39 46, 61, 207 217, 418, 431, 589
   war, 493, 510, 591
Tea versus coffee, 102 103
Technology, 391
   changes in, 33, 89
   digital. See Napster story
Time
   constraint. See Gasoline
   consumption choices under pure exchange, 459 464
   economics of, 455 488
   endowment, 207, 487, 488 489, 491
   production and consumption over time. See Saving; Investment
   preference, 468 469, 487 488, 490 491, 492, 493, 591
   productivity, 487, 489 490, 493, 591
   rationing. See Gasoline
Tobacco. See also Agriculture; Alcohol, 130 131
Tort awards, 541
Total Cost, 56 57, 63, 160, 165 172, 187, 188, 575
   long-run (LRTC). See Long-run
   short-run (SRTC). See Short-run
   variable (TVC), 171 172, 344 345
Trade. See Exchange
Trade embargo
   Jefferson’s, 412 413
Trade unions. See Cartels; Labor
Transaction costs, 179 180, 186, 409 446, 468, 484, 542, 576, 588 589
   lump-sum, 437 440, 448, 450, 590
   and money, 440 443
   NYSE versus NASDAQ, 432 433
   proportional, 433 437, 438 439, 448, 450
Transaction demand and supply, 418 420, 426, 427 428, 439, 450, 588. See also Demand Supply
Transactions, 16 18, 24. See also Market interactions
   mutual and voluntary, 18, 24, 208, 538, 568
   involuntary, 18, 538
   taxes on, 39 43, 207 217, 418, 431, 510
Transfers, 208 210, 211, 212, 217, 218, 232 233, 234
Transitivity
   age and, 70 71
   Axiom of, 70, 71 72, 73, 90, 92
Triple Alliance, 528 529
Triple Entente, 528 529

Ultrasuperior good. See Goods
Uncertainty, 307 329, 551
   and ignorance, 16
Unemployment, 23, 25, 26, 28
   and homeownership, 439 440
   minimum wage, 21, 366 369, 373, 383
Unionization in private and public sectors, 395 396
United Kingdom
   Black Death, 359 360
   bread, demand for, 118. See also Giffen good
   functional distribution of income, 397
   home ownership and unemployment, 439 440
   Income sources of the wealthy, 397 398
   interest rates, 481, 490
   Lotto and consumer surplus, 205
   median voter, 548
   minimum wage, 369, 370
   taxation, 510 511
   trade embargo, 412 413
   Weakest-link and best-shot, 528 529
United States
   Civil War, 399 400, 413 414
   Congress, 545
   customization in U.S. economy, 275
   regional specialization, 429 430
   slavery, 346 347, 399 400
Used-car prices, 258. See also Lemons problem
Utilitarianism, 500
Utility, 77, 90, 91, 571, 572
   cardinal versus ordinal, 73 77, 91, 571. See also Cardinal utility; Ordinal utility
   of commodity baskets, 77 78, 90
   contours, 78, 79, 571
   differences, 73, 90
   expected, 308 310, 332
   indifference curves, 78, 80, 90, 91, 571
   marginal. See Marginal Utility
   measurement, 73 77, 78, 90
   and preference, 69 88
   satiation, 83, 84
   Total, 74, 75, 78, 91

Value of the Average Product (VAP), 530
Value of the Marginal Product (VMP), 346 349, 361, 363, 373, 400, 530
Value, marginal. See Marginal Value
Variable Cost (VC), 165, 171, 186, 343 344, 575
   Average (AVC). See Average Cost (AC)
   Separable, 183 184
   Total (TVC). See Total Cost
Variety, 266 275, 276, 329, 580. See also Product variety
   and religion, 267 268
Voluntary associations, 22
Voting, 543 550, 565. See also Public choice
   turnout, 544
Voucher, 120 122, 123 124, 125, 572, 573. See also Education; Subsidy
   Do vouchers really help? 122

Wages, 376 391, 586, 587. See also Labor, Inputs, supply; Labor, minimum wage
War. See also Conflict
   American Civil War, 399 400, 413 414, 554
   Raid or Trade? 554 555
   rationality of, 553 554
   rationing, 144 147, 148, 149 150, 154
Water-diamond paradox, 205 206
Water supply, 182 183. See also Peak versus off-peak operation
Weakest-link versus best-shot, 528 529
   public goods, 525 527, 528
Wealth, 459, 460 461, 466, 469, 490 491, 492, 527, 587
Welfare, 28, 378, 382 385, 406, 587
Welfare economics, 497 532. See also Coase Theorem; Externalities; Pareto Optimality; Public Goods
Winner-take-all markets, 394
Women, 572
   dowries, 35
   labor-force participation, 34 35
   marriage market, 34 35, 594
   suffrage, 539 540

Zero-profit Theorem, 201 203, 433

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