Eric Chiang | Jose Vazquez

Table of Contents


Principles of Microeconomics

    Introduction to Economics

  1. Exploring Economics
    1. Overview
    2. Scarcity and the Economics Problem
    3. Microeconomics versus Macroeconomics
    4. Summary
  2. Key Ideas of Economics
    1. Overview
    2. Opportunity Cost
    3. The Net Marginal Benefits Principle
    4. The Invisible Hand Principle
    5. Trade
    6. Benefits of Studying in Groups
    7. Summary
  3. Production and Trade

  4. Economic Models and Production Possibilities
    1. Overview
    2. Economic Modeling
    3. The Production Possibilities Frontier
    4. The PPF and Opportunity Costs
    5. Changes to the PPF
    6. Tradeoff between Security and Privacy
    7. Summary
  5. Trade and Comparative Advantage
    1. Overview
    2. Production Possibilities and Absolute Advantage
    3. Absolute versus Comparative Advantage
    4. Specialization and Trade
    5. From Countries to Individuals
    6. Why Are Tablets Designed in the US and Assembled in China?
    7. Summary
  6. Supply and Demand Part I

  7. Basics of Supply and Demand
    1. Overview
    2. A Market Example
    3. The Effects of a Shortage
    4. The Effects of a Surplus
    5. The Equilibrium Price
    6. Using the Equilibrium Price for Forecasting
    7. What Happened to the American Farmer?
    8. Summary
  8. Demand
    1. Overview
    2. The Demand Curve
    3. The Law of Demand: Movements along the Demand Curve
    4. Buyer’s Preferences and Market Demand
    5. Income and Prices of Related Goods
    6. Why Are There So Many Different Prices for Soda?
    7. Summary
  9. Supply and Demand Part II

  10. Supply
    1. Overview
    2. The Supply Curve
    3. The Low Hanging Fruit Principle: Movements along the Supply Curve
    4. Changes in Price of the Inputs and the Supply Curve
    5. Changes in Technology and the Supply Curve
    6. Why Are “Cash-For-Gold” Stores Sprouting Up All Over the Country?
    7. Summary
  11. Market Equilibrium
    1. Overview
    2. The Equilibrium Price: Introduction
    3. A Shortage of Supply
    4. The Equilibrium Price: Conclusion
    5. Forecasting Price and Quantity in an Economy
    6. Why Do Home Prices Vary So Much Between Different Cities?
    7. Summary
  12. Market Efficiency and Government

  13. Consumer and Producer Surplus
    1. Overview
    2. Consumer Surplus
    3. Consumer Surplus and the Demand Curve
    4. Producer Surplus
    5. Producer Surplus and the Supply Curve
    6. Total Surplus and the Efficiency of Markets
    7. Do We Need those Silly Products?
    8. Summary
  14. Price Ceilings and Price Floors
    1. Overview
    2. Price Disruptions at a Glance
    3. Price Ceilings
    4. Price Floors
    5. Why Is It So Hard to Find a Taxi Cab during Rush Hour?
    6. Summary
  15. Elasticity

  16. Elasticity of Demand
    1. Overview
    2. Percentage Changes
    3. Price Elasticity of Demand: Definition
    4. Classifying Different Price Elasticities of Demand
    5. Price Elasticity of Demand and Revenue
    6. Determinants of Price Elasticity of Demand
    7. Price Elasticities of Demand and the Linear Demand Curve
    8. Why is it so difficult to win the war against drugs?
    9. Summary
  17. Other Elasticities
    1. Overview
    2. The Income Elasticity of Demand
    3. The Cross Elasticity of Demand
    4. The Price Elasticity of Supply
    5. How stores decide which discounted items to highlight in their store fronts?
    6. Summary
  18. Taxes
    1. Overview
    2. Two Lessons about Excise Tax
    3. Excise Taxes and the Supply and Demand Model
    4. Excise Taxes and Elasticity
    5. Application: Why Are Taxes on Wireless Services So High?
    6. Summary
  19. Competitive Output

  20. Budget Line
    1. Overview
    2. The Budget Constraint
    3. Changes in the Budget Line
    4. Utility and Assumptions about Consumer Preferences
    5. Utility Maximization
    6. Deriving a Demand Curve
    7. Application: Why Do So Many Gift Cards Go Unused?
    8. Summary
  21. Indifference Curves
    1. Overview
    2. Two Assumptions about Indifference Curves
    3. Indifference Curves and Diminishing Marginal Utility
    4. Consumer Choice
    5. Application: Why Do Many Stores Offer Loyalty Cards?
    6. Summary
  22. Production and Costs

  23. Firm, Production, and Profits
    1. Overview
    2. The Firm and Economic Profits
    3. Production at a Glance
    4. The Production Function
    5. Diminishing Marginal Returns to the Variable Input
    6. Application: What is the Best Way to Allocate One's Study Time?
    7. Summary
  24. Cost Analysis
    1. Overview
    2. Fixed versus Variable Costs
    3. Marginal Costs
    4. Average Variable Costs of Production
    5. Cost Curves
    6. Average Costs and Economies of Scale
    7. Application: Why are Car Companies Investing So Much to
    8. Produce Electric Cars?
    9. Summary
  25. Competitive Output

  26. Competition in the Short Run
    1. Overview
    2. Perfect Competition
    3. The Profit Maximization Rule: MR=MC
    4. Profit Maximization with Diagrams
    5. Perfect Competition, Price, and Marginal Revenue
    6. The Short-run Decision: P = AVC
    7. Application: Why Do Hotels Charge Regular Room rates Late at Night even when Rooms Will Likely End Up Unoccupied?
    8. Summary
  27. Competition in the Long Run
    1. Overview
    2. The Long-run Output Decision
    3. A Graphical Model of Long-run Equilibrium
    4. The Long-Run Supply Curve
    5. Increasing, Constant, and Decreasing Costs Industries
    6. Application: How Have Personal Computers Become So Powerful and Inexpensive Over a Relatively Short Period of Time?
    7. Summary
  28. Market Power

  29. Monopoly
    1. Overview
    2. Market Structures
    3. How a Monopolist Maximizes Profits
    4. The Social Costs of a Monopoly
    5. A Diagram for the Monopoly Situation
    6. Why Do We Have Monopolies?
    7. Why Are Textbooks so Expensive?
    8. Summary
  30. Price Discrimination
    1. Overview
    2. Why Does Price Discrimination Increase Firm Profits?
    3. Not All Price Discrimination is the Same
    4. The Social Benefit of Price Discrimination
    5. Price Discrimination and Social Welfare
    6. Application: Why Do Airlines Charge Different Prices for the Same Seats?
    7. Summary
  31. Monopolistic Competition and Oligopoly

  32. Monopolistic Competition
    1. Overview
    2. What Is Monopolistic Competition?
    3. Sources of Product Differentiation
    4. Output in Monopolistic Competition
    5. Monopolistic Competition and Economic Efficiency
    6. Application: Why Are There So Many Brands of Coffee?
    7. Summary
  33. Oligopoly and Game Theory
    1. Overview
    2. A Parable of Oligopoly
    3. Nash Equilibrium
    4. Nash Equilibrium and Game Theory
    5. The Prisoners’ Dilemma
    6. Overcoming the Prisoner’s Dilemma
    7. Application: Why Do Stores Match Prices of its Competitors?
    8. Summary
  34. Factor Markets

  35. Labor Markets
    1. Overview
    2. The Individual Supply for Labor
    3. The Market Supply of Labor
    4. The Demand for Labor
    5. Equilibrium in the Labor Market
    6. Economic Discrimination
    7. Application: How Have Living Standards Increased By So Much?
    8. Summary
  36. Income Distribution
    1. Overview
    2. Measuring Income Inequality: Lorenz Curve and Gini
    3. Coefficient
    4. Causes of Income Inequality
    5. Measuring Poverty
    6. Application: Why Do Cities Exhibit Vast Differences in Income?
    7. Summary
  37. Capital Markets
    1. Overview
    2. Capital and the Interest Rate
    3. How Does the Firm Choose the Optimal Level of Capital?
    4. Present Value Approach
    5. Application: Making Economic Decisions Across Time
    6. Summary
  38. Externalities and Public Goods

  39. Externalities
    1. Overview
    2. Negative and Positive Externalities
    3. Externalities and Market Failure
    4. The Coase Theorem
    5. Governmental Policies
    6. Application: Should Society Strive to Eliminate All Pollution?
    7. Summary
  40. Public Goods
    1. Overview
    2. Not All Goods are the Same
    3. Public Goods and the Free Rider Problem
    4. How Many Public Goods Should be Provided?
    5. Common Resources and the Tragedy of the Commons
    6. Application: Why Are Police and Fire Protection Services Provided by the Government?
    7. Summary

Principles of Macroeconomics

    Introduction to Economics

  1. Exploring Economics
    1. Overview
    2. Scarcity and the Economics Problem
    3. Microeconomics versus Macroeconomics
    4. Summary
  2. Key Ideas of Economics
    1. Overview
    2. Opportunity Cost
    3. The Net Marginal Benefits Principle
    4. The Invisible Hand Principle
    5. Trade
    6. Benefits of Studying in Groups
    7. Summary
  3. Production and Trade

  4. Economic Models and Production Possibilities
    1. Overview
    2. Economic Modeling
    3. The Production Possibilities Frontier
    4. The PPF and Opportunity Costs
    5. Changes to the PPF
    6. Tradeoff between Security and Privacy
    7. Summary
  5. Trade and Comparative Advantage
    1. Overview
    2. Production Possibilities and Absolute Advantage
    3. Absolute versus Comparative Advantage
    4. Specialization and Trade
    5. From Countries to Individuals
    6. Why Are Tablets Designed in the US and Assembled in China?
    7. Summary
  6. Supply and Demand Part I

  7. Basics of Supply and Demand
    1. Overview
    2. A Market Example
    3. The Effects of a Shortage
    4. The Effects of a Surplus
    5. The Equilibrium Price
    6. Using the Equilibrium Price for Forecasting
    7. What Happened to the American Farmer?
    8. Summary
  8. Demand
    1. Overview
    2. The Demand Curve
    3. The Law of Demand: Movements along the Demand Curve
    4. Buyer’s Preferences and Market Demand
    5. Income and Prices of Related Goods
    6. Why Are There So Many Different Prices for Soda?
    7. Summary
  9. Supply and Demand Part II

  10. Supply
    1. Overview
    2. The Supply Curve
    3. The Low Hanging Fruit Principle: Movements along the Supply Curve
    4. Changes in Price of the Inputs and the Supply Curve
    5. Changes in Technology and the Supply Curve
    6. Why Are “Cash-For-Gold” Stores Sprouting Up All Over the Country?
    7. Summary
  11. Market Equilibrium
    1. Overview
    2. The Equilibrium Price: Introduction
    3. A Shortage of Supply
    4. The Equilibrium Price: Conclusion
    5. Forecasting Price and Quantity in an Economy
    6. Why Do Home Prices Vary So Much Between Different Cities?
    7. Summary
  12. Market Efficiency and Government

  13. Consumer and Producer Surplus
    1. Overview
    2. Consumer Surplus
    3. Consumer Surplus and the Demand Curve
    4. Producer Surplus
    5. Producer Surplus and the Supply Curve
    6. Total Surplus and the Efficiency of Markets
    7. Do We Need those Silly Products?
    8. Summary
  14. Price Ceilings and Price Floors
    1. Overview
    2. Price Disruptions at a Glance
    3. Price Ceilings
    4. Price Floors
    5. Why Is It So Hard to Find a Taxi Cab during Rush Hour?
    6. Summary
  15. Introduction to Macroeconomics

  16. Introduction to Macroeconomics
    1. Overview
    2. Macroeconomics vs. Microeconomics
    3. Macroeconomic Philosophies
    4. Macroeconomic Policy
    5. Application: How can we tell when recessions begin and end?
    6. Summary
  17. National Income Accounting
    1. Overview
    2. National Income Accounting and GDP
    3. Expenditure Approach to Measuring GDP
    4. Income Approach to Measuring GDP
    5. GDP and the Standard of Living
    6. Application: Why do countries with the largest total output sometimes have many poor citizens?
    7. Summary
  18. Inflation and Unemployment

  19. Inflation
    1. Overview
    2. Defining Inflation and Its Causes
    3. Measuring Inflation
    4. Nominal vs. Real Values
    5. Changes in Inflation and the Extreme Case of Hyperinflation
    6. Application: Why does getting a raise not necessarily guarantee a higher standard of living?
    7. Summary
  20. Unemployment
    1. Overview
    2. Defining Unemployment and the Labor Force
    3. Calculating Unemployment Rates and Other Measures
    4. Three Types of Unemployment and the Natural Rate
    5. Application: Why doesn’t employment growth always coincide with a decrease in the unemployment rate?
    6. Summary
  21. Economic Growth

  22. Economic Growth Part I
    1. Overview
    2. A Tale of Two Countries
    3. Measuring Economic Growth
    4. Application: Compounding and the Rule of 70
    5. Summary
  23. Economic Growth Part II
    1. Factors of Production
    2. The Production Function
    3. Diminishing Marginal Returns and the Catch-up Effect
    4. Application: How did South Korea achieve this level of spectacular economic growth?
    5. Overview
    6. Summary
  24. Aggregate Demand and Aggregate Supply

  25. Aggregate Expenditures
    1. Overview
    2. Aggregate Expenditures and the Marginal Propensity to Consume
    3. Macroeconomic Equilibrium (The Keynesian Cross)
    4. The Multiplier Effect
    5. Other Types of Spending
    6. Application: Why Do Cities Want to Spend Billions to Host the Olympic Games?
    7. Summary
  26. Aggregate Demand and Aggregate Supply
    1. Overview
    2. Aggregate Demand
    3. Changes in Aggregate Demand
    4. Aggregate Supply Curve
    5. Changes in Aggregate Supply
    6. Macroeconomic Equilibrium
    7. Application: Why Do Natural Disasters Affect Citizens Beyond the Affected Areas?
    8. Summary
  27. Fiscal Policy and Debt

  28. Fiscal Policy
    1. Overview
    2. Fiscal Policy: Taxation and Spending
    3. Discretionary versus Mandatory Spending
    4. Using Fiscal Policy to Correct Macroeconomic Disequilibrium
    5. Criticisms of Fiscal Policy
    6. Application: How Can Government Taxation and Spending Change Without Any Approval?
    7. Summary
  29. Deficits and National Debt
    1. Overview
    2. Deficits and Debt
    3. Financing the National Debt
    4. How Much Debt Is Too Much?
    5. Application: Is the National Debt Out of Control?
    6. Summary
  30. Savings and Investment

  31. The Financial System and the Market for Loanable Funds
    1. Overview
    2. The Market for Loanable Funds
    3. Changes in the Market for Loanable Funds
    4. The Financial System
    5. The Market for Bonds and Stocks
    6. Application: Why Doesn’t the Bond and Stock Markets Move in the Same Direction?
    7. Summary
  32. Saving vs. Consumption
    1. Overview
    2. Saving and Investment
    3. Two Factors Affecting Saving and Investment
    4. Interest Rate Adjustments
    5. Application: Can Saving Too Much Money Be Bad for an Economy?
    6. Summary
  33. Money

  34. Functions of Money
    1. Overview
    2. What Is Money?
    3. The Three Functions of Money
    4. The Nominal vs. Real Value of Money
    5. Application: Why Doesn’t a $100 Trillion Bill Buy Anything?
    6. Summary
  35. Money Creation
    1. Overview
    2. Bank Liabilities, Assets, and the Reserve Ratio
    3. Fractional Reserve Banking and the Creation of Money
    4. The Money Multiplier
    5. Money Leakages
    6. Application: Can a Jar of Coins Generate More Money than the Amount of Coins Deposited?
    7. Summary
  36. Monetary Policy and the FED

  37. Federal Reserve
    1. Overview
    2. The Structure of the Fed
    3. The Three Tools of the Fed
    4. Open Market Operations
    5. Doves vs. Hawks: Balancing Fed Policies
    6. Application: Why Does the World Pay So Much Attention to the Fed’s Actions?
    7. Summary
  38. Monetary Policy
    1. Overview
    2. Expansionary Monetary Policy and Interest Rates
    3. Using Contractionary Monetary Policy to Reduce Inflationary Pressures
    4. Monetary Policy Challenges
    5. Application: How Can Changing Interest Rates Be a More Powerful Tool than Increasing Government Spending and Reducing Taxes?
    6. Summary
  39. The Open Economy

  40. International Trade
    1. Overview
    2. The Importance of Trade
    3. Absolute vs. Comparative Advantage
    4. Winners and Losers with Trade
    5. Trade Protection: Tariffs and Quotas
    6. Application: Why Are Duty-Free Shops Beneficial to Consumers but not to Some Workers?
    7. Summary
  41. Exchange Rates
    1. Overview
    2. Foreign Exchange Markets
    3. Nominal vs. Real Exchange Rates
    4. Purchasing Power Parity
    5. Exchange Rate Fluctuations
    6. Fixed Exchange Rates
    7. Application: How Does the Chinese Government Influence the Value of the U.S. Dollar?
    8. Summary