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Book Details
Abstract
This text brings the fascinating subject of economics alive, addressing current and often controversial issues that have a great effect upon us all, for example: why does government worry about inflation? What is a fair wage? Is the Euro a good idea? The state of the Health service, etc. The book adopts a unique case-study approach, to both stimulate and challenge the student. Each of the twenty cases has been carefully chosen to build up an understanding of economic analysis, showing how economic theory relates to the real world. For example Supply, Demand and Elasticity is discussed with the help of the case of ‘The stock market: a quick way to riches or poverty’ and Oligopoly is covered with the help of the case of ‘Europe’s airline prices: the sky’s the limit?’
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Economics theory in action | i | ||
| Contents | v | ||
| List of applications | xiii | ||
| Preface | xv | ||
| Approach to the Fourth Edition | xvi | ||
| A word to the student | xviii | ||
| A word to the instructor | xxi | ||
| Acknowledgements | xxiii | ||
| Introductory concepts | 1 | ||
| Economic models and opportunity cost East European economic reforms: the road to freedom? | 3 | ||
| Chapter overview | 3 | ||
| Introduction | 3 | ||
| Use of economic models | 5 | ||
| Beginning to construct a model | 6 | ||
| Developing the model: two types of economy | 13 | ||
| From planned to market economies: some problems | 17 | ||
| Conclusion | 20 | ||
| Chapter summary | 20 | ||
| Questions for discussion | 21 | ||
| Websites | 23 | ||
| Notes | 23 | ||
| Microeconomics | 25 | ||
| Supply, demand and elasticity The stock market: a quick way to riches or poverty? | 27 | ||
| Chapter overview | 27 | ||
| Introduction: what is the stock market for? | 27 | ||
| Prices in the secondary market: supply and demand | 29 | ||
| Changes in the demand for equities | 33 | ||
| Changes in the supply of equities | 38 | ||
| Sensitivity of demand to share price changes: elasticity of demand | 39 | ||
| Changes in share prices: speculation | 41 | ||
| Share price changes: some illustrations | 43 | ||
| Conclusion | 44 | ||
| Chapter summary | 47 | ||
| Questions for discussion | 47 | ||
| Websites | 49 | ||
| Consumer behaviour: utility Traffic jams: could European cities import a solution from Singapore? | 50 | ||
| Chapter overview | 50 | ||
| Introduction | 50 | ||
| The demand for road space | 54 | ||
| The supply of road space | 58 | ||
| Peak use pricing | 59 | ||
| Example of road pricing | 62 | ||
| Singapore today | 64 | ||
| Conclusion | 66 | ||
| Chapter summary | 67 | ||
| Questions for discussion | 67 | ||
| Websites | 69 | ||
| Notes | 69 | ||
| Consumer behaviour: indifference analysis The health care system: is radical treatment needed? | 70 | ||
| Chapter overview | 70 | ||
| Introduction | 70 | ||
| The market case | 71 | ||
| Private medical care using indifference theory | 75 | ||
| The case for publicly provided health care | 79 | ||
| Developing the equity argument: Pareto optimality | 84 | ||
| Inefficiency in the market for insurance | 86 | ||
| Conclusion | 87 | ||
| Chapter summary | 90 | ||
| Questions for discussion | 90 | ||
| Websites | 92 | ||
| Notes | 92 | ||
| Production and cost Europe’s regional problems: why so depressing? | 93 | ||
| Chapter overview | 93 | ||
| Introduction | 93 | ||
| Illustrating the size of the problem: the UK and Germany | 94 | ||
| A possible solution: the market case | 96 | ||
| The interventionist case | 99 | ||
| The law of diminishing returns | 100 | ||
| Diminishing returns and the optimum population | 103 | ||
| The form of state intervention | 104 | ||
| The problem at the wider level | 109 | ||
| European regional policy | 111 | ||
| Conclusion | 112 | ||
| Chapter summary | 113 | ||
| Questions for discussion | 113 | ||
| Websites | 114 | ||
| Perfect competition Small firms: is small beautiful? | 115 | ||
| Chapter overview | 115 | ||
| Introduction | 115 | ||
| The presence of small firms in Britain | 116 | ||
| The case for non-protection | 121 | ||
| Competing against large firms: long-run cost curves in practice | 127 | ||
| The survival of small firms | 129 | ||
| The case for small firm protection | 131 | ||
| Government aid for small firms | 133 | ||
| Small firms and the banking sector | 134 | ||
| Conclusion | 136 | ||
| Chapter summary | 136 | ||
| Questions for discussion | 136 | ||
| Websites | 137 | ||
| Notes | 137 | ||
| Monopoly and monopolistic competition The price of oil: does OPEC hold the West to ransom? | 138 | ||
| Chapter overview | 138 | ||
| Introduction | 138 | ||
| Oil: a brief history of the industry | 139 | ||
| Oil prices: ‘market forces at work’ | 140 | ||
| Objections to the ‘market forces’ view | 144 | ||
| Developing the concept of monopoly power | 152 | ||
| The market for petrol: monopolistic competition | 156 | ||
| Conclusion | 159 | ||
| Chapter summary | 159 | ||
| Questions for discussion | 160 | ||
| Websites | 161 | ||
| Notes | 161 | ||
| Oligopoly Europe’s airline prices: | 162 | ||
| Chapter overview | 162 | ||
| Introduction | 162 | ||
| The European airline industry: an oligopolistic market | 163 | ||
| Government attitudes towards the airline industry: state regulation | 171 | ||
| US experience of airline deregulation | 174 | ||
| Applying North American lessons to European airlines | 177 | ||
| Conclusion | 180 | ||
| Chapter summary | 181 | ||
| Questions for discussion | 181 | ||
| Websites | 182 | ||
| Non-profit-maximising behaviour Business behaviour: are profits everything? | 183 | ||
| Chapter overview | 183 | ||
| Introduction | 183 | ||
| The profit maximisation view | 184 | ||
| Full cost pricing | 185 | ||
| Sales revenue maximisation | 188 | ||
| Growth maximisation | 190 | ||
| A ‘managerial utility’ model | 192 | ||
| Other models | 194 | ||
| Some strands of evidence | 195 | ||
| Conclusion | 200 | ||
| Chapter summary | 200 | ||
| Questions for discussion | 200 | ||
| Websites | 202 | ||
| Note | 202 | ||
| Efficiency, externalities and public goods Government expenditure: is the money efficiently spent? | 203 | ||
| Chapter overview | 203 | ||
| Introduction | 203 | ||
| Understanding efficiency | 204 | ||
| Allocative efficiency | 209 | ||
| Market imperfections | 211 | ||
| Government policy on efficiency | 215 | ||
| National Audit Office: getting value for money | 215 | ||
| Purchasing defence equipment | 216 | ||
| Coastal and inland defences in England | 219 | ||
| Innovation | 221 | ||
| Conclusion | 224 | ||
| Chapter summary | 225 | ||
| Questions for discussion | 226 | ||
| Websites | 226 | ||
| Notes | 226 | ||
| Labour markets Trade unions: labour market | 227 | ||
| Chapter overview | 227 | ||
| Introduction | 227 | ||
| Trade unions and industrial relations in the UK | 228 | ||
| Economic analysis of trade unions | 231 | ||
| Constraints on union action in labour markets | 234 | ||
| The empirical evidence | 241 | ||
| Conclusion | 243 | ||
| Chapter summary | 244 | ||
| Questions for discussion | 244 | ||
| Websites | 245 | ||
| Notes | 245 | ||
| Macroeconomics | 247 | ||
| National income Damaging the Earth: how much does it really matter? | 249 | ||
| Chapter overview | 249 | ||
| Introduction | 249 | ||
| The circular flow of incomes | 250 | ||
| The traditional measurement of national output flows | 253 | ||
| Environmental pollution and the national income accounts | 259 | ||
| Resource depletion and the national income accounts | 264 | ||
| Conclusion | 267 | ||
| Chapter summary | 267 | ||
| Questions for discussion | 267 | ||
| Websites | 269 | ||
| Notes | 269 | ||
| Keynesianism and unemployment Unemployment: what can the government do? | 270 | ||
| Chapter overview | 270 | ||
| Introduction | 270 | ||
| Equilibrium output in Keynesian thinking | 275 | ||
| The paradox of thrift | 278 | ||
| Government action on demand-deficient unemployment | 283 | ||
| Problems in controlling unemployment | 286 | ||
| Two fallacies exposed | 290 | ||
| Conclusion | 291 | ||
| Chapter summary | 292 | ||
| Questions for discussion | 292 | ||
| Websites | 293 | ||
| Notes | 293 | ||
| Investment Saving for the future: how much should we invest? | 294 | ||
| Chapter overview | 294 | ||
| Introduction | 294 | ||
| The market for investment goods | 295 | ||
| The meaning of investment | 298 | ||
| Extent and direction of UK investment | 299 | ||
| Investment decisions and the rate of interest | 301 | ||
| Investment and other factors | 309 | ||
| Weaknesses in the market case? | 313 | ||
| Conclusion | 315 | ||
| Chapter summary | 315 | ||
| Questions for discussion | 316 | ||
| Websites | 316 | ||
| Notes | 317 | ||
| Inflation, aggregate demand and supply Beating inflation: is it really worth it? | 318 | ||
| Chapter overview | 318 | ||
| Introduction | 318 | ||
| Inflation: what do we mean? | 319 | ||
| The costs of inflation | 323 | ||
| Imperfectly anticipated inflation | 325 | ||
| Inflation and unemployment | 330 | ||
| Problems with deflation | 337 | ||
| Conclusion | 338 | ||
| Chapter summary | 338 | ||
| Questions for discussion | 339 | ||
| Websites | 339 | ||
| Notes | 340 | ||
| Supply side behaviour: taxation Taxes and benefits: a just and fair society? | 341 | ||
| Chapter overview | 341 | ||
| Introduction | 341 | ||
| The tax system in the UK | 342 | ||
| Tax and effects on output | 346 | ||
| The supply of labour: willingness to work | 349 | ||
| Direct taxation and its effects on incentives | 352 | ||
| Income support and its effects on incentives | 355 | ||
| Strands of evidence | 358 | ||
| Conclusion | 361 | ||
| Chapter summary | 362 | ||
| Questions for discussion | 362 | ||
| Websites | 364 | ||
| Supply side behaviour: privatisation Privatisation: a supply side improvement? | 365 | ||
| Chapter overview | 365 | ||
| Introduction | 365 | ||
| Public ownership of assets: the arguments in favour | 367 | ||
| Private ownership of assets: counter arguments | 371 | ||
| Claimed benefits of privatisation | 372 | ||
| Deregulation | 378 | ||
| Conclusion | 380 | ||
| Chapter summary | 381 | ||
| Questions for discussion | 381 | ||
| Websites | 382 | ||
| Notes | 382 | ||
| Money and banking Running the economy: an independent central bank? | 383 | ||
| Chapter overview | 383 | ||
| Introduction | 383 | ||
| Keynesian macroeconomic management | 385 | ||
| Central bank independence in Keynesian economics | 392 | ||
| An alternative perspective: monetarism | 394 | ||
| Monetarists and central bank independence | 400 | ||
| How independent is independent? | 401 | ||
| Central bank independence, prices and growth: some evidence | 403 | ||
| UK Central Bank independence: the early years | 404 | ||
| Conclusion | 407 | ||
| Chapter summary | 408 | ||
| Questions for discussion | 408 | ||
| Websites | 409 | ||
| Note | 409 | ||
| The international economy | 411 | ||
| Comparative advantage and the balance of payments Manufacturing trade: not made in Britain? | 413 | ||
| Chapter overview | 413 | ||
| Introduction | 413 | ||
| The balance of payments | 414 | ||
| The basis of international trade | 420 | ||
| How significant is the deficit in manufacturing trade? | 425 | ||
| Conclusion | 429 | ||
| Chapter summary | 431 | ||
| Questions for discussion | 431 | ||
| Websites | 433 | ||
| Notes | 433 | ||
| Exchange rates Giving up sterling: too high a price to pay? | 434 | ||
| Chapter overview | 434 | ||
| Introduction | 434 | ||
| Exchange rates and the balance of payments | 435 | ||
| The history of the European exchange rate mechanism | 440 | ||
| The establishment of European monetary union | 448 | ||
| Living with monetary union: the Stability Pact | 454 | ||
| The UK and monetary union | 455 | ||
| Conclusion | 459 | ||
| Chapter summary | 459 | ||
| Questions for discussion | 460 | ||
| Websites | 461 | ||
| Notes | 462 | ||
| AFTERWORD An overview of the economic system | 463 | ||
| APPENDIX 1 Guide to sources of information | 466 | ||
| Sources of information on share prices | 469 | ||
| Measuring the distribution of income: the Gini coefficient | 472 | ||
| Derivation of the demand curve for labour | 474 | ||
| Determination of the multiplier | 476 | ||
| Glossary | 478 | ||
| Index | 495 |