El equipo de Core Economics website
La Economía
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La Economía
- Inicio
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Preface
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A note to instructors
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Producing The Economy
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Table of contents
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List of resources
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Einsteins
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Great economists
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How economists learn from facts
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When economists disagree
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Exercises
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Videos
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Figures
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1—The capitalist revolution
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Introduction
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1.1 Income inequality
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1.2 Measuring income and living standards
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1.3 History’s hockey stick: Growth in income
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1.4 The permanent technological revolution
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1.5 The economy and the environment
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1.6 Capitalism defined: Private property, markets, and firms
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1.7 Capitalism as an economic system
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1.8 The gains from specialization
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1.9 Capitalism, causation and history’s hockey stick
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1.10 Varieties of capitalism: Institutions, government, and the economy
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1.11 Economics and the economy
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1.12 Conclusion
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1.13 References
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2—Technology, population, and growth
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Introduction
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2.1 Economists, historians, and the Industrial Revolution
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2.2 Economic models: How to see more by looking at less
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2.3 Basic concepts: Prices, costs, and innovation rents
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2.4 Modelling a dynamic economy: Technology and costs
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2.5 Modelling a dynamic economy: Innovation and profit
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2.6 The British Industrial Revolution and incentives for new technologies
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2.7 Malthusian economics: Diminishing average product of labour
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2.8 Malthusian economics: Population grows when living standards rise
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2.9 The Malthusian trap and long-term economic stagnation
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2.10 Escaping from Malthusian stagnation
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2.11 Conclusion
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2.12 References
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3—Scarcity, work, and choice
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Introduction
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3.1 Labour and production
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3.2 Preferences
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3.3 Opportunity costs
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3.4 The feasible set
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3.5 Decision making and scarcity
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3.6 Hours of work and economic growth
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3.7 Income and substitution effects on hours of work and free time
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3.8 Is this a good model?
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3.9 Explaining our working hours: Changes over time
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3.10 Explaining our working hours: Differences between countries
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3.11 Conclusion
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3.12 References
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4—Social interactions
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Introduction
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4.1 Social interactions: Game theory
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4.2 Equilibrium in the invisible hand game
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4.3 The prisoners’ dilemma
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4.4 Social preferences: Altruism
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4.5 Altruistic preferences in the prisoners’ dilemma
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4.6 Public goods, free riding, and repeated interaction
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4.7 Public good contributions and peer punishment
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4.8 Behavioural experiments in the lab and in the field
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4.9 Cooperation, negotiation, conflicts of interest, and social norms
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4.10 Dividing a pie (or leaving it on the table)
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4.11 Fair farmers, self-interested students?
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4.12 Competition in the ultimatum game
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4.13 Social interactions: Conflicts in the choice among Nash equilibria
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4.14 Conclusion
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4.15 References
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5—Property and power: Mutual gains and conflict
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Introduction
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5.1 Institutions and power
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5.2 Evaluating institutions and outcomes: The Pareto criterion
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5.3 Evaluating institutions and outcomes: Fairness
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5.4 A model of choice and conflict
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5.5 Technically feasible allocations
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5.6 Allocations imposed by force
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5.7 Economically feasible allocations and the surplus
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5.8 The Pareto efficiency curve and the distribution of the surplus
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5.9 Politics: Sharing the surplus
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5.10 Bargaining to a Pareto-efficient sharing of the surplus
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5.11 Angela and Bruno: The moral of the story
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5.12 Measuring economic inequality
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5.13 A policy to redistribute the surplus and raise efficiency
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5.14 Conclusion
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5.15 References
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6—The firm: Owners, managers, and employees
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Introduction
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6.1 Firms, markets, and the division of labour
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6.2 Other people’s money: The separation of ownership and control
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6.3 Other people’s labour
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6.4 Employment rents
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6.5 Determinants of the employment rent
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6.6 Work and wages: The labour discipline model
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6.7 Wages, effort, and profits in the labour discipline model
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6.8 Putting the model to work: Owners, employees, and the economy
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6.9 Another kind of business organization
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6.10 Principals and agents: Interactions under incomplete contracts
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6.11 Conclusion
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6.12 References
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7—The firm and its customers
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Introduction
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7.1 Breakfast cereal: Choosing a price
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7.2 Economies of scale and the cost advantages of large-scale production
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7.3 Production: The cost function for Beautiful Cars
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7.4 Demand and isoprofit curves: Beautiful Cars
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7.5 Setting price and quantity to maximize profit
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7.6 Look at profit maximization as marginal revenue and marginal cost
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7.7 Gains from trade
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7.8 The elasticity of demand
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7.9 Using demand elasticities in government policy
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7.10 Price-setting, competition, and market power
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7.11 Product selection, innovation, and advertising
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7.12 Prices, costs, and market failure
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7.13 Conclusion
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7.14 References
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8—Supply and demand: Price-taking and competitive markets
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Introduction
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8.1 Buying and selling: Demand and supply
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8.2 The market and the equilibrium price
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8.3 Price-taking firms
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8.4 Market supply and equilibrium
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8.5 Competitive equilibrium: Gains from trade, allocation, and distribution
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8.6 Changes in supply and demand
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8.7 The effects of taxes
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8.8 The model of perfect competition
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8.9 Looking for competitive equilibria
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8.10 Price-setting and price-taking firms
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8.11 Conclusion
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8.12 References
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9—The labour market: Wages, profits, and unemployment
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Introduction
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9.1 The wage-setting curve, the price-setting curve, and the labour market
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9.2 Measuring the economy: Employment and unemployment
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9.3 The wage-setting curve: Employment and real wages
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9.4. The firm’s hiring decision
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9.5. The price-setting curve: Wages and profits in the whole economy
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9.6 Wages, profits, and unemployment in the whole economy
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9.7 How changes in demand for goods and services affect unemployment
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9.8. Labour market equilibrium and the distribution of income
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9.9. Labour supply, labour demand, and bargaining power
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9.10. Labour unions: Bargained wages and the union voice effect
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9.11 Labour market policies to address unemployment and inequality
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9.12. Looking backward: Baristas and bread markets
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9.13 Conclusion
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9.14 References
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10—Banks, money, and the credit market
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Introduction
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10.1 Money and wealth
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10.2 Borrowing: Bringing consumption forward in time
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10.3 Impatience and the diminishing marginal returns to consumption
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10.4 Borrowing allows smoothing by bringing consumption to the present
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10.5 Lending and storing: Smoothing and moving consumption to the future
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10.6 Investing: Another way to move consumption to the future
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10.7 Assets, liabilities, and net worth
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10.8 Banks, money, and the central bank
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10.9 The central bank, the money market, and interest rates
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10.10 The business of banking and bank balance sheets
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10.11 The central bank’s policy rate can affect spending
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10.12 Credit market constraints: A principal–agent problem
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10.13 Inequality: Lenders, borrowers, and those excluded from credit markets
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10.14 Conclusion
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10.15 References
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11—Rent-seeking, price-setting, and market dynamics
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Introduction
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11.1 How people changing prices to gain rents can lead to a market equilibrium
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11.2 How market organization can influence prices
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11.3 Short-run and long-run equilibria
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11.4 Prices, rent-seeking, and market dynamics at work: Oil prices
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11.5 The value of an asset: Basics
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11.6 Changing supply and demand for financial assets
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11.7 Asset market bubbles
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11.8 Modelling bubbles and crashes
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11.9 Non-clearing markets: Rationing, queuing, and secondary markets
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11.10 Markets with controlled prices
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11.11 The role of economic rents
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11.12 Conclusion
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11.13 References
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12—Markets, efficiency, and public policy
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Introduction
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12.1 Market failure: External effects of pollution
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12.2 External effects and bargaining
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12.3 External effects: Policies and income distribution
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12.4 Property rights, contracts, and market failures
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12.5 Public goods
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12.6 Missing markets: Insurance and lemons
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12.7 Incomplete contracts and external effects in credit markets
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12.8 The limits of markets
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12.9 Market failure and government policy
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12.10 Conclusion
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12.11 References
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13—Economic fluctuations and unemployment
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Introduction
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13.1 Growth and fluctuations
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13.2 Output growth and changes in unemployment
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13.3 Measuring the aggregate economy
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13.4 Measuring the aggregate economy: The components of GDP
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13.5 How households cope with fluctuations
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13.6 Why is consumption smooth?
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13.7 Why is investment volatile?
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13.8 Measuring the economy: Inflation
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13.9 Conclusion
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13.10 References
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14—Unemployment and fiscal policy
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Introduction
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14.1 The transmission of shocks: The multiplier process
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14.2 The multiplier model
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14.3 Household target wealth, collateral, and consumption spending
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14.4 Investment spending
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14.5 The multiplier model: Including the government and net exports
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14.6 Fiscal policy: How governments can dampen and amplify fluctuations
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14.7 The multiplier and economic policymaking
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14.8 The government’s finances
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14.9 Fiscal policy and the rest of the world
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14.10 Aggregate demand and unemployment
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14.11 Conclusion
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14.12 References
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15—Inflation, unemployment, and monetary policy
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Introduction
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15.1 What’s wrong with inflation?
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15.2 Inflation results from conflicting and inconsistent claims on output
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15.3 Inflation, the business cycle, and the Phillips curve
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15.4 Inflation and unemployment: Constraints and preferences
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15.5 What happened to the Phillips curve?
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15.6 Expected inflation and the Phillips curve
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15.7 Supply shocks and inflation
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15.8 Monetary policy
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15.9 The exchange rate channel of monetary policy
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15.10 Demand shocks and demand-side policies
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15.11 Macroeconomic policy before the global financial crisis: Inflation-targeting policy
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15.12 Another reason for rising inflation at low unemployment
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15.13 Conclusion
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15.14 References
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16—Technological progress, employment, and living standards in the long run
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Introduction
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16.1 Technological progress and living standards
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16.2 The job creation and destruction process
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16.3 Job flows, worker flows, and the Beveridge curve
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16.4 Investment, firm entry, and the price-setting curve in the long run
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16.5 New technology, wages, and unemployment in the long run
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16.6 Technological change and income inequality
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16.7 How long does it take for labour markets to adjust to shocks?
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16.8 Institutions and policies: Why do some countries do better than others?
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16.9 Technological change, labour markets, and trade unions
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16.10 Changes in institutions and policies
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16.11 Slower productivity growth in services, and the changing nature of work
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16.12 Wages and unemployment in the long run
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16.13 Conclusion
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16.14 References
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17—Capstone: The Great Depression, golden age, and global financial crisis
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Introduction
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17.1 Three economic epochs
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17.2 The Great Depression, positive feedbacks, and aggregate demand
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17.3 Policymakers in the Great Depression
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17.4 The golden age of high growth and low unemployment
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17.5 Workers and employers in the golden age
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17.6 The end of the golden age
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17.7 After stagflation: The fruits of a new policy regime
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17.8 Before the financial crisis: Households, banks, and the credit boom
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17.9 Modelling housing bubbles
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17.10 The financial crisis and the great recession
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17.11 The role of banks in the crisis
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17.12 The economy as teacher
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17.13 Conclusion
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17.14 References
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18—Capstone: The nation and the world economy
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Introduction
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18.1 Globalization and deglobalization in the long run
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18.2 Globalization and investment
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18.3 Globalization and migration
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18.4 Specialization and the gains from trade among nations
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18.5 Specialization, factor endowments, and trade between countries
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18.6 Winners and losers from trade and specialization
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18.7 Winners and losers in the very long run and along the way
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18.8 Migration: Globalization of labour
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18.9 Globalization and anti-globalization
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18.10 Trade and growth
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18.11 Conclusion
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18.12 References
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19—Capstone: Economic inequality
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Introduction
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19.1 Inequality across the world and over time
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19.2. Accidents of birth: Another lens to study inequality
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19.3 What (if anything) is wrong with inequality?
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19.4 How much inequality is too much (or too little)?
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19.5 Endowments, technology, and institutions
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19.6 Inequality, endowments, and principal–agent relationships
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19.7 Putting the model to work: Explaining changes in inequality
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19.8 Predistribution
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19.9 Explaining recent trends in inequality in market income
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19.10 Redistribution: Taxes and transfers
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19.11 Equality and economic performance
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19.12 Conclusion
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19.13 References
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20—Capstone: Economics of the environment
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Introduction
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20.1 Recap: External effects, incomplete contracts, and missing markets
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20.2 Climate change
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20.3 The abatement of environmental damages: Cost-benefit analysis
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20.4 Conflicts of interest: Bargaining over wages, pollution, and jobs
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20.5 Cap and trade environmental policies
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20.6 The measurement challenges of environmental policy
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20.7 Dynamic environmental policies: Future technologies and lifestyles
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20.8 Environmental dynamics
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20.9 Why is addressing climate change so difficult?
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20.10 Policy choices matter
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20.11 Conclusion
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20.12 References
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21—Capstone: Innovation, information, and the networked economy
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Introduction
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21.1 The innovation process: Invention and diffusion
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21.2 Innovation systems
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21.3 External effects: Complements, substitutes, and coordination
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21.4 Economies of scale and winner-take-all competition
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21.5 Matching (two-sided) markets
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21.6 Intellectual property rights
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21.7 Optimal patents: Balancing the objectives of invention and diffusion
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21.8 Public funding of basic research, education, and information infrastructure
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21.9 Conclusion
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21.10 References
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22—Capstone: Economics, politics, and public policy
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Introduction
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22.1 The government as an economic actor
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22.2 Government acting as a monopolist
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22.3 Political competition affects how the government will act
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22.4 Why an erstwhile dictator might submit to political competition
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22.5 Democracy as a political institution
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22.6 Political preferences and electoral competition: The median voter model
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22.7 A more realistic model of electoral competition
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22.8 The advance of democracy
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22.9 Varieties of democracy
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22.10 Democracy makes a difference
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22.11 A puzzle: The persistence of unfairness and market failures in democracies
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22.12 Economic infeasibility
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22.13 Administrative infeasibility
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22.14 Special interests
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22.15 Policy matters and economics works
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22.16 Conclusion
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22.17 References
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Looking forward to economics after Core Economics website
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Glossary
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Bibliography
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Leibnizes
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2.2.1 Introducing the Leibnizes
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2.7.1 The production function
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3.1.1 Average and marginal productivity
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3.1.2 Diminishing marginal productivity
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3.1.3 Concave and convex functions
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3.2.1 Indifference curves and the marginal rate of substitution
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3.4.1 Marginal rate of transformation
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3.5.1 Optimal allocation of free time: MRT meets MRS
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3.6.1 Modelling technological change
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3.7.1 Mathematics of income and substitution effects
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4.4.1 Altruistic preferences: Finding the optimal distribution
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5.4.1 Quasi-linear preferences
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5.4.2 Angela’s choice of working hours
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5.7.1 Angela’s choice of working hours when she pays rent
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5.8.1 The Pareto efficiency curve
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6.6.1 The worker’s best response function
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6.7.1 Profit, wages, and effort
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7.3.1 Average and marginal cost functions
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7.4.1 Isoprofit curves and their slopes
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7.5.1 The profit-maximizing price
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7.6.1 Marginal revenue and marginal cost
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7.8.1 The elasticity of demand
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8.4.1 The firm and market supply curves
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8.4.2 Market equilibrium
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8.5.1 Gains from trade
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8.6.1 Shifts in demand and supply
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11.8.1 Price bubbles
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12.1.1 External effects of pollution
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12.3.1 Pigouvian taxes
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22.2.1 Expected duration of the dictator or governing elite
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22.2.2 How the monopolist sets the rent-maximizing level of taxes
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22.3.1 The income and substitution effect of an increase in political competition
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Copyright acknowledgements