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Summary Principles of Economics - N. Gregory Mankiw
Introductory Macroeconomics (University of Queensland)
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Summary
Principles of Economics
N. Gregory Mankiw
6th Revised Edition
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Contents
1. Ten principles of Economics ................................................................................................................ 6
1.1. How people make decisions ......................................................................................................... 6
1.2. How people interact ..................................................................................................................... 7
1.3. How the Economy as a whole works ............................................................................................ 8
2. Thinking like an Economist ................................................................................................................ 10
2.1. The economist as a Scientist ...................................................................................................... 10
2.2. The economist as a policy advisor .............................................................................................. 13
3. Interdependence and the gains from Trade ..................................................................................... 14
3.1. A parable for the modern Economy ........................................................................................... 14
3.2. Comparative advantage: The driving force of Specialization ..................................................... 15
4. The market forces of supply and demand......................................................................................... 18
4.1. Markets and competition ........................................................................................................... 19
4.2. Demand ...................................................................................................................................... 20
4.3. Supply ......................................................................................................................................... 23
4.4. Supply and demand together ..................................................................................................... 25
5. Elasticity and its Applications ............................................................................................................ 28
5.1. The Elasticity of Demand ............................................................................................................ 29
5.2. The Elasticity of Supply ............................................................................................................... 32
6. Supply, Demand and government policies ........................................................................................ 34
6.1. Control on prices ........................................................................................................................ 35
6.2. Taxes ........................................................................................................................................... 38
7. Consumers, Producers, and the Efficiency of Markets ..................................................................... 41
7.1. Consumer surplus ....................................................................................................................... 42
7.2. Producer surplus ........................................................................................................................ 44
7.3. Market efficiency........................................................................................................................ 45
8. Application: The costs of taxation ..................................................................................................... 47
8.1. The Deadweight loss of Taxation ............................................................................................... 47
8.2. The determinants of the deadweight loss ................................................................................. 49
8.3. Deadweight loss and tax revenue as taxes vary ......................................................................... 50
9. Application: International trade ........................................................................................................ 52
9.1. The determinants of trade ......................................................................................................... 52
9.2. The winners and losers from trade ............................................................................................ 53
9.3. The arguments for restricting trade ........................................................................................... 56
10. Externalities ..................................................................................................................................... 58
10.1. Externalities and market inefficiency ....................................................................................... 58
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10.2. Public policies towards externalities ........................................................................................ 60
10.3. Private solutions to externalities.............................................................................................. 61
11. Public goods and common resources.............................................................................................. 62
11.1. The different kinds of goods .................................................................................................... 62
11.2. Public goods ............................................................................................................................. 64
11.3. Common resources .................................................................................................................. 65
12. The design of the tax system ........................................................................................................... 67
12.1. A financial overview of the US government ............................................................................. 68
12.2. Taxes and efficieny ................................................................................................................... 68
12.3. Taxes and equity....................................................................................................................... 69
13. The costs of production ................................................................................................................... 72
13.1. What are costs? ........................................................................................................................ 73
13.2. Production and costs ................................................................................................................ 74
13.3. The various measures of costs ................................................................................................. 75
13.4. Costs in the short run and in the long run ............................................................................... 77
14. Firms in competitive markets .......................................................................................................... 78
14.1. What is a competitive market? ................................................................................................ 79
14.2. Profit maximization and the competitive firm's supply ........................................................... 80
14.3. The supply curve in a competitive market ............................................................................... 82
15. Monopoly ........................................................................................................................................ 84
15.1. Why monopolies arise .............................................................................................................. 85
15.2. How monopolies make production and pricing ....................................................................... 86
15.3. The welfare cost of monopolies ............................................................................................... 87
15.4. Price discrimination .................................................................................................................. 88
15.5. Public policy toward monopolies ............................................................................................. 90
16. Monopolistic competition ............................................................................................................... 92
16.1. Between monopoly and perfect competition .......................................................................... 92
16.2. Competition with differentiated products ............................................................................... 93
16.3. Advertising................................................................................................................................ 96
17. Oligopoly.......................................................................................................................................... 97
17.1. Markets with only a few sellers................................................................................................ 97
17.2. The economics of cooperation ............................................................................................... 100
17.3. Public policy toward oligopolies ............................................................................................. 102
18. The markets for the factors of production .................................................................................... 104
18.1. The demand for labor............................................................................................................. 104
18.2. The supply of labor ................................................................................................................. 106
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Summary Principles of Economics - N. Gregory Mankiw
Introductory Macroeconomics (University of Queensland)
Distributing prohibited | Downloaded by Havishma Haranath ()
, lOMoARcPSD|1709270
Summary
Principles of Economics
N. Gregory Mankiw
6th Revised Edition
Distributing prohibited | Downloaded by Havishma Haranath ()
, lOMoARcPSD|1709270
Contents
1. Ten principles of Economics ................................................................................................................ 6
1.1. How people make decisions ......................................................................................................... 6
1.2. How people interact ..................................................................................................................... 7
1.3. How the Economy as a whole works ............................................................................................ 8
2. Thinking like an Economist ................................................................................................................ 10
2.1. The economist as a Scientist ...................................................................................................... 10
2.2. The economist as a policy advisor .............................................................................................. 13
3. Interdependence and the gains from Trade ..................................................................................... 14
3.1. A parable for the modern Economy ........................................................................................... 14
3.2. Comparative advantage: The driving force of Specialization ..................................................... 15
4. The market forces of supply and demand......................................................................................... 18
4.1. Markets and competition ........................................................................................................... 19
4.2. Demand ...................................................................................................................................... 20
4.3. Supply ......................................................................................................................................... 23
4.4. Supply and demand together ..................................................................................................... 25
5. Elasticity and its Applications ............................................................................................................ 28
5.1. The Elasticity of Demand ............................................................................................................ 29
5.2. The Elasticity of Supply ............................................................................................................... 32
6. Supply, Demand and government policies ........................................................................................ 34
6.1. Control on prices ........................................................................................................................ 35
6.2. Taxes ........................................................................................................................................... 38
7. Consumers, Producers, and the Efficiency of Markets ..................................................................... 41
7.1. Consumer surplus ....................................................................................................................... 42
7.2. Producer surplus ........................................................................................................................ 44
7.3. Market efficiency........................................................................................................................ 45
8. Application: The costs of taxation ..................................................................................................... 47
8.1. The Deadweight loss of Taxation ............................................................................................... 47
8.2. The determinants of the deadweight loss ................................................................................. 49
8.3. Deadweight loss and tax revenue as taxes vary ......................................................................... 50
9. Application: International trade ........................................................................................................ 52
9.1. The determinants of trade ......................................................................................................... 52
9.2. The winners and losers from trade ............................................................................................ 53
9.3. The arguments for restricting trade ........................................................................................... 56
10. Externalities ..................................................................................................................................... 58
10.1. Externalities and market inefficiency ....................................................................................... 58
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10.2. Public policies towards externalities ........................................................................................ 60
10.3. Private solutions to externalities.............................................................................................. 61
11. Public goods and common resources.............................................................................................. 62
11.1. The different kinds of goods .................................................................................................... 62
11.2. Public goods ............................................................................................................................. 64
11.3. Common resources .................................................................................................................. 65
12. The design of the tax system ........................................................................................................... 67
12.1. A financial overview of the US government ............................................................................. 68
12.2. Taxes and efficieny ................................................................................................................... 68
12.3. Taxes and equity....................................................................................................................... 69
13. The costs of production ................................................................................................................... 72
13.1. What are costs? ........................................................................................................................ 73
13.2. Production and costs ................................................................................................................ 74
13.3. The various measures of costs ................................................................................................. 75
13.4. Costs in the short run and in the long run ............................................................................... 77
14. Firms in competitive markets .......................................................................................................... 78
14.1. What is a competitive market? ................................................................................................ 79
14.2. Profit maximization and the competitive firm's supply ........................................................... 80
14.3. The supply curve in a competitive market ............................................................................... 82
15. Monopoly ........................................................................................................................................ 84
15.1. Why monopolies arise .............................................................................................................. 85
15.2. How monopolies make production and pricing ....................................................................... 86
15.3. The welfare cost of monopolies ............................................................................................... 87
15.4. Price discrimination .................................................................................................................. 88
15.5. Public policy toward monopolies ............................................................................................. 90
16. Monopolistic competition ............................................................................................................... 92
16.1. Between monopoly and perfect competition .......................................................................... 92
16.2. Competition with differentiated products ............................................................................... 93
16.3. Advertising................................................................................................................................ 96
17. Oligopoly.......................................................................................................................................... 97
17.1. Markets with only a few sellers................................................................................................ 97
17.2. The economics of cooperation ............................................................................................... 100
17.3. Public policy toward oligopolies ............................................................................................. 102
18. The markets for the factors of production .................................................................................... 104
18.1. The demand for labor............................................................................................................. 104
18.2. The supply of labor ................................................................................................................. 106
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