Author Profile

Paul Beaudry is an Associate Professor of Economics and International Affairs at the George Washington University. He is the current Director of the GW Global Bachelor's program (Shanghai), and a former Director of the Elliot School's Masters in International Economic Policy. He teaches courses in international economics and microeconomics principles. His research includes theoretical analysis of the role of ethics in economics, international trade policy, behavioral models of addiction, energy policy, and climate change policy. (RePEc, Google Scholar, Research Gate, SSRN) Paul Beaudry maintains two educational websites. The International Economics Study Center features a free online international economics textbook, and a complete Survey of International Economics course that includes a textbook, PPT presentations, video lectures, and problem sets. The Ethical Economics Study Center features a collection of primers highlighting the role of ethical behavior in fostering good (or efficient) economic outcomes. It also features case studies, including selected movie reviews, demonstrating how unethical behavior is often responsible for the negative outcomes attributed to free markets. Soon, the website will feature a free online Principles of Microeconomics course that incorporates the role that ethics plays in the fair and efficient functioning of a capitalistic market economy. Professor Paul received his B.S. in mathematics from the University of Illinois at Urbana/Champaign and his M.S. and Ph.D. in economics from Cornell University. He has published in numerous academic journals, including the Journal of International Economics, the Canadian Journal of Economics, World Economy, and the Journal of Health Economics. His book titled, "A Moderate Compromise: Policy Choice in an Era of Globalization," published by Palgrave-Macmillan, offers a critique of current methods of policy evaluation and choice and suggests a simple, principled, and moderate alternative.

About The Book

As we were completing this textbook, the world entered a period of marked economic uncertainty that led many students, and indeed people from all walks of life, to tune into economic events as never before to try to understand the economic world around them. So, while we as economists have the public's attention, we see an opportunity to share economics principles and the economic way of thinking in a way that emphasizes their relevance to today's world. We use applications from sports, politics, campus life, current events, and other familiar settings to illustrate the links between theoretical principles and common experiences. Because of the increasingly global nature of economic activity, we also recognize the need for a clear and consistent international focus throughout an economics text. In addition, we have tried to provide a sense of the intellectual excitement of the field and an appreciation for the gains it has made, as well as an awareness of the challenges that lie ahead. To ensure students realize that economics is a unified discipline and not a bewildering array of seemingly unrelated topics, we develop the presentation of microeconomics and of macroeconomics around integrating themes.

Table of Contents

Preface
1.
FUNDAMENTALS OF PRINCIPLES OF ECONOMICS..........................1
1.1. Mankiw’s 10 Principles
1.2 Trade-Offs & Costs
1.3 Rationality & Incentives
1.4 Trades & Markets
1.5 The Economy as a Whole
1.6 Conclusion
2.
THE ECONOMIC PROBLEM: SCARCITY AND CHOICE....................31
2.1 Introduction
2.2 The Production Possibilities Frontier (PPF)
2.3 Economic Concept of PPF
2.4 Economic Systems
2.5 Summary
3.
DEMAND, SUPPLY AND
MARKET EQUILIBRIUM...........................................................................40
3.1 Introduction
3.2 Demand
3.3 Determinants of Demand
3.4 Supply
3.5 Determinants of Supply
3.6 Market Equilibrium
3.7 Change in Equilibrium
3.8 Supply and Demand and Market Efficiency
3.9 Summary
4.
ELASTICITY................................................................................................61
4.1 The Elasticity of Demand
4.2 Applications of Demand Elasticity
4.3 The Elasticity of Supply
4.4 Applications of Supply Elasticity
5.
TAXATION..................................................................................................84
5.1 Commodity Taxes
5.2 Who Ultimately Pays the Tax Depends on the
Relative Elasticities of Supply and Demand
5.3 A Commodity Tax Raises Revenue and Creates a Deadweight Loss
6.
THE PRICE SYSTEM................................................................................101
6.1 Markets Link the World
6.2 Markets Link to One Another
6.3 Solving the Great Economic Problem
6.4 A Price Is a Signal Wrapped Up in an Incentive
6.5 Signal Watching
6.6 Prediction Markets
7.
INTERNATIONAL TRADE......................................................................116
7.1 Analyzing Trade with Supply and Demand
7.2 The Costs of Protectionism
7.3 Arguments Against International Trade
8.
COMPETITION........................................................................................129
8.1 What Price to Set?
8.2 What Quantity to Produce?
8.3 Profits and the Average Cost Curve
8.4 Entry, Exit, and Shutdown Decisions
8.5 Entry, Exit, and Industry Supply Curves
9.
MONOPOLY..............................................................................................150
9.1 Market Power
9.2 The Costs of Monopoly: Deadweight Loss
9.3 The Costs of Monopoly: Corruption and Inefficiency
9.4 The Benefits of Monopoly:
Incentives for Research and Development
9.5 Economies of Scale and the Regulation of Monopoly
9.6 Other Sources of Market Power
10.
OLIGOPOLY AND GAME THEORY.......................................................170
10.1 Cartels
10.2 The Prisoner’s Dilemma
10.3 Oligopolies
10.4 When Are Cartels and Oligopolies Most Successful?
10.5 Government Policy toward Cartels and Oligopolies
10.6 Government-Supported Cartels
10.7 Business Strategy and Changing the Game
11.
POLITICAL ECONOMY AND PUBLIC CHOICE................................188
11.1 Voters and the Incentive to Be Ignorant
11.2 Special Interests and the Incentive to Be Informed
11.3 A Formula for Political Success: Diffuse Costs, Concentrate Benefits
11.4 Voter Myopia and Political Business Cycles
11.5 Two Cheers for Democracy
12.
ECONOMICS, ETHICS,
AND PUBLIC POLICY.............................................................................207
12.1 The Case for Exporting Pollution and Importing Kidneys
12.2 Exploitation
12.3 Meddlesome Preferences
12.4 Fair and Equal Treatment
12.5 Cultural Goods and Paternalism
12.6 Poverty, Inequality, and the Distribution of Income
12.7 Who Counts? Immigration
12.8 Economic Ethics
13.
INCENTIVE-BASED STRATEGIES:
EMISSION CHARGES AND SUBSIDIES...............................................221
13.1 What Is GDP?
13.2 Growth Rates
13.3 Nominal vs. Real GDP
13.4 Cyclical and Short-Run Changes in GDP
13.5 The Many Ways of Splitting GDP
13.6 Problems with GDP as a Measure of Output and Welfare
14.
THE WEALTH OF NATIONS AND
ECONOMIC GROWTH...........................................................................241
14.1 Key Facts about the Wealth of Nations and Economic Growth
14.2 Understanding the Wealth of Nations
14.3 Incentives and Institutions
15.
UNEMPLOYMENT AND
LABOR FORCE PARTICIPATION..........................................................261
15.1 Defining Unemployment
15.2 Frictional Unemployment
15.3 Structural Unemployment
15.4 Cyclical Unemployment
15.5 Labor Force Participation
Bibliography...............................................................................................287
Index...........................................................................................................312