Introduction to Economics

Wendy A. Stock, Ph.D. is the Co-Department Head & Professor of Economics within the Department of Agricultural Economics and Economics at Montana State University. She received her PhD in Economics in 1996 from Michigan State University. She has been published in Journal of Economic Education, American Economic Review, Journal of Human Resources, Economic Inquiry, to name a few. She has experience with the American Economic Association (AEA) Committee on Economic Education (CEE) and is coordinator of the CEE-sponsored poster session on active learning techniques at the AEA meetings. Her research interests include: the effects of labor market policies, labor force participation and employment trends, professional labor markets, economic education, the education and training of economists, job stability, and job displacement.

• About the Author xiiiPreface xivSECTION I THE ECONOMICS TOOLKIT 1Chapter 1 An Introduction to the Economic Way of Th inking 3Chapter 1 Appendix: Working with Graphs 18Chapter 2 Production Possibilities 23Chapter 3 Demand and Supply 40Chapter 4 Consumer Surplus, Producer Surplus, and Economic Efficiency 67Chapter 5 Elasticity 80Chapter 5 Appendix: Elasticity and the Slope of Demand 94Chapter 6 Measuring Economic Activity 97Chapter 7 Inflation and the Measurement of Prices 115Chapter 8 The Power and Limits of Markets 131SECTION II MARKETS, MARKETS EVERYWHERE 143Chapter 9 Wage Determination and Superstar Salaries 145Chapter 10 The Minimum Wage 165Chapter 11 International Trade of Goods 178Chapter 12 Immigration and the International Trade of Labor 196Chapter 13 Foreign Exchange and the International Trade of Money 212Chapter 14 Farm Policy 222Chapter 15 The Economics of Illegal Drugs 237Chapter 16 Pollution, The Environment, and Global Warming 253Chapter 17 The Economics of Education 271Chapter 17 Appendix: Education as an Investment: Present andFuture Values 288Chapter 18 Competition and Monopoly 291SECTION III SOCIAL ISSUES 309Chapter 19 The Economics of Labor Market Discrimination 311Chapter 20 Poverty and the Distribution of Income 329Chapter 21 The Economics of Health Care 347Chapter 22 Monetary Policy and the Federal Reserve 363Chapter 23 Fiscal Policy and the Federal Budget 382Appendix A Answers to “Think for Yourself” Questions 399Appendix B Glossary 411Index 419