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Book Details
Abstract
Completely updated and restructured to reflect the new AS/A Level Economics specifications, this highly acclaimed and well respected text book is written in a student friendly manner.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Economics | i | ||
| Contents | v | ||
| Preface | xv | ||
| Syllabus map | xvi | ||
| About the authors | xviii | ||
| Acknowledgements | xix | ||
| Publishers’ acknowledgements | xx | ||
| The market system | 1 | ||
| Introduction: what is economics all about? | 3 | ||
| The subject matter of economics | 3 | ||
| Positive and normative statements | 5 | ||
| Scientific method | 6 | ||
| Different answers to the same questions | 8 | ||
| Conclusions | 11 | ||
| Summary | 12 | ||
| Questions | 12 | ||
| Data response A | 13 | ||
| Data response B | 13 | ||
| Mathematical techniques in economics | 16 | ||
| How to use this chapter | 16 | ||
| The use and abuse of statistics | 16 | ||
| Indices | 19 | ||
| Statistics | 24 | ||
| Summary | 26 | ||
| Questions | 26 | ||
| Data response A | 26 | ||
| Data response B | 27 | ||
| Data response C | 27 | ||
| The economic problem: resources, scarcity and choice | 29 | ||
| Wants and needs | 29 | ||
| The factors of production | 30 | ||
| The division of labour | 32 | ||
| Economies of scale | 33 | ||
| New technology | 36 | ||
| Increasing costs and diminishing returns | 37 | ||
| The law of increasing costs | 38 | ||
| International trade | 42 | ||
| Summary | 45 | ||
| Questions | 45 | ||
| Data response A | 45 | ||
| Data response B | 46 | ||
| The allocation of resources in competitive markets | 47 | ||
| The price system | 47 | ||
| Demand | 48 | ||
| Supply | 51 | ||
| Equilibrium prices | 53 | ||
| Demand in detail | 56 | ||
| The price system assessed | 60 | ||
| Summary | 61 | ||
| Questions | 62 | ||
| Data response A | 62 | ||
| Data response B | 63 | ||
| Elasticities of demand and supply | 64 | ||
| Introduction | 64 | ||
| Elasticity of demand | 64 | ||
| Price elasticity of demand and the firm’s decision making | 66 | ||
| The calculation of price elasticity of demand | 67 | ||
| Factors determining price elasticity of demand | 69 | ||
| Arc elasticity | 71 | ||
| Point elasticity | 72 | ||
| Income elasticity of demand | 73 | ||
| Cross elasticity of demand | 74 | ||
| Price elasticity of supply | 75 | ||
| Summary | 78 | ||
| Questions | 78 | ||
| Data response A | 79 | ||
| Data response B | 79 | ||
| Markets in movement | 80 | ||
| Some important ideas reviewed | 80 | ||
| Changes in market price | 81 | ||
| The effect of time on prices | 84 | ||
| Government interference withequilibrium prices | 84 | ||
| Taxes and subsidies | 89 | ||
| Problems with demand and supplyanalysis | 92 | ||
| Summary | 95 | ||
| Questions | 95 | ||
| Data response A | 96 | ||
| Data response B | 96 | ||
| The business organisation, costs and profits | 98 | ||
| Types of business organisation | 98 | ||
| Legal forms of firms | 100 | ||
| Costs of production | 103 | ||
| Profits | 108 | ||
| Conclusion | 110 | ||
| Summary | 110 | ||
| Questions | 111 | ||
| Data response A | 111 | ||
| Data response B | 111 | ||
| Market structures | 112 | ||
| Supply | 112 | ||
| Profit maximisation | 112 | ||
| Types of competition | 113 | ||
| Alternative objectives | 119 | ||
| Summary | 120 | ||
| Questions | 120 | ||
| Data response A | 120 | ||
| Data response B | 120 | ||
| Market failure andgovernment intervention | 123 | ||
| The mixed economy: market failure vs government failure | 125 | ||
| What is a mixed economy? | 125 | ||
| The origins of the mixed economy | 127 | ||
| Criteria for government intervention in the market | 130 | ||
| The allocative role: provision of goods and services | 130 | ||
| The distributive role: transfer payments | 132 | ||
| Criteria for the allocation of resources | 133 | ||
| Conclusion | 135 | ||
| Summary | 135 | ||
| Questions | 136 | ||
| Data response A | 136 | ||
| Government intervention in the market | 137 | ||
| Introduction | 137 | ||
| Case study 10.1 the growth of public expenditure | 137 | ||
| Reasons for growth in public expenditure | 138 | ||
| Strategies for the control of public expenditure | 139 | ||
| Case study 10.2 reform of the NHS: technical efficiency and transactions costs | 140 | ||
| How to pay for the service? | 141 | ||
| Case study 10.3 markets in education: allocative efficiency | 144 | ||
| Case study 10.4 monopoly and privatised industries | 146 | ||
| Case study 10.5 regional problems | 147 | ||
| Summary | 151 | ||
| Markets in operation | 153 | ||
| The market in practice: agriculture, housing and labour | 155 | ||
| Introduction | 155 | ||
| Case study 11.1 agricultural prices | 155 | ||
| Features of the agriculture industry | 157 | ||
| Recent developments in policy | 158 | ||
| A comparison of three policies | 159 | ||
| Case study 11.2 the housing market | 161 | ||
| The public sector | 163 | ||
| The voluntary sector | 165 | ||
| The owner occupied sector | 165 | ||
| Case study 11.3 minimum wage legislation | 170 | ||
| Summary | 172 | ||
| The leisure industry | 173 | ||
| The meaning of leisure | 173 | ||
| Travel and tourism | 176 | ||
| Some economic aspects of the English Premier League | 177 | ||
| Conclusion | 179 | ||
| Summary | 179 | ||
| Questions | 180 | ||
| Data response A | 180 | ||
| The economics of the environment | 182 | ||
| An introduction to the environment | 182 | ||
| Policies to deal with the environment | 183 | ||
| Pollution characteristics | 185 | ||
| Case study 13.1 global warming | 187 | ||
| Policies | 189 | ||
| Case study 13.2 ozone depletion | 192 | ||
| ase study 13.3 rubbish and recycling | 193 | ||
| Policy | 194 | ||
| Summary | 195 | ||
| Questions | 195 | ||
| Transport and the economy | 196 | ||
| Introduction | 196 | ||
| Case study 14.1 road congestion | 196 | ||
| Case study 14.2 privatising a loss-makingmonopoly | 200 | ||
| Privatisation | 202 | ||
| Accountability | 203 | ||
| Alternative methods of privatisation | 203 | ||
| Case study 14.3 air transport | 204 | ||
| Case study 14.4 the channel crossing: intermodal competition | 207 | ||
| Summary | 208 | ||
| The national economy | 209 | ||
| What is the macroeconomy? | 211 | ||
| Pre-Keynesian attitudes | 211 | ||
| Macroeconomics | 212 | ||
| Conclusion | 214 | ||
| Summary | 214 | ||
| Questions | 214 | ||
| Data response A | 215 | ||
| Measuring the macroeconomy | 216 | ||
| The four macroeconomic policy targets | 216 | ||
| The circular flow of national income | 217 | ||
| The components of national income | 218 | ||
| National income accounts | 219 | ||
| Growth | 222 | ||
| Conclusion | 225 | ||
| Summary | 226 | ||
| Questions | 226 | ||
| Data response A | 226 | ||
| Analysing the macroeconomy | 228 | ||
| The aggregate demand and supply curve approach | 228 | ||
| The derivation of the aggregate supply curve | 231 | ||
| Conclusion | 234 | ||
| Summary | 235 | ||
| Questions | 235 | ||
| Data response A | 236 | ||
| Managing the macroeconomy: problems and policies | 238 | ||
| The major objectives of government policy | 238 | ||
| 1945 to the early 1970s | 239 | ||
| 1974–1982 | 241 | ||
| 1982–1996 | 249 | ||
| 1997 onwards | 251 | ||
| International interdependence and ‘globalisation’ | 252 | ||
| Conclusion | 254 | ||
| Summary | 254 | ||
| Questions | 254 | ||
| Data response A | 255 | ||
| Business economics | 257 | ||
| The size and growth of firms | 259 | ||
| The size of firms | 259 | ||
| The growth of firms | 260 | ||
| Multinational firms | 264 | ||
| The continuation of the small business | 264 | ||
| Conclusion | 265 | ||
| Summary | 265 | ||
| Questions | 265 | ||
| Data response A | 266 | ||
| Data response B | 266 | ||
| Costs in the short run and the long run | 270 | ||
| Average costs in the short run | 270 | ||
| Average costs in the long run | 272 | ||
| The mathematics of marginal cost | 275 | ||
| Changes in costs | 276 | ||
| Conclusion | 276 | ||
| Summary | 277 | ||
| Questions | 278 | ||
| Data response A | 278 | ||
| Data response B | 278 | ||
| Competitive supply | 279 | ||
| The best profit output | 279 | ||
| The supply curve | 281 | ||
| The optimality of perfect competition | 282 | ||
| Summary | 284 | ||
| Questions | 284 | ||
| Data response A | 284 | ||
| Data response B | 285 | ||
| Price and output under imperfect competition | 286 | ||
| Perfect and imperfect competition | 286 | ||
| Profit-maximising techniques | 287 | ||
| The equilibrium of the monopolist | 292 | ||
| The equilibrium of the monopolistically competitive firm | 293 | ||
| Oligopolistic competition | 295 | ||
| Managerial and behavioural theories revisited | 298 | ||
| Contestable markets | 299 | ||
| Limit pricing | 300 | ||
| Conclusion | 300 | ||
| Summary | 300 | ||
| Questions | 301 | ||
| Data response A | 301 | ||
| Data response B | 301 | ||
| Aspects of monopoly | 304 | ||
| Governments and monopoly | 304 | ||
| Pricing problems | 308 | ||
| Discriminating monopoly | 309 | ||
| Monopoly assessed | 311 | ||
| Conclusion | 313 | ||
| Summary | 313 | ||
| Questions | 314 | ||
| Data response A | 314 | ||
| Data response B | 314 | ||
| Public ownership, privatisation, regulation and deregulation | 318 | ||
| How to use this chapter | 318 | ||
| Introduction | 318 | ||
| Case study 24.1 the development of the nationalised industries | 319 | ||
| Reasons for nationalisation | 319 | ||
| Case study 24.2 problems of nationalised industry control | 321 | ||
| Case study 24.3 the privatisation process | 325 | ||
| Methods of privatisation | 325 | ||
| Case study 24.4 privatisation and the introduction of competition | 326 | ||
| Vertical disintegration | 326 | ||
| Local monopolies competing in the capital markets | 329 | ||
| Competition and new technology | 329 | ||
| Case study 24.5the regulation of privatised industries | 331 | ||
| Case study 24.6 is privatisation a success? | 333 | ||
| Summary | 335 | ||
| Labour markets and thedistribution of income | 337 | ||
| The pricing of productive factors | 339 | ||
| Introduction | 339 | ||
| Marginal distribution theory | 339 | ||
| Resources and costs | 345 | ||
| Production in the long run | 347 | ||
| Conclusion | 350 | ||
| Summary | 350 | ||
| Questions | 351 | ||
| Data response A | 351 | ||
| Data response B | 352 | ||
| Labour and wages | 354 | ||
| The determination of the wage rate and level of employment | 354 | ||
| The supply of labour | 355 | ||
| Trade unions and wages | 358 | ||
| National minimum wage | 362 | ||
| Monopsony in labour markets | 362 | ||
| Differentials and disequilibriums | 363 | ||
| Summary | 366 | ||
| Questions | 366 | ||
| Data response A | 367 | ||
| Data response B | 368 | ||
| An introduction to welfare economics | 371 | ||
| Introduction | 371 | ||
| Partial and general equilibrium | 371 | ||
| The Pareto criterion | 373 | ||
| Allocative efficiency | 374 | ||
| Welfare and utility | 375 | ||
| Efficiency and the free market | 375 | ||
| Pareto efficiency and perfect competition | 376 | ||
| The welfare significance of equilibrium in a perfect market | 378 | ||
| Causes of market failure | 381 | ||
| Imperfect competition | 381 | ||
| Externalities | 382 | ||
| Public goods | 386 | ||
| Public goods, efficiency and valuation | 387 | ||
| Conclusion | 389 | ||
| Summary | 389 | ||
| Questions | 390 | ||
| Data response A | 391 | ||
| Inequality and public policy | 392 | ||
| Structure of the chapter | 392 | ||
| The distribution of income and wealth | 392 | ||
| Understanding the tax–benefit system | 395 | ||
| Understanding the benefit system | 399 | ||
| Case study 28.1 what makes a good tax? | 399 | ||
| Case study 28.2 the shift to expenditure taxation | 400 | ||
| Case study 28.3 direct taxes: a disincentive to work? | 403 | ||
| Tax reform | 406 | ||
| Case study 28.4 local taxation and autonomy | 408 | ||
| Summary | 409 | ||
| Macroeconomic analysis | 411 | ||
| Keynesian macroeconomics | 413 | ||
| The Keynesian revolution | 413 | ||
| Macroeconomics | 414 | ||
| The fundamental ideas of Keynes | 416 | ||
| Keynesian recession and depression | 417 | ||
| The revival of the neo-classical school | 421 | ||
| Conclusion | 421 | ||
| Summary | 421 | ||
| Questions | 421 | ||
| Data response A | 422 | ||
| Data response B | 422 | ||
| Changes in aggregate demand: consumption, savings and investment | 423 | ||
| Income and consumption | 423 | ||
| Determinants of consumption | 427 | ||
| Savings | 428 | ||
| Determinants of investment | 430 | ||
| Conclusion | 433 | ||
| Summary | 435 | ||
| Questions | 435 | ||
| Appendix: the accelerator | 435 | ||
| Data response A | 437 | ||
| Data response B | 438 | ||
| The Keynesian | 439 | ||
| The Keynesian aggregate model | 439 | ||
| Goods and money | 439 | ||
| Withdrawals and injections | 440 | ||
| The ‘hydraulic’ Keynesian model – an overview | 441 | ||
| The equilibrium of national income | 443 | ||
| A model of the economy | 443 | ||
| Conclusion | 445 | ||
| Summary | 445 | ||
| Questions | 446 | ||
| Data response A | 446 | ||
| The multiplier | 448 | ||
| The multiplier defined | 449 | ||
| The operation of the multiplier | 449 | ||
| The multiplier formula | 450 | ||
| Equilibrium and the multiplier | 451 | ||
| Conclusion | 453 | ||
| Summary | 453 | ||
| Questions | 453 | ||
| Data response A | 454 | ||
| Data response B | 454 | ||
| Aggregate demand and supply analysis | 455 | ||
| The aggregate demand and supply curve approach | 455 | ||
| A neo-classical view | 459 | ||
| Conclusion | 461 | ||
| Summary | 461 | ||
| Questions | 462 | ||
| Data response A | 462 | ||
| Data response B | 463 | ||
| Managing the economy:issues and policies | 467 | ||
| Growth and stability | 469 | ||
| Economic growth | 469 | ||
| Factors influencing growth | 471 | ||
| People and growth | 474 | ||
| The problems of the UK economy | 477 | ||
| Summary | 478 | ||
| Questions | 479 | ||
| Data response A | 479 | ||
| Data response B | 479 | ||
| Money and prices | 480 | ||
| Introduction | 480 | ||
| The development of money | 480 | ||
| Credit creation | 481 | ||
| The functions and attributes of money | 483 | ||
| Measuring the money supply | 486 | ||
| The quantity equation of money | 489 | ||
| The concept of the general price level | 491 | ||
| Alternative measures of inflation | 495 | ||
| International comparisons | 496 | ||
| Financial institutions | 497 | ||
| Commercial banks | 498 | ||
| Money markets | 502 | ||
| The capital market | 505 | ||
| Central banking | 505 | ||
| Summary | 506 | ||
| Questions | 508 | ||
| Data response A | 508 | ||
| Fiscal and monetary policies | 510 | ||
| Introduction | 510 | ||
| Fiscal policy | 510 | ||
| The development of monetary policy | 514 | ||
| The stages of monetary policy | 515 | ||
| The weapons of monetary policy | 516 | ||
| Problems of monetary policy | 519 | ||
| The independence of the Bank of England | 521 | ||
| Summary | 522 | ||
| Questions | 522 | ||
| Data response A | 523 | ||
| Data response B | 523 | ||
| Monetary analysis and income analysis | 527 | ||
| Monetarists and Keynesians | 527 | ||
| Money and national income | 529 | ||
| Liquidity preference | 532 | ||
| Monetarist theory of the demand for money | 535 | ||
| The determination of aggregate real income | 539 | ||
| Recession or the natural rate of unemployment? | 542 | ||
| Conclusion | 546 | ||
| Summary | 546 | ||
| Questions | 547 | ||
| Data response A | 548 | ||
| Data response B | 548 | ||
| The control of inflation | 550 | ||
| The costs of inflation | 550 | ||
| The Phillips curve | 551 | ||
| The causes of inflation | 555 | ||
| The control of inflation | 559 | ||
| Conclusion | 563 | ||
| Summary | 563 | ||
| Questions | 563 | ||
| Data response A | 564 | ||
| Data response B | 564 | ||
| Unemployment and government policy | 566 | ||
| Employment and unemployment | 566 | ||
| The costs of unemployment | 569 | ||
| Vacancies and unemployment | 569 | ||
| Types of unemployment | 570 | ||
| Regional unemployment | 572 | ||
| The control of unemployment: the supply side view | 577 | ||
| The control of unemployment: neo-Keynesian views | 580 | ||
| Conclusion | 581 | ||
| Summary | 581 | ||
| Questions | 582 | ||
| Data response A | 582 | ||
| Data response B | 582 | ||
| Advanced policy issues | 585 | ||
| About this chapter | 585 | ||
| The philosophy behind neo-classical economics | 585 | ||
| Demand and marginal utility | 586 | ||
| Case studies | 589 | ||
| Case study 40.1 acid rain | 589 | ||
| Case study 40.2 problems of decision makingin the public sector | 592 | ||
| Cost–benefit analysis | 592 | ||
| Conclusions | 597 | ||
| Summary | 597 | ||
| Appendix: Indifference curve analysis | 597 | ||
| Applications of indifference curve analysis | 600 | ||
| Revealed preference theory | 603 | ||
| Appendix summary | 604 | ||
| Appendix questions | 604 | ||
| Data response A | 604 | ||
| Data response B | 605 | ||
| The gains of international trade | 606 | ||
| The theory of comparative advantage | 606 | ||
| Comparative advantage: a model | 607 | ||
| Comparative advantage and exchange rates | 611 | ||
| Extending the theory | 612 | ||
| Limitations of comparative advantage | 614 | ||
| Protectionism considered | 616 | ||
| Conclusion | 618 | ||
| Summary | 619 | ||
| Questions | 619 | ||
| Data response A | 620 | ||
| The balance of payments and exchange rates | 622 | ||
| The pattern of the UK’s overseas trade | 622 | ||
| The balance of payments | 625 | ||
| The problems of a surplus | 627 | ||
| Deficit problems | 628 | ||
| Exchange rates | 630 | ||
| The exchange rate debate | 632 | ||
| Fixed exchange rates | 633 | ||
| The equilibrium exchange rate | 634 | ||
| The Asian crisis | 635 | ||
| Recent UK developments | 636 | ||
| Summary | 638 | ||
| Questions | 638 | ||
| Data response A | 638 | ||
| Data response B | 639 | ||
| Conflicts between objectives | 641 | ||
| The lessons of history | 641 | ||
| Conclusion | 644 | ||
| Summary | 644 | ||
| Questions | 645 | ||
| The EU and widerperspectives | 647 | ||
| International institutions | 649 | ||
| Introduction | 649 | ||
| The International Monetary Fund | 649 | ||
| The break-up of the Bretton Woods System | 651 | ||
| Eurocurrencies | 654 | ||
| The General Agreement on Tariffs and Trade (GATT) and its successor, the WorldTrade Organisation (WTO) | 655 | ||
| Other international institutions | 657 | ||
| Summary | 659 | ||
| Questions | 659 | ||
| Data response A | 660 | ||
| Websites | 661 | ||
| The European Union | 662 | ||
| Introduction | 662 | ||
| The economics of integration | 663 | ||
| Economic and Monetary Union | 668 | ||
| Regional problems and policy in the EU | 678 | ||
| Employment and social policy in the EU | 681 | ||
| EU enlargement | 683 | ||
| Summary | 686 | ||
| Questions | 687 | ||
| Data response A | 687 | ||
| Index | 717 |