Introduction to Economics Social Issues and Economic Thinking

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 xiii

Preface xiv

SECTION I THE ECONOMICS TOOLKIT 1

Chapter 1 An Introduction to the Economic Way of Th inking 3

Chapter 1 Appendix: Working with Graphs 18

Chapter 2 Production Possibilities 23

Chapter 3 Demand and Supply 40

Chapter 4 Consumer Surplus, Producer Surplus, and Economic Efficiency 67

Chapter 5 Elasticity 80

Chapter 5 Appendix: Elasticity and the Slope of Demand 94

Chapter 6 Measuring Economic Activity 97

Chapter 7 Inflation and the Measurement of Prices 115

Chapter 8 The Power and Limits of Markets 131

SECTION II MARKETS, MARKETS EVERYWHERE 143

Chapter 9 Wage Determination and Superstar Salaries 145

Chapter 10 The Minimum Wage 165

Chapter 11 International Trade of Goods 178

Chapter 12 Immigration and the International Trade of Labor 196

Chapter 13 Foreign Exchange and the International Trade of Money 212

Chapter 14 Farm Policy 222

Chapter 15 The Economics of Illegal Drugs 237

Chapter 16 Pollution, The Environment, and Global Warming 253

Chapter 17 The Economics of Education 271

Chapter 17 Appendix: Education as an Investment: Present and

Future Values 288

Chapter 18 Competition and Monopoly 291

SECTION III SOCIAL ISSUES 309

Chapter 19 The Economics of Labor Market Discrimination 311

Chapter 20 Poverty and the Distribution of Income 329

Chapter 21 The Economics of Health Care 347

Chapter 22 Monetary Policy and the Federal Reserve 363

Chapter 23 Fiscal Policy and the Federal Budget 382

Appendix A Answers to “Think for Yourself” Questions 399

Appendix B Glossary 411

Index 419

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