A different kind of trade-off between equity and efficiency is created by meanstesting.

Taking that job will make the family worse off because it will gain $1,000 in earnings but lose the $2,000 government benefit.

The problem with programs that aid the poor is that they behave like high marginal tax rates on income.

Welfare state programs try to avoid creating a notch.

This is done by setting a sliding scale for benefits so that they fall off gradually as the recipient's income increases.

In the early part of the French Revolution, France had a kind of congress, the National Assembly, in which representatives were seated according to social class: nobles, who liked the way things were, sat on the right; commoners, who wanted big changes, sat on the left.

It is common in political discourse to talk about politicians as being on the right or left.

They don't agree on the size of antipoverty programs in the United States.

You might think that the political debate is only about one thing--how big should government's involvement in income redistribution be?

Political scientists have found that if you rank members of Congress from right to left, you can predict their votes on proposed legislation.

If you believe that the trade-offs of generous benefits and high taxes are very large, you're likely to look less favorably on welfare state programs than if you don't.

The cost to society of pollution from a power plant is low.

Without mal Pigouvian tax on production of the good is equal government intervention, the market produces too to its marginal external cost, yielding lower output and little of the good.

The market to the socially optimal quantity of produc can achieve efficiency at minimum cost if the system of tradable pro ducers is equal to the marginal external benefit.

Positive price leads to higher price than marginal private cost when goods are social cost of an individual's use of a common resource nonrival in consumption The commission act was the first major antitrust law without allowing deadweight loss.

The Sherman Antitrust Act was supposed to clarify pollution in half, what would be the result?

Price fixing was banned by the Sherman Antitrust Act.

Marginal cost pricing can lead to large quantities.

There is a free-rider problem with the information required for average cost pricing.

The marginal social benefit of palm trees has gone down since the 1970s, while the poverty has gone up.

The graph shows that Country A has an advantage in the 150 units of textiles.

Country B has a comparative advantage in textiles, what happens to the production of corn.

An increase in aggregate demand affects real GDP and run equilibrium.

Draw a graph of the loanable and the value of the country's currency on the foreign funds market.

Drug inelasticity is caused by the resources being equally transferred.

Increasing opportunity costs are caused by the fact that the resources are not equally distributed.

Changing the quantity supplied increases opportunity costs.

Marginal revenue is temporarily earning a positive economic profit due to the lower price for the firm.

The marginal revenue is lower than the long-run equilibrium because each firm's out price is different.

The payoff matrix shows the tic of a natural monopoly if it is capable of profits for Alpha andBeta.

marginal cost is the point at which price equals production.

Since the monopoly will earn a high price, it will need a tax.

Alpha has a dominant strategy of charging a low price.

The rental rate is less than the marginal revenue product of capital.

The bakers are paid $75 per day if the total amount spent on labor is equal to the pie.

Despite the existence of externalities, they require each firm to limit emissions to a set solution.

Consumers and lost producers know more about the quality of what they are selling.

If the claim is denied, the insured pays lower premiums.

If the claim is denied, the insured pays higher premiums.

If the claim is honored, the insured pays higher premiums.

Using the data from part (b) and assuming Clark housecleaning industry and Sally's Clean Bowls buys his labor in a perfectly competitive labor showing the long-run equilibrium.

Assume the government imposes a license fee on a housecleaning business.

The short-run impact of this one-time fee on has no external benefits, but the plants in the industry have side-by-side graphs.

Adding a subscript that emits a bad smell can cause nausea and sickness.

If Sally's earns an economic profit, the pigouvian tax brings meat output.

You'll enjoy the story of the Great and Recession in the enrichment module.

The module explains how economists deal with behavior that isn't rational.

Choice offers advice for making good economic decisions and developing sound financial habits, as well as providing interesting background and insights.

The financial markets assist with the transaction when you receive a paycheck, pay a bill, borrow money, or use a credit card.

Banks and mutual funds are used by the financial system to perform these tasks.

Banks are a major part of the econ markets and are necessary to facilitate the flow of funds from lenders to and bond.

The markets that channel private saving into investment spending play in the economy.

Liquid assets in the form of deposits are used by banks and other depository institutions to finance loans.

The depository institution uses those funds to make long-term loans to other borrowers.

Depositary institutions earn profits by converting their short-term deposit liabilities into long-term loans when the lower interest rate paid to depositors and the higher interest rate received from borrowers is different.

The loans made by depository institutions are long-term and can cause liabilities into long-term assets.

The United States has seen a steady increase in shadow banking since 1980.

The maturity transformation function of financial markets can be seen in the diagram.

Financial markets take private savings and inject them into the economy through loans.

The investment that drives economic growth is helped by financial markets.

This underestimates the scale of the 1907 crisis because it doesn't take into account the role of trusts.

Banking crises that involve a large system fail.

The failure of a large number of banks at the same time can occur either because many institutions make the same mistake or because mistakes from one institution spread to others through links in the financial system.

When prices decrease instead of rising, people who borrowed money to purchase the asset end up with a large debt.

Imagine buying a house worth $100,000 and paying for it with a $95,000 mortgage and a $5,000 down payment.

After a few years, investors stop buying houses because of the price increases that they counted on.

Being underwater won't affect you if you stay in your house and make your mortgage payments.

The fall in asset prices from a bursting asset bubble exposes financial institutions to losses that can affect confidence in the financial system as a whole.

An economic downturn can cause people with underwater mortgages to default on them and abandon their Andy Dean Photography/Shutterstock houses rather than paying to sell them.

If the borrowers rience losses that undermine confidence in the financial default on their loans, lenders take possession of the homes and sell system.

Links in the financial system can increase the chances of more bank failures.

The downward spiral in the banking system is reinforced by the decrease in asset prices.

Financial markets are linked to each other by their dependence on the banking system and the value of long-term assets.

A well-developed financial system is a central part of a functioning economy.

Banking crises can easily turn into more widespread financial crises since the banking system provides a lot of liquidity for buyers and sellers of everything from homes and cars to stocks and bonds.

Shadow banks are not subject to the same regulations as depository institutions, so an increase in the number and size of shadow banks can increase the scope and severity of financial crises.

The Great Depression was caused by financial crises that resulted in decreased output and high unemployment.

Recovering from financial crises can take a long time, as they tend to cause sustained economic damage.

Real estate is often an individual's largest asset and decreases in housing prices are significant.

Consumers who become poorer as a result of the decrease in the price of housing respond by reducing their spending to pay off debt and rebuild their assets.

Financial crises can cause a decrease in the effectiveness of monetary policy intended to combat a recession.

During a recession, the Fed decreases the target interest rate in order to increase spending.

Depositors, depository institutions, and borrowers all lose confidence in the system during a financial crisis.

Even very low interest rates may not encourage lending or borrowing in the economy.

The government allows market forces to determine the success or failure of banks.

Governments act as a lender of last resort, guarantee deposits, and provide private credit market financing in order to diminish the effects of banking crises.

When governments act as a lender of last resort, they provide funds to banks that are unable to borrow through private credit markets.

When a banking crisis causes private credit markets to dry up, governments can provide credit to shadow banks and purchase private debt to keep the economy afloat.

A burst housing market bubble, a loss of faith in financial institutions, and an unregulated shadow banking system led to a widespread disruption of financial markets in 2008.

The 2008 financial crisis began in the United States with the collapse of Lehman Brothers.

Shadow banks were encouraged to take risks because it was easy and cheap to borrow money.

New ways to invest the funds they borrowed from short-term credit markets were searched for by the banks.

Lehman Brothers had been borrowing heavily in short-term credit markets and investing in subprime mortgages before the 2008 crisis.

When the housing bubble burst, the large number of defaults caused AIG to collapse.

The start and spread of the financial crisis was not prevented by relaxed regulation of investment banks.

Shadow banks increased their risk taking due to a number of reasons.

Given the importance of the financial system to the economy as a whole, many people thought the government would step in to prevent severe problems.

The large profits earned by shadow banks make it easier for someone else to bear the costs of lack of care or effort.

Economic conditions were good when the high-risk shadow banking activities were not a problem.

Shadow banks activities could not be stopped because the existing government regulation did not apply to them.

The 2008 financial crisis caused long-term damage to economies across the globe.

Almost half of the total unemployment in the economy was caused by the crisis.

At the start of the financial crisis, the U.S. government and the Federal Reserve helped calm the markets.

The Troubled Asset Relief Program (TARP) was instituted by the federal government to help strengthen the markets by buying assets and equity from failing financial institutions.

The fed eral funds rate was decreased to zero by the Federal Reserve.

The Fed changed its balance sheet because of programs to foster improved conditions in financial markets.

The Fed acted as a lender of last resort by providing liquidity to financial institutions, it provided credit to borrowers and investors in key credit markets, and it put downward pressure on long-term interest rates by purchasing longer-term securities.

The Dodd-Frank Act was enacted in 2010 to reform financial regulation after the crisis.

The DoddFrank Act created the Consumer Financial Protection Bureau to protect borrowers from abusive practices that became prevalent due to the complexity of these instruments.

The crisis was caused by the proliferation of derivatives, which hid risk prior to 2008.

The new law is designed to make financial markets transparent so that asset risk is no longer hidden.

The Dodd-Frank Act gives a special panel the power to designate financial institutions that have the potential to cause a banking crisis.

The government now has the power to take control of financial institutions during a crisis like it already did with commercial banks.

The power of resolution authority allows governments to guarantee a wide range of financial institution debts.

The problem of moral hazard still exists despite the idea that a financial institution can be too big to fail.

New regulations have been put in place in the United States, but it is not clear how they will be applied in other countries.

The Dodd-Frank Act created the Consumer Financial Pro in the future, but regulation that addresses what happened in 2008 may not be effective in addressing any future financial crisis.

The agency that protects borrowers from abusive practices in the world economies and world financial markets is dynamic and must be able to respond to the current situation, not just the most recent crisis.

On Friday night, September 12, 2008, Richard Fuld unleashed the furies.

The New desperate search for a healthier bank was held on the same day as the stock market fell.

Lehman's loss for the market funds and financial institu Treasury secretary, Hank Paulson, and third quarter had risen to $3.9 billion, due to early rowing costs and a run on money.

The head of the New York Fed, Tim, agreed to an $85 billion Geithner rescue on September 9.

The government called the meeting in order to cut off its credit and Lehman's accounts were frozen.

Investment bankers have been trying to put together an earlier package to purchase Lehman's bad investment bank Bear Stearns to assets since the forced sale six months ago.

Lehman had been in an extremely turbulent market, fearing for their own survival.

If Lehman would fall next, this wouldn't lend to it, many wondered, facing a backlash from Congress.

In July 2008, Lehman reported a loss of $2.8 billion for the second quarter.

In the early hours of Monday morning, September 15, 2008, Richard Fuld, the head of Lehman, testified before a congressional committee about the fall in its stock price.

Lehman declared the panel on how the collapse of its share price was the most expensive in history.

Fuld had warned of panic after Lehman caused a financial of credit to dry up.

The models predict that people will buy more of a product when the price falls, work more when the wage increases, and prefer some money to none.

The scarcity of time, intelligence, and information can cause human decisions to go awry.

Acceptance of the field of behavioral economics has grown considerably over the past four decades, despite the fact that the psychological side of economic behavior is still controversial.

The extent of information problems and behavioral anomalies are thought of in different ways.

Unless you are a bicycle enthusiast, you probably don't know much about the Felt B2 before reading this module.

Consumers don't know every product's availability, quality, or price because information is imperfect.

The value of information is exemplified by the large amounts of money people pay for it.

The cost of perfect information makes it hard for someone to become all knowing.

Under realistic constraints on time, information, and intelligence, researchers in the field of behavioral economics study the rationality of market par ticipants.

It takes a long time to get information about the prices and products available to consumers, and the marginal cost of information is more important than the marginal benefit.

A program that would allow 400 out of 600 people to buy shoes and other goods would not work for shoppers out of 600.

Bovinity Divinity and Dastardly Mash were discontinued by Ben and Jerry's for lack of interest.

While the prospect of higher wages motivates employees to work harder, so does the prospect of loftier job titles, such as vice president or office manager.

There is reason to be concerned about errors, bias, and incomplete information with perfect information and rationality at the foundation of efficient decision making in many economic models.

Some mistakes were made by the people who voted for him, but they looked like a good president due to the limits on information and intelligence.

Herbert Simon, the winner of the 1995 Nobel Prize in Economics, said that rationality is limited by limitations in the ability of decision makers to formulate and solve complex problems.

Bounded rationality causes mis and the scarcity of time and steps when a price ends in 99.

When fully analyzing every possible sequence of actions that will a price that ends in "99" follow their move, con Bounded sumers and managers are like chess players.

They must rely on instincts and make a consumer think of the amount as experience, advice, short-cuts, and guesswork.

The next box says that people tend to stick with the way things are.

Sometimes assumptions of rationality are at odds with observed human behavior.

Drivers had the right to litigate after an accident under plan A.

Most drivers in New Jersey received plan A if they stuck with the status quo.

If you're stuck with the status quo, think about your family's choice of where to live and your favorite sports.

People choose to stick with failing stocks because of excessive optimism.

The price of the expected punishment is what neoclassical models treat crime as.

This means that more severe punishments or higher rates of apprehension will deter crime.

A study found that most criminals don't have the information required to perform cost-benefit analysis before committing their crimes.

A majority of the criminals in the study had no idea that they would be caught or that they would be punished for their crime.

The information needed to perform cost-benefit analysis was lacking among violent offenders.

In order to solve the crime problem, policy makers must go beyond the tenets of neoclassical economics and be open to solutions that address psychological problems and informational drawbacks.

Poor decisions are caused by exces sive optimism and crime is just the tip of it.

The result is inadequate safety precautions against the large risks.

The improper use of information can lead to unfortunate and inefficient resource allocations because people are capable of stubbornness, bias, and misjudgment to their own downfall.

It is standard procedure at several international hotel chains to place a card in the bathroom of the guest room with a message to save the planet.

If the hotels cared about saving Earth's resources, they would provide recycling bins, organic cotton sheets, and carpets made from recycled fibers.

The pitch to avoid washing towels may have more to do with saving the financial resources of the hotels, but customer participation depends on how the appeal is framed.

Brand managers spend millions of dollars to frame their brand names because consumers perceive apparel differently after seeing Maria Sharapova wear it, and they perceive a hotel differently knowing that Brad Pitt stays there.

Consumers place more emphasis on the dollar amount at the beginning of a price than they do on the cents at the end.

The idea of a discount to bargain-hungry shoppers is conveyed by prices ending in "99" or "95".

Three versions of a direct mail catalog for women's clothing were sent out by Thomas Kibarian.

Managers at upscale department stores know the psychology of pricing, but they use a different strategy of ending prices with even numbers, which is symbolic of their high-end brand image.

If the value of the benefits exceeds the value of the money forgone, then it's reasonable to spend money, retire, or take vacations that decrease earnings.

Limits on the determination needed to do difficult things can be the cause.

Bounded Willpower can explain decisions to do too little homework, procrastinate too much, overeat, or throw a career-ending temper tantrum in front of the boss.

It's important not to categorize everything that causes problems as irrational in the analysis of behavior.

If the benefits outweigh the costs, the use of potentially addictive substances can be rational.

Becker and Murphy argue that prices ending in even numbers convey an upscale image.

willpower constrained by limits can overcome anger, jealousy, frustration, and embarrassment.

The customer who shot the manager was angry that he didn't get enough to do difficult things.

Neoclassical economic models rely on assumptions of self-interested behavior.

Americans recycled or composted almost 87 million tons of materials in 2011.

According to the Bureau of Labor Statistics, 26.5% of the US population volunteered in 2012 to help less fortunate individuals.

The recipient can either accept or reject the division after the divider makes it allo cation.

A wealth-maximizing divider would allocate the smallest possible positive amount to the recipient: one cent.

Even with changes in the culture of the participants, the amount of money at stake, and opportunities to learn from experience, fairness is still important.

Managers at Toyota found out that customers may pay more for a product that causes less harm to other people or the environment when their relatively expensive but eco-friendly Prius hybrid flew out of showrooms faster than the company could make more.

There is no amount of money that can separate a parent from a needy child, as was suggested by the forfeiture of the remaining three years and $21 million in his NBA contract with the Utah Jazz to be with his ill daughter in 2007.

Under the constraints of human rationality, willpower, and self-interest, behavioral economists have adapted earlier notions of economic man to capture decision making.

Some strange behaviors can be traced to rational foundations, but others are sufficiently suspect to warrant policy that addresses the possibility of misinformation, mistakes, and psychosis.

Information that is fully and freely available is often incomplete and expensive.

The question is whether problems with information justify an abandonment of neoclassical precepts, some revisions and expansions in rational choice theory, or none of the above.

Experiments show that people tend to follow money, cheese, and sardines, and that rats, dolphins, and other decision makers are broadly defined.

Improvements in theories and policy making can be achieved by acknowledging psychological influences beyond the desire for money and leisure.

Consumers, managers, employees, and all other participants in an economy are flawed, biased, emotional, benevolent, undisciplined, and uneducated, which helps to explain a lot of the behaviors that neoclassical models do not predict.

Roberto will pay more for the same steak in a res wage than Nelson's firm will make from it.

Market research shows that there is insufficient consumer demand for the store's products.

You're more likely to have a better estimate than your health insurance company is if you're going to need an expensive procedure.

If someone offers to sell you a car with only 2,000 miles on the odometer and no dents or scratches, you might be interested.

You might think that the extra information held by the sellers gives them an advantage.

It depresses the prices that buyers offer because of the poor opinion of used cars.

The disproportionate share of lemons in used cars makes them sell at a discount.

Potential sellers who have good cars are unwilling to sell them at a deep discount.

It's important that good used car sales are done by people who would like to get rid of them to people who would like to buy them, because they end up being frustrated by the inability of potential sellers to convince potential buyers that their cars are worth the higher price demanded.

The reason for the name is obvious, because if one person knows more about the quality of what they are selling than the potential buyers, then they have an incentive to select the worst things to sell.

It is a problem for many parts selection, for example, when sellers offer items of the economy--notably for insurance companies, and most notably for health insur particularly low.

A health insurance company could offer a standard quality for sale and a policy for everyone with the same premium.

It would make the policy look very expensive because the healthiest people are less likely to pay for insurance than the average person.

The health insurance company wouldn't want people with a higher-than-average risk of needing medical care because they would find the premium to be a good deal.

The health insurance company is forced to raise premiums in order to cover its expected losses from this sicker customer pool.

Many advanced countries assume the role of providing health insurance to their citizens because of the adverse selection problems.

If you apply to use observable information, the insurance company will demand that you give them information about your private health status in order to screen out sicker applicants.

An insurance company may not know if you are a careful driver, but it can use statistical data on accident rates of people who look like you to set premiums.

A 19-year-old male who drives a sports car and has already had a fender-bender is likely to pay a very high premium.

Some adolescent males are very careful drivers, and some mature women drive their minivans as if they were fighter jets.

Reputable used-car dealers often offer information through actions warranties, which promise to repair any problems with the cars they sell that arise within that credibly reveal what they know.

In the late 1970s, New York and other major cities experienced an epidemic of suspicious fires.

A large number of buildings owned by landlords burned down.

Police had few doubts that most of the fire-prone landlords were hiring professional arsonists to torch their own properties.

This presented a profitable opportunity for an unscrupulous landlord who knew the right people.

Insurance companies began making it difficult to over-insure properties and a boom in real estate values made some buildings worth more unburned.

The owner of the building has to put in a lot of effort to prevent fires.

If basic safety precautions have not been taken, the insurance company will not pay.

The owner of the building knows how careful he has been, but the insurance company doesn't.

The owner of the building has private information about his or her own actions, so he or she knows if he or she has really taken all appropriate precautions.

The insurance company is likely to face more claims than if it were able to determine how much effort a building owner puts into preventing a loss.

To deal with moral hazard, it is necessary to give individuals with private information some personal stake in what happens, a stake that gives them a reason to exert effort even if others cannot verify that they have done so.

Many stores and restaurants, even if they are part of national chains, are similar to his or her own actions.

franchises are licensed outlets owned by the people who run them.

If someone else bears the costs of the lack of care on your car, you may only be able to get the repairs paid for after the first $500 in loss.

Deductibles give a partial solution to the problem of adverse selection in the policy.

If you have to pay before you can accept a large deductible, your insurance premiums often go down.

By offering a menu of policies with different premiums and deductibles, insurance companies can screen their customers, inducing them to sort themselves out on the basis of their private information.

The moral hazard limits the ability of the econ omy to allocate risks efficiently.

If you have had the problem of moral hazard, your car insurance premiums will be lower.

If you or the AP(r) program chooses a rigorous approach to this material, we provide review questions in addition to discussion starters.

Each insured person can be made to pay a co potential solution to reduce the inefficiency that each payment of a certain dollar amount creates.

If individuals or corporations don't know if you are a home-buyer or a bank, they might think the government will be productive.

We will learn how to express total utility as a function of the consumption of two goods.

This will help us understand the trade-offs involved in choosing the optimal bundle.

The optimal consumption bundle changes in response to the prices of goods.

Ingrid is a consumer who only buys two things: housing and restaurant meals.

The distance along the horizontal axis shows the number of rooms she consumes and the distance along the vertical axis shows the number of meals she eats.

Figure D.1 helps us think about the relationship between consumption bundles and total utility.

Anyone who has ever used a topographical map to plan a hiking trip knows that it is possible to represent a threedimensional surface in only two dimensions.

A topographical map doesn't offer a three-dimensional view of the terrain; instead, it conveys information about altitude through the use of contour lines.

There is an indifference curve for each level of total utility for an individual.

The table shows the total utility of each bundle, as well as the composition of rooms and restaurant meals.

It is easier to understand how rational choice can be made by using the concept of measurable consumers.

Every indifference curve map has two general properties, according to economists.

The diagram in panel a shows that we assume that more is better because we only consider consumption bundles for which the consumer is not satisfied.

Economists believe that the indifference curve maps have more than one property.

The same level of total utility is achieved by these consumption bundles.

Giving up some restaurant meals is the only way a person can consume more rooms without gaining utility.

indifference curves share the left diagram of panel.

A reduction in quantity of restaurant meals is offset by the right diagram of panel.

Panel flatter as you move down the curve to the right, a feature depicts two additional properties of indifference curves for arising from diminishing marginal utility.

When a consumer has diminishing marginal utility, consumption of another unit of a good causes a smaller increase in total utility than the previous unit consumed.

We will look at how diminishing marginal utility causes indifference curves.

In the next section, we will see how diminishing marginal utility plays a role in ordinary goods.

In the previous section, indifference curves were used to represent the preferences of Ingrid, whose consumption bundles consist of rooms and restaurant meals.

Consumers are assumed to maximize total utility as before in this module.

Figure D.5 shows a downward sloping indifference curve for most goods.

In exchange for an additional room change along the indifference curve, Ingrid is willing to give up the quantity of restaurant meals.

One of the four properties of an indifference curve for ordinary goods is that it gets flatter as we move to the right.

It takes a large reduction in her restaurant meals to make up for the increased utility she gets from the extra room of housing.

We look at how the slope of the indifference curve changes as we move down it.

Reducing restaurant meal consumption will reduce her total utility, but increasing housing consumption will raise her total utility.

The left-hand side of Equation D-5 has a negative sign that shows the loss in total utility from decreased restaurant meal consumption.

The gain in total utility from increased room consumption is represented by the right-hand side of the equation.

The slope of the indifference curve is the left-hand side of Equation D6, and it is the rate at which Ingrid is willing to trade rooms for restaurant meals without changing her total utility level.

As she consumes more housing and fewer restaurant meals, her marginal utility from housing falls and her marginal utility from restaurant meals increases.

As she moves down the indifference curve, the marginal rate of substitution falls as she does.

An indifference curve only compensates for fewer units if it has a diminishing marginal rate of substitution.

Next, we will use indif ference curves to determine the optimal consumption bundle.

Let's put the indifference curves on the same diagram as the budget line to show her optimal consumption choice.

A bundle consisting of 8 rooms and 40 restaurant meals per month is the optimal consumption choice.

Figure D.6 shows us how to use a graph of the budget line and indifference curves to find the optimal consumption bundle.

We can use a bit more math to determine the optimal consumption bundle.

Information about the slopes of the budget line can be used to find the optimal consumption bundle.

The slope of the budget line is a fairly straightforward task to analyze.

Ingrid will get the highest possible utility by spending all of her income and consuming a bundle on her budget line.

The slope of the budget line tells us the opportunity cost of each good in terms of the other.

When relative price or income changes, Equations D-8, D-9, and D10 give us all the information we need about what happens to the budget line.

How far out the budget line is from the origin depends on the consumer's income.

The budget line slope stays the same because the relative price of one good in terms of the other does not change.

At the optimal consumption bundle, the marginal rate of substitution between any two goods is equal to the ratio of their prices.

To see this, you have to imagine that Lars also consumes housing and restaurant meals.

Lucinda has a marginal rate of substitution of books for games of 2 and Kyle has a marginal rate of substitution of books for games of 5.

You can find the relative price of books and games by bundle.

If you or the AP(r) program chooses a rigorous approach to this material, we provide review questions in addition to discussion starters.

The ratio of the prices of the consumption bundles is equal to the slope.

Some money is needed to pay bills and make customers, but not all of it is used for cash purchases.

Keeping a large amount of cash at home or in your wallet makes banks less safe because they don't know how banks work or how much nonbank alternatives cost.

When you're ready to open a bank account, there are three main types of institutions to visit and only a website address.

You can choose from savings and loan associations, banks, and credit unions.

They lend to customers who want to borrow money for big purchases like cars and homes.

Federal businesses lend to small and large commercial banks for purchases like inven and state regulations.

To stay profitable, a bank needs to get more into and out of accounts and give more money in interest to borrowers than it does in loans to customers.

Consumers may not use banks for a local branch because of a variety of reasons, including the lack of online.

Credit union members tend to be more expensive than alternatives, such as working check cashing service.

A fee that's a percentage of the profession, or living in the same geographic check value, plus an additional flat fee, is charged for some check cash for the same employer.

You must be a member of the credit union to be able to use its finan cashing service.

If your bank closes, you'll have to have at least one direct deposit per month and use a debit card or NCUA to pay the insured portion of your account.

A savings account can be used to deposit money at a local safe place and earn you branch or electronic direct interest.

Some institutions have remote access to your money as a checking deposit service.

If you take a picture of the check with a number of deposits you can make into a mobile device or a savings account, you can make it online, but there's no limit on paper check.

Online bill pay can be used for six withdrawals or transfers per month.

The site sends you a monthly account that can be used to make investments, such as stocks.

The bet card, online bill pay, and opening a bank account a month earlier will help you save more money.

If you want to find the best money market account offer, always do your research.

You should reconcile each month to give up the use of your money for a fixed statement's ending balance against your re term or period of time, such as 3 months, cords, so you never miss a transaction.

Don't write checks or restrict access, banks usually pay more for make debit card purchases than for savings or money balance.

If you take money out of a CD, you have to pay a penalty if you don't check your account before the end of the term.

Unless your bank gives you free access to the charges and fees associated with, you should not put money in a CD until after the cash withdrawal at banks other than your maturity date.

People don't use paper checks to make purchases anymore because of the popularity of debit cards and oncard.

It's better to start over account because Al is deducted immediately from your bank ways and credited to the merchant's cross out mistake.

You will receive a statement each month, but it will cost you a large service fee.

If you have an authorized agency, they will never ask you for your personal online accounts that are at least 8 characters in length.

The process of making of interest is when you reconcile your account to pay the highest rate.

Key banking terms make reconciliation account simple.

A paper form is used to authorize a bank to release funds from the payers fees.

You can avoid potential charges by opting out of the overdraft account.

If your account balance is too low, you won't be allowed to make the purchase if you use your debit card.

In your own words, tell me why you think it's better to keep your money in a financial institution.

Say you borrow $100 from your friend store, choose a car loan, or figure out John at a 5% annual rate of simple interest how much to invest for retirement, man for a term of 3 years.

You'll be charged interest when you take out a loan for college, a car, or anything else.

You don't pay off a credit card balance in $100 if you late on the original principal amount.

At the end of the third year, you'll have to pay a fee of $100 plus 15 cents in interest.

It's wise to shop 3 years from your friend John, but if you borrow at the lowest interest he charges, you'll be able to keep your $100 loan.

The faster the interest grows, the more frequent the standing the relevant money math is.

You will earn on an annual basis if you compare different interest.

The effect of compounding is included in the rates of bank accounts.

If you make purchases that you can't afford to pay off, your balance will be reduced by the previous month's financial future.

If you make late payments, the interest portion is report history.

If you start saving and investing when you're 17 years old, you can accumulate a million dollars by the time you're 30.

Tom ends up saving the same amount of money for 10 years as she did.

Over a 30-year period, Steve will accumulate of choosing to invest earlier, rather than the same amount.

Submitting an impressive relevel of knowledge, boosting your resume, sume and application will make you stand out from the crowd.

A resume is a summary of your education and may include topics such as your age, race, religion, citizenship status, and whether you are disabled.

You can learn more about employment skills and work experience by visiting the U.S. Department of Labor website.

The money you make falls into one of two ground checks to verify data in your resume, basic categories: earned income and passive, so never include any false information.

"Experience," "Skills," "Education," and "own and run" should be included in the body.

Tailor each resume to the hourly wages, salaries, tips, commissions, particular job you apply for so the employer and bonuses.

You can learn more about passive income by visiting the IRS and searching for "How work on your part."

If you get a job that pays $600 a week, you may be able to afford to live where you want.

If you become your own boss, you will have to spend after taxes and deduc ance benefits on eligible individuals.

100% of the Social Security and Medicare tax forms you must complete is the W-4.

If too much tax is not paid by April 15th of the following year, the IRS will make a payment, but you will lose the use of your and file, by mail or electronically, a federal money until the payment arrives.

It is a good idea to have your payroll withholding in the prior year.

Tax filing status, age, and whether or not you have a home all affect whether or not you are a dependent.

You can file on any amount owed if you are charged a late payment penalty.

If you don't file a new W-4 with your employer, you will be in violation of the law, and you may be charged with a crime.

If your income exceeds certain limits, the IRS and certain states will tax it.

A range of income that's taxed at a cer as your employer, bank, or investment bro tain rate is below.

You can purchase tax software to help you prepare and file your federal and state returns.

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, and Texas all don't collect tax on income over $40,000.

The decade that includes your financial future will pay off and allow you to control it.

The savings account that earns a small amount of money taking financial risk is different.

Money you need horizon, such as a year or less, many finans to spend in the short-term for planned pur cial advisors recommend that you stick with chases and emergencies should be kept in an insured savings account.

Part 1 of the handbook for expla Investments, or securities, is not about the nation of these accounts and the protection they get from any federal agency.

You receive a relatively low rate of return on your Investor Protection Corporation stock.

Financial securities and products that you can purchase for your investment portfolio are bundled into mutual funds.

When you buy shares of a stock, you have the greatest potential risk and purchase an ownership interest in a com reward, however, there's a wide range of risk and your shares can go up or down in this category.

People don't know which stocks will increase in value over the short Exchange-traded funds.

Historically, stocks bundle combinations of investments just reward investors with higher returns like mutual funds, but trade like a stock on an exchange throughout the day.

Real es riod of time is one of the types of investments that include bonds.

A questionnaire can help deter tax on your earnings if you defer or avoid paying.

When you have a retirement account that isn't tolerance for risk, you're more likely to see your investments decline in value.

An early withdrawal penalty and one who doesn't like risk are considered ordinary income tax.

To live comfortably for decades, you need enough investment losses in exchange for poten money.

There is no right or wrong way to save money in retirement.

Retirement on contributions or earnings until after accounts are two of the most traditional IRA's you don't pay tax on.

You can open a contri Brokerage account at local butions up front.

You get a huge tax benefit when you buy or sell shares of a Roth because your entire account grows into a stock, mutual fund, or exchange traded fund.

Defined ben self-employment taxes, the age you choose efit plans and defined contribution plans are the main types of retirement pro earnings.

Employees don't pay Administration, the benefit replaces into the plan, pick investments, or manage less than 40% of their preretirement money.

If you delay benefits, they will become rare in the workplace because it's expensive to operate.

Many employers match a certain amount of money to pay for a student's qualified of the money you put in a workplace re expenses at a college, university, or voca tirement plan.

100% of your contributions to a 401(k) up to where you prepay all or a portion of your salary can be put into a pre-paid plan.

Your employer would grow tax free as a result of matching.

Give a brief description of each of the four ideas to invest in retirement accounts.

A good balance of both is provided by different kinds of plan.

When you're making a large credit reporting agency, like a computer or furniture, you should purchase it.

It's convenient to your credit limits when you need to buy something like books, clothes, time, or travel reservations over the internet.

If you don't repay the debt, the agencies will take full responsibility for it, even if they are slightly different.

You'll either be turned down for credit or charged an interest rate that's higher than the rate offered to customer liens for unpaid income taxes, and legal with good credit.

The amount of interest she'll pay on the loan in your credit reports is used to calculate the principal.

Her monthly pay is late because of the higher interest rate.

She'd pay a total ing systems or use brand-name cal scorescu of $3,960.36 in interest--or $2,703.44 more lated by other firms, like the FICO.

If you don't have excellent credit score, you can pay an additional request.

It's a snapshot of your $127,493.41 in interest, on top of the origi credit behavior up to that moment in time.

Everyone over the age of 18 can agers prefer tenants who have a secured credit card.

The FTC has a website where you can learn more about the Fed for bills and credit accounts.

It's easy to get into financial trouble if you don't repay your debt if you borrow money.

Large late fees and long-term dam signature loans are called personal because you sign an agree age to your credit history.

There are many different types of debt, but they fall into two main categories: install loans and revolving credit.

A signature loan is an agreement you make with a creditor to borrow a certain amount of money and repay it in equal installments.

The lender room and board is the title to the car until you attend college.

The term or repayment period for a car may be available to you or your parents.

A $20,000 car is worth only Student Aid if the loan amount, interest, and term are all ample.

If you want to trade or sell a car for students, you have to go to the federal government.

It's important to make a down payment to avoid financial need.

Being government pays, or subsidizes, the inter helps reduce your est on the loan while you're in school.

It's wise to make a down pay on a car loan even if you have good credit.

You have to re parents have no adverse credit history after the lease term is over.

Monthly lease payments may be less than private student loans.

You have to submit the ber of payments or the final due date.

finaid.org is a lead over federal loans because the lender approves the FAFSA and pays for interest rates and less repayment flexibility.

5% balance transfers to 20% of the purchase price is what you need to chases, promotions, cash advances, and make a down payment.

If you have a credit card with a lower interest rate, you can get a brand new loan with better terms.

Credit cards can be used as erful financial tools if you stop making loan payments.

Credit cards property, evict the borrowers, and sell the can also devastate your finances if you property to pay off the debt that you can't state laws, according to get over your head in debt that you can't state laws.

Credit cards can be used for con because they're so easy to use and you can pay with your minimum payment.

Minimum payment could be 3% or 15%, depending on the amount of time you have to make a credit card purchase.

There are different kinds of remember when it comes to managing student loans.

If you have a reliable that you begin saving for the future as early income and manage your money wisely, it's easy to be critical.

Strik Social Security is a group of benefits paid to the right balance will allow you to have eligible taxpayers who are retired, disabled, enough money to fulfill your future wants or who survive a relative who was receiving and needs.

If you use your financial resources wisely, you will be able to have a secure pay during your career, the age you choose to future and make your dreams a reality.

If you want to take a vacation next summer, keep this year.

If you invested $32 a week for 40 years at a moderate rate of return, your savings would last until the end of your life.

Creating a budget is the best way to take control of your life and pursue interests other than money.

In Part 3, you learned that Social Secu understand how much money you have and how you can prioritize your expenses after you retire.

If you don't manage money the right way, you won't have a comfortable lifestyle as you grow older.

Though you have many years to go, sav always have many needs and wants, and it can be hard to find enough money for retirement.

It's important that you keep a close watch on how much you make and how much you spend so that you never exceed your net penses or discretionary purchases.

Variable A spending plan is a great way to keep track of expenses and income.

To monitor cretionary, like dining out, transportation, the big picture of your finances, you need to or buying clothes.

You can organize your expenses into categories such as rent, insurance, groceries, dining out, clothes, and entertain net worth, and enter the total amounts.

You may be pleased that you have money left over and money owed to you when you compare your total take value, such as cash in the bank, vehicles, in home pay to your total expenses.

Discretionary income is the amount of money you have left over each month after you borrow from a friend.

If you owe more than you own, your net worth will be a negative number.

It's possible to set up reminders for all your recurring bills, so no payment due date ever offers free bill pay, which allows you to pay through the cracks.

The wealthiest people in the United States have a plan for what to do each year and 80% of them know what they want to achieve.

They accumulate wealth by working month, week, or day to stay on track and save and invest their money.

Think again, there are 10 tips to manage your money too young to start saving for retirement.

Unless you beat huge odds by having a winning, spending less than you make is a choice.

A big inheritance or a lottery ticket is saving money.

If you don't have a habit to save 15% to 20% of your income, starting with a spending plan to track your money, and adjusting your lifestyle so you can easily make wise decisions, you won't know if your first job is a good one.

It's a good idea to have a for unexpected expenses safety net in your workplace retirement account or paycheck.

It should be split between a checking and savings account so you can deal with a rough patch in your finances.

Use money to achieve your needs and your dreams if you decide what's important to you and worth of your living expenses.

Setting aside money for the future is a good idea if you make bad decisions.

Most U.S. citizens need to go to the emergency room for broken bones.

If you have enough of their dependents or pay a penalty, you can protect your health insurance for yourself and your finances.

Many employers offer group health events occur, that are defined in an insur insurance, or you can purchase an indi ance policy, they'll meet certain expenses on your own.

Health insurance only covers a portion of your medical bills, not your everyday and life circumstances.

If you're and umbrella, many employers offer some type of auto, homeowner's, renter's, long-term care, ability coverage for employees.

If more named beneficiaries are involved in a serious accident, you person dies.

It's important to have a good life because you could be sued for a lot of money.

The cost of auto insurance varies depending on many factors, such as your beneficiary.

The Toyota Sienna is the least expensive car you can withdraw later in life according to the most recent data.

When you have a home mortgage, the lend time income needs of a surviving partner are critical considerations.

Liability coverage is part of homeowner's insurance and protects you if a car, truck, motorcycle, or recreational vehicle gets hurt on your property.

If you rent a home or apartment, you should always have renter's insurance because you have a medical bill for $2,000.

If you have a long-term illness or disability, the salesperson probably won't sell you a long-term care insurance policy.

If something isn't covered by other types of insurance, these warranties give you a certain amount of day-to-day care.

If facturer doesn't cover issues that the manureplaces a portion of your lost income, you can still get disability insurance.

An And health insurance only pays for a por extended product warranty can come in handy when it comes to medical bills.

Individuals who require long-term care uct warranties may need help with activities of daily living, such as dressing, bathing, eating, and selling aggressively.

Long-term care insurance isn't worth the cost, never let a salesper ally cover care provided in your home by a son, or in an assisted living facility, if you don't need it.

If you have an auto insurance liability and a million dol, you should buy an mp3 player and lar umbrella policy.

If you were in a car that had an extended warranty, the accident that caused serious injuries to the other driver would be 40% more expensive.

If you spend $150 for an umbrella policy, you can get a protection warranty on a $2,000 computer.

Many credit cards offer built-in extended warranty coverage, so it's important to keep an eye on your accounts.

An initial fraud alert lasts for 90 days and can be renewed for free if you want.

New phone accounts can be opened with a free identity you have access to.

It's a good idea to get a copy of your credit cards or loans in your name, but only the last four digits of your Social Security number should be visible.

If you know which of your accounts have been compromised, you should contact the companies that have been affected.

If you're a victim of identity theft, be sure to send all the information you'll need, such as wages, attorney fees, and certified mailing by certified mail, and ask for a return receipt.

It's important to create a record that proves protection to your homeowner's or renter's if you want to resolve unauthority policy.

These services may be sold through insur formal reports, which will help you prove that you've been an identity theft victim.

If a thief opened new accounts in these policies so that they could make large purchases, this understand if do-it-yourself safeguards could damage your credit history unless the may be just as effective.

It's not possible to completely prevent fraudulent charges from appearing in your report.

Identity theft can be posed as a legitimate organization such as the IRS, a bank, or 1.

Genuine security cards, paper checks, and financial cards from companies don't ask for personal information over your wallet, so they can't be the phone or internet.

If you need to enter confidential information on a website, such as for a new job, a public computer or an open internet connection, don't access it.

If you want your financial accounts to be safe, make sure that your password is restaurant server only, with no more than eight characters, and get it back as soon as possible.

Identity thieves can get your mail, have access to your personal work, and even use the last few digits of a confiden information if they get your dumpster dive for paper.

It's important to review your accounts online or view monthly state them on a periodic basis.

Is it one thing to account for your specific situation and low monthly needs.

The owner of a business will take a free ride on anyone that capital if it had been used in its next best alternative way.

The opportunity cost exchange rate is between mark and bar.

Section 1: Basic Economic Concepts Module 1: The Study of Economics Individual Choice: The Core of Economics Resources Are Scarce Opportunity Cost: The Real Cost of Something Is What You Must Give Up to Get It Microeconomics Versus Macroeconomics Positive Versus Normative Economics When and Why Economists Disagree FYI: When Economists Agree Module 1 Review Module 2: Introduction to Macroeconomics The Business Cycle Employment, Unemployment, and the Business Cycle FYI: Defining Recessions and Expansions Aggregate Output and the Business Cycle Inflation, Deflation, and Price Stability Economic Growth The Use of Models in Economics Module 2 Review Module 3: The Production Possibilities Curve Model Trade-offs: The Production Possibilities Curve Efficiency Opportunity Cost Economic Growth Module 3 Review Module 4: Comparative Advantage and Trade Gains from Trade Comparative Advantage and Gains from Trade Mutually Beneficial Terms of Trade Comparative Advantage and International Trade FYI: Rich Nation, Poor Nation Module 4 Review Section 1 Review AP(r) Exam Practice Questions Section 1 Appendix: Graphs in Economics FYI: The Price of Admission Using Equilibrium to Describe Markets Changes in Supply and Demand What Happens When the Demand Curve Shifts What Happens When the Supply Curve Shifts Simultaneous Shifts of Supply and Demand Curves FYI: Makin' Bacon?

Section 3: Measurement of Economic Performance Module 10: The Circular Flow and Gross Domestic Product The National Accounts The Circular-Flow Diagram Gross Domestic Product Module 10 Review Module 11: Interpreting Real Gross Domestic Product What GDP Tells Us Real GDP: A Measure of Aggregate Output FYI: Creating the National Accounts Calculating Real GDP What Real GDP Doesn't Measure FYI: Miracle in Venezuela?

Section 4: National Income and Price Determination Module 16: Income and Expenditure The Spending Multiplier: An Informal Introduction FYI: The Spending Multiplier and the Great Depression Consumer Spending Current Disposable Income and Consumer Spending Shifts of the Aggregate Consumption Function Investment Spending The Interest Rate and Investment Spending Expected Future Real GDP, Production Capacity, and Investment Spending Inventories and Unplanned Investment Spending FYI: Interest Rates and the U.S. Housing Boom Module 16 Review Module 17: Aggregate Demand: Introduction and Determinants Aggregate Demand Why Is the Aggregate Demand Curve Downward Sloping?

Shifts of the Aggregate Demand Curve Module 17 Review Module 18: Aggregate Supply: Introduction and Determinants Aggregate Supply The Short-Run Aggregate Supply Curve Shifts of the Short-Run Aggregate Supply Curve The Long-Run Aggregate Supply Curve From the Short Run to the Long Run FYI: Prices and Output During the Great Depression Module 18 Review Module 19: Equilibrium in the Aggregate Demand-Aggregate Supply Model The AD-AS Model Short-Run Macroeconomic Equilibrium Shifts of Aggregate Demand: Short-Run Effects Shifts of the SRAS Curve Long-Run Macroeconomic Equilibrium FYI: Supply Shocks Versus Demand Shocks in Practice Module 19 Review Module 20: Economic Policy and the Aggregate Demand-Aggregate Supply Model Macroeconomic Policy Policy in the Face of Demand Shocks Responding to Supply Shocks FYI: Is Stabilization Policy Stabilizing?

Fiscal Policy: The Basics Taxes, Government Purchases of Goods and Services,Transfers, and Borrowing The Government Budget and Total Spending Expansionary and Contractionary Fiscal Policy A Cautionary Note: Lags in Fiscal Policy Module 20 Review Module 21: Fiscal Policy and Multiplier Effects The Spending Multiplier and Estimates of the Influence of Government Policy Multiplier Effects of Changes in Government Purchases Multiplier Effects of Changes in Government Transfers and Taxes How Taxes Affect the Multiplier FYI: About That Stimulus Package .

Module 24 Review Module 25: Banking and Money Creation The Monetary Role of Banks What Banks Do The Problem of Bank Runs FYI: It's a Wonderful Banking System Bank Regulation Determining the Money Supply How Banks Create Money Reserves, Bank Deposits, and the Money Multiplier The Money Multiplier in Reality Module 25 Review Module 26: The Federal Reserve System: History and Structure The Federal Reserve System An Overview of the Twenty-first Century American Banking System Crisis in American Banking at the Turn of the Twentieth Century Responding to Banking Crises: The Creation of the Federal Reserve The Structure of the Fed The Effectiveness of the Federal Reserve System The Savings and Loan Crisis of the 1980s Back to the Future: The Financial Crisis of 2008 FYI: Regulation After the 2008 Crisis Module 26 Review Module 27: The Federal Reserve System: Monetary Policy The Federal Reserve System The Functions of the Federal Reserve System What the Fed Does The Reserve Requirement The Discount Rate Open-Market Operations The European Central Bank FYI: Who Gets the Interest on the Fed's Assets?

Module 27 Review Module 28: The Money Market The Demand for Money The Opportunity Cost of Holding Money FYI: Long-Term Interest Rates The Money Demand Curve Shifts of the Money Demand Curve Money and Interest Rates The Equilibrium Interest Rate Two Models of the Interest Rate Module 28 Review Module 29: The Market for Loanable Funds The Market for Loanable Funds Reconciling the Two Interest Rate Models The Interest Rate in the Short Run The Interest Rate in the Long Run Module 29 Review Section 5 Review AP(r) Exam Practice Questions Module 30 Review Module 31: Monetary Policy and the Interest Rate Monetary Policy and the Interest Rate FYI: The Fed Reverses Course Monetary Policy and Aggregate Demand Expansionary and Contractionary Monetary Policy Monetary Policy in Practice Inflation Targeting FYI: What the Fed Wants, the Fed Gets Module 31 Review Module 32: Money, Output, and Prices in the Long Run Money, Output, and Prices Short-Run and Long-Run Effects of an Increase in the Money Supply Monetary Neutrality Changes in the Money Supply and the Interest Rate in the Long Run FYI: International Evidence of Monetary Neutrality Module 32 Review Module 33: Types of Inflation, Disinflation, and Deflation Money and Inflation The Classical Model of Money and Prices The Inflation Tax The Logic of Hyperinflation FYI: Zimbabwe's Inflation Moderate Inflation and Disinflation The Output Gap and the Unemployment Rate Module 33 Review Module 34: Inflation and Unemployment: The Phillips Curve The Short-Run Phillips Curve Inflation Expectations and the Short-Run Phillips Curve FYI: From the Scary Seventies to the Nifty Nineties Inflation and Unemployment in the Long Run The Long-Run Phillips Curve The Natural Rate of Unemployment, Revisited FYI: The Great Disinflation of the 1980s The Costs of Disinflation Deflation Debt Deflation Effects of Expected Deflation Module 34 Review Module 35: History and Alternative Views of Macroeconomics Classical Macroeconomics Money and the Price Level The Business Cycle The Great Depression and the Keynesian Revolution Keynes's Theory Policy to Fight Recessions FYI: The End of the Great Depression Challenges to Keynesian Economics The Revival of Monetary Policy Monetarism Inflation and the Natural Rate of Unemployment The Political Business Cycle Rational Expectations, Real BusinessCycles,and New Classical Macroeconomics Rational Expectations Real Business Cycles Module 35 Review Module 36: Consensus and Conflict in Modern Macroeconomics The Modern Consensus Is Expansionary Monetary Policy Helpful in Fighting Recessions?

Is Expansionary Fiscal Policy Effective in Fighting Recessions?

Can Monetary and/or Fiscal Policy Reduce Unemployment in the Long Run?

FYI: The Information Technology Paradox Success, Disappointment, and Failure East Asia's Miracle Latin America's Disappointment Africa's Troubles FYI: Are Economies Converging?

Section 8: The Open Economy: International Trade and Finance Module 41: Capital Flows and the Balance of Payments Capital Flows and the Balance of Payments Balance of Payments Accounts FYI: GDP, GNP, and the Current Account Modeling the Financial Account Underlying Determinants of International Capital Flows FYI: A Global Savings Glut?

The Exchange Rate Regime Dilemma FYI: China Pegs the Yuan Exchange Rates and Macroeconomic Policy Devaluation and Revaluation of Fixed Exchange Rates FYI: From Bretton Woods to the Euro Monetary Policy Under a Floating Exchange Rate Regime International Business Cycles FYI: The Joy of a Devalued Pound Module 43 Review Module 44: Barriers to Trade Trade Restrictions Tariffs Import Quotas FYI: Bringing Down the Walls Module 44 Review Module 45: Putting It All Together A Structure for Macroeconomic Analysis The Starting Point The Pivotal Event The Initial Effect of the Event Secondary and Long-Run Effects of the Event Analyzing Our Scenario Module 45 Review Section 8 Review AP(r) Exam Practice Questions An Elasticity Menagerie Module 48 Review Module 49: Consumer and Producer Surplus Consumer Surplus and theDemand Curve Willingness to Pay and the Demand Curve Willingness to Pay and Consumer Surplus How Changing Prices Affect Consumer Surplus FYI: A Matter of Life and Death Producer Surplus and the Supply Curve Cost and Producer Surplus How Changing Prices Affect Producer Surplus Module 49 Review Module 50: Efficiency and Deadweight Loss Consumer Surplus, Producer Surplus, and Efficiency The Gains from Trade The Efficiency of Markets Equity and Efficiency The Effects of Taxes on Total Surplus The Effect of an Excise Tax on Quantities and Prices Price Elasticities and Tax Incidence The Benefits and Costs of Taxation The Revenue from an Excise Tax The Costs of Taxation Module 50 Review Module 51: Utility Maximization Utility: It's All About Getting Satisfaction Utility and Consumption The Principle of Diminishing Marginal Utility FYI: Is Marginal Utility Really Diminishing?

Budgets and Optimal Consumption Budget Constraints and Budget Lines The Optimal Consumption Bundle Spending the Marginal Dollar Marginal Utility per Dollar Optimal Consumption Module 51 Review Section 9 Review AP(r) Exam Practice Questions Module 55 Review Module 56: Long-Run Costs andEconomies of Scale Short-Run Versus Long-Run Costs Returns to Scale Sunk Costs FYI: There's No Business Like Snow Business Summing Up Costs: The Short and Long of It Module 56 Review Module 57: Introduction to Market Structure Types of Market Structure Perfect Competition Defining Perfect Competition Two Necessary Conditions for Perfect Competition FYI: What's a Standardized Product?

Monopolistic Competition Defining Monopolistic Competition Module 57 Review Section 10 Review AP(r) Exam Practice Questions Section 11: Market Structures: Perfect Competition and Monopoly Module 58: Introduction to Perfect Competition Production and Profit When Is Production Profitable?

Module 58 Review Module 59: Graphing Perfect Competition Interpreting Perfect Competition Graphs The Short-Run Production Decision The Shut-Down Price Changing Fixed Cost Summing Up: The Perfectly Competitive Firm's Profitability and Production Conditions FYI: Prices Are Up .

Section 12: Market Structures: Imperfect Competition Module 64: Introduction to Oligopoly Understanding Oligopoly A Duopoly Example Collusion and Competition FYI: The Great Vitamin Conspiracy Module 64 Review Module 65: Game Theory Games Oligopolists Play The Prisoners' Dilemma FYI: Prisoners of the Arms Race More Games Module 65 Review Module 66: Oligopoly in Practice The Legal Framework Tacit Collusion Overcoming the Prisoners' Dilemma: Repeated Interaction and Tacit Collusion Constraints on Collusion Large Numbers Complex Products and Pricing Schemes Differences in Interests Bargaining Power of Buyers FYI: The Art of Conspiracy Product Differentiation and Price Leadership How Important Is Oligopoly?

Module 70 Review Module 71: The Market for Labor The Supply of Labor Work Versus Leisure Wages and Labor Supply Shifts of the Labor Supply Curve Equilibrium in the Labor Market FYI: The Decline of the Summer Job When the Labor Market Is Not Perfectly Competitive Equilibrium in the Imperfectly Competitive Labor Market Module 71 Review Module 72: The Cost-Minimizing Input Combination Alternative Input Combinations Substitutes and Complements in Factor Markets Determining the Optimal Input Mix Cost Minimization The Cost-Minimization Rule Module 72 Review Module 73: Theories of Income Distribution The Marginal Productivity Theory of Income Distribution Marginal Productivity and Wage Inequality Market Power Efficiency Wages Discrimination FYI: The Economics of Apartheid Wage Disparities in Practice Is the Marginal Productivity Theory of Income Distribution Really True?

Section 14: Market Failure and the Role of Government Module 74: Introduction to Externalities The Economics of Pollution Costs and Benefits of Pollution Pollution: An External Cost The Inefficiency of Excess Pollution FYI: Talking and Driving Private Solutions to Externalities FYI: Thank You for Not Smoking Module 74 Review Module 75: Externalities and Public Policy Policies Toward Pollution Environmental Standards Emissions Taxes Tradable Emissions Permits FYI: Cap and Trade Production, Consumption, and Externalities Private Versus Social Benefits Private Versus Social Costs Network Externalities Module 75 Review Module 76: Public Goods Private Goods--and Others Characteristics of Goods Why Markets Can Supply Only Private Goods Efficiently Public Goods Providing Public Goods How Much of a Public Good Should Be Provided?

FYI: Voting as a Public Good Common Resources The Problem of Overuse The Efficient Use and Maintenance of a Common Resource Artificially Scarce Goods Module 76 Review Module 77: Public Policy to Promote Competition Promoting Competition Antitrust Policy The Sherman Antitrust Act of 1890 The Clayton Antitrust Act of 1914 The Federal Trade Commission Act of 1914 Dealing with Natural Monopoly FYI: The Regulated Price of Power Module 77 Review Module 78: Income Inequality and Income Distribution The Problem of Poverty Trends in Poverty Who Are the Poor?

Consequences of Poverty FYI: The Impeccable Economic Logic of Early-Childhood Intervention Programs Economic Inequality FYI: Long-Term Trends in Income Inequality in the United States Economic Insecurity U.S. Antipoverty Programs Means-Tested Programs Social Security and Unemployment Insurance The Effects of Programs on Poverty and Inequality The Debate Over Income Redistribution Problems with Income Redistribution The Politics of Income Redistribution Module 78 Review Section 14 Review AP(r) Exam Practice Questions