issues in economics today - gbvissues in economics today seventh edition robert c.guell indiana...
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Issues in
Economics Today
Seventh Edition
ROBERT C.GUELL Indiana State University
Mc Graw Hill Education
Brief Contents
1 Economics: The Study of Opportunity Cost 1
2 Supply and Demand 18 3 The Concept of Elasticity and Consumer
and Producer Surplus 39 4 Firm Production, Cost, and Revenue 54 5 Perfect Competition, Monopoly, and
Economic versus Normal Profit 66 6 Every Macroeconomic Word You
Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, and Depression 77
7 Interest Rates and Present Value 93 8 Aggregate Demand and Aggregate
Supply 102 9 Fiscal Policy 114
10 Monetary Policy 126 11 Federal Spending 139 12 Federal Deficits, Surpluses, and the
National Debt 149 13 The Housing Bubble 162 14 The Recession of 2007-2009: Causes and
Policy Response« 171 15 Japan's Lost Decade: Could It Happen in
the United States? 180 16 Is the (Fiscal) Sky Falling?: An Examination
of Unfunded Social Security, Medicare, and State and Local Pension Liabilities 189
17 International Trade: Does It Jeopardize American Jobs? 197
18 International Finance and Exchange Rates 209
19 European Debt Crisis 218 20 Economic Growth and Development 227 21 The Line between Legal and Illegal
Goods 234
22 Natural Resources, the Environment, and Climate Change 244
23 Health Care 257 24 Government-Provided Health Insurance:
Medicaid, Medicare, and the Child Health Insurance Program 269
25 The Economics of Prescription Drugs 282
26 So You Want to Be a Lawyer: Economics and the Law 290
27 The Economics of Crime 296 28 The Economics of Race and Sex
Discrimination 305 29 Income and Wealth Inequality: What's
Fair? 317 30 Farm Policy 326 31 Minimum Wage 335 32 Ticket Brokers and Ticket Scalping 343 33 The Economics of K-12 Education 350 34 College and University Education: Why Is
It So Expensive? 361 35 Poverty and Weifare 371 36 Social Security 382 37 Personal Income Taxes 393 38 Energy Prices 404 39 If We Build It, Will They Come? And
Other Sports Questions 417 40 The Stock Market and Crashes 429 41 Unions 440 42 Walmart: Always Low Prices (and Low
Wages)—Always 450 43 The Economic Impact of Casino
Gambling 455
vii
Table of Contents )
Chapter 1 Economics: The Study of Opportunity Cost 1
Economics and Opportunity Cost 1 Economics Defined 1 Choices Have Consequences 2
Modeling Opportunity Cost Using the Production Possibilities Frontier 2 The Intuition behind Our First Graph 2 The Starting Point for a Production Possibilities
Frontier 3 Points between the Extremes ofa Production Possibilities
Frontier 3 Attributes of the Production Possibilities Frontier 5
Increasing and Constant Opportunity Cost 5 The Big Picture 6
Circular Flow Model: A Model That Shows the Interactions ofAll Economic Actors 6
Thinking Economically 7 Marginal Analysis 7 Positi ve and Normative Analysis 8 Economic Incentives 8 Fallacy of Composition 8 Correlation ¥= Causation 9
Kick It Up a Notch: Demonstrating Constant and Increasing Opportunity Cost on a Production Possibilities Frontier 10 Demonstrating Increasing Opportunity Cost 10 Demonstrating Constant Opportunity Cost 10
Summary 11
Chapter 2 Supply and Demand 18
Supply and Demand Defined 19 Markets 19 Quantity Demanded and Quantity Supplied 19 Ceteris Paribus 21 Demand and Supply 21
The Supply and Demand Model 21 Demand 21 Supply 22 Equilibrium 23 Shortages and Surpluses 24
viii
All about Demand 24 The Law of Demand 24 Why Does the Law of Demand Make Sense? 24 t
All about Supply 25 The Law of Supply 25 Why Does the Law of Supply Make Sense ? 25
Determinante of Demand 26 Taste 27 Income 27 Price ofOther Goods 27 Population of Potential Buyers 28 Expected Price 28 Excise Taxes 28 Subsidies 28 The Effect of Changes in the Determinants of Demand
on the Supply and Demand Model 28 Determinants of Supply 30
Price oflnputs 30 Technology 31 Price ofOther Potential Outputs 31 Number of Seilers 31 Expected Price 31 Excise Taxes 32 , Subsidies 32 The Effect of Changes in the Determinants of
Supply on the Supply and Demand Model 32 The Effect of Changes in Price Expectations
on the Supply and Demand Model 34 Kick It Up a Notch: Why the New
Equilibrium? 34 1
Summary 36
Chapter 3 The Concept of Elasticity and Consumer and Producer Surplus 39
Elasticity of Demand 40 Intuition 40 Definition of Elasticity and Its Formula 40 Elasticity Labels 41
Alternative Ways to Understand Elasticity 41 The Graphical Explanation 41 The Verbal Explanation 42 Seeing Elasticity through Total Expenditures 43
Table of Contents ix
More on Elasticity 43 Determinants of Elasticity 43 Elasticity and the Demand Curve 43 Elasticity of Supply 45
Consumer and Producer Surplus 47 Consumer Surplus 47 Producer Surplus 48 Market Failure 48 Categorizing Goods 49
Kick It Up a Notch: Deadweight Loss 49 Summary 50
Chapter 4 Firm Production, Cost, and Revenue 54
Production 55 Just Words 55 Graphical Exploitation 56 Numerical Example 56
Costs 57 Just Words 57 Numerical Example 58
Revenue 60 Just Words 60 Numerical Example 61
Maximizing Profit 62 Graphical Explanation 62 Numerical Example 62
Summary 63
Chapter 5 Perfect Competition, Monopoly, and Economic versus Normal Profit 66
From Perfect Competition to Monopoly 67 Perfect Competition 67 Monopoly 68 Monopolistic Competition 68 Oligopoly 69 Which Model Fits Reality 69
Supply under Perfect Competition 71 Normal versus Economic Profit 71 When and Why Economic Profits Go to Zero 71 Why Supply Is Marginal Cost under Perfect
Competition 71 Just Words 72 Numerical Example 72 Graphical Explanation 72
Summary 74
Chapter 6 Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, and Depression 77
Measuring the Economy 78 Measuring Nominal Output 78 Measuring Prices and Inflation 79 Problems Measuring Inflation 80
Real Gross Domestic Product and Why It Is Not Synonymous with Social Weifare 82 Real Gross Domestic Product 82 Problems with Real GDP 84
Measuring and Describing Unemployment 85 Measuring Unemployment 85 Problems Measuring Unemployment 85 Types of Unemployment 86
Business Cycles 87 Kick It Up a Notch: National Income and Product
Accounting 90 Summary 90
Chapter 7 Interest Rates and Present Value 93
Interest Rates 94 The Market for Money 94 Nominal Interest Rates versus Real Interest Rates 94
Present Value 95 Simple Calculations 95 Mortgages, Car Payments, and Other Multipayment
Examples 96 Future Value 97 Kick It Up a Notch: Risk and Reward 99 Summary 99
Chapter 8 Aggregate Demand and Aggregate Supply 102
Aggregate Demand 103 Definition 103 Why Aggregate Demand Is Downward Sloping 103
Aggregate Supply 104 Definition 104 Competing Views of the Shape of
Aggregate Supply 104 Shifts in Aggregate Demand and Aggregate
Supply 105
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MznaWM TW S/wß Aggregat Demawf 7 OJ VünoAkf TW Miß Aggregate SwpXy 70&
Causes of Inflation 109 How the Government Can Influenae
(but Probably Not Control) the Economy 109 Demand-Side Macroeconomics 110 Supply-Side Macroeconomics 110
Summary 111
Chapter 9 Fiscal Policy 114
Nondiscretionary and Discretionary Fiscal Policy 114 How They Work 114 Using Aggregate Supply and Aggregate Demand
to Model Fiscal Policy 115 Using Fiscal Policy to
Counteract "Shocks" 116 Aggregate Demand Shocks 116 Aggregate Supply Shocks 117
Evaluating Fiscal Policy 118 Nondiscretionary Fiscal Policy 118 Discretionary Fiscal Policy 118 The Political Problems with Fiscal Policy 119 Criticism from the Right and Left 120 The Rise, Fall, and Rebirth of
Discretionary Fiscal Policy 120 The Obama Stimulus Plan 121 Kick It Up a Notch: Aggregate
Supply Shocks 123 Summary 123
Chapter10 Monetary Policy 126
Goals, Tools, and a Model of Monetary Policy 127 Goals of Monetary Policy 127 Traditional and Ordinary Tools
of Monetary Policy 127 Modeling Monetary Policy 128 The Monetary Transmission Mechanism 129 The Additional Tools of Monetary
Policy Created in 2008 131 Central Bank Independence 132 Modern Monetary Policy 133
The Last 30 Years 133 Summary 137
Chapter 11 Federal Spending 139
A Primer on the Constitution and Spending Money 140 What the Constitution Says 140 Shenanigans 140 Dealing with Disagreements 141
Using Our Understanding of Opportunity Cost 142 Mandatory versus Discretionary Spending 142 Where the Money Goes 143
Using Our Understanding of Marginal Analysis 145 The Size ofthe Federal Government 145 The Distribution of Federal Spending 145
Budgeting for the Future 145 Baseline versus Current Services Budgeting 145
Summary 146
Chapter 12 Federal Deficits, Surpluses, and the National Debt 149
Surpluses, Deficits, and the Debt: Definitions and History 150 Definitions 150 History 150
How Economists See the Deficit and the Debt 153 Operating and Capital Budgets 153 Cyclical and Structural Deficits 153 The Debt as a Percentage of GDP 154 International Comparisons 154 Generational Accounting 155
Who Owns the Debt? 155 Externally Held Debt 156
A Balanced-Budget Amendment 157 Projections 158 Summary 159
Chapter 13 The Housing Bubble 162
How Much Is a House Really Worth? 162 Mortgages 163 How to Make a Bubble 166 Pop Goes the Bubble! 167 The Effect on the Overall Economy 168 Summary 169
Table of Contents xi
Chapter14 The Recession of 2007-2009: Causes and Policy Response« 171
Before It Began 171 Late 2007: The Recession Begins as Do the Initial
Policy Reactions 174 The Bottom Falls Out in Fall 2008 176 The Obama Stimulus Package 176 Extraordinary Monetary Stimulus 178 Summary 179
Chapter 15 Japan s Lost Decade: Could It Happen in the United States? 180
The Economic Situation in Japan Prior to 1990 180
So What Happened in Japan to Change All This? 182 WhatDid Japan Do (Wrong)? 183 How Can This Be Modeled Using the
Aggregate Supply-Aggregate Demand Model? 185
How Is This Similar to the Current Situation in the United States? 185
Summary 187
Chapter 16 Is the (Fiscal) Sky Falling?: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities 189
What Is the Source of the Problem? 189 How Big Is the Social Security and Medicare
Problem? 190 How Big Is the State and Local
Pension Problem? 193 Is It Possible That the Fiscal Sky Isn't About to
Fall? 195 Summary 195
Chapter 17 International Trade: Does It Jeopardize American Jobs? 197
What We Trade and with Whom 197 The Benefits of International Trade 199
Comparative and Absolute Advantage 199 Demonstrating the Gainsfrom Trade 200 Production Possibilities Frontier Analysis 201 Supply and Demand Analysis 202 Whom Does Trade Harm? 202
Trade Barriers 203 Reasons for Limiting Trade 203 Methods of Limiting Trade 204
Trade as a Diplomatie Weapon 205 Kick It Up a Notch: Costs
of Protectionism 205 Summary 206
Chapter18 International Finance and Exchange Rates 209
International Financial Transactions 209 Foreign Exchange Markets 211 Alternative Foreign Exchange Systems 213 Determinants of Exchange Rates 215 Summary 216
Chapter19 European Debt Crisis 218
Introduction 218 In the Beginning There Were 17 Currencies in
17 Countries 218 The Effect of the Euro 219 Why Couldn't They Pull Themselves Out? The United
States Did 223 Is It Too Late to Leave the Euro? 225 Where Should Europe Go from Here? 225 Summary 225
Chapter 20 Economic Growth and Development 227
Growth in Already Developed Countries 227 Comparing Developed Countries and Developing
Countries 229 Fostering (and Inhibiting)
Development 230 The Challenges Facing Developing Countries 231 What Works 232
Summary 232
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Chapter 21 The Line between Legal and Illegal Goods 234
An Economic Model of Tobacco, Alcohol, and Illegal Goods and Services 235
Why Is Regulation Warranted? 235 The Information Problem 235 External Costs 236 Morality Issues 238
Taxes on Tobacco and Alcohol 239 Modeling Taxes 239 The Tobacco Settlement and Why Elasticity Matters 239
Why Are Certain Goods and Services Illegal? 240 The Impact of Decriminalization
on the Marketfor the Goods 240 The External Costs of Decriminalization 241
Summary 241
Chapter 22 Natural Resources, the Environment, and Climate Change 244
Using Natural Resources 245 How Clean Is Clean Enough? 245 The Externalities Approach 246
When the Market Works for Everyone 246 When the Market Does Not Work for Everyone 246
The Property Rights Approach to the Environment and Natural Resources 248 Why You Do Not Mess Up Your Own Property 248 Why You Do Mess Up Common Property 248 Natural Resources and the Importance
of Property Rights 248 Environmental Problems and
Their Economic Solutions 249 Environmental Problems 249 Economic Solutions: Using Taxes
to Solve Environmental Problems 251 Economic Solutions: Using Property Rights
to Solve Environmental Problems 252 No Solution: When There Is No
Government to Tax or Regulate 253 Summary 254
Chapter23 Health Care 257
Where the Money Goes and Where It Comes From 257
Insurance in the United States 258 How Insurance Works 258 Varieties of Private Insurance 259 Public Insurance 259
Economic Models of Health Care 260 Why Health Care Is Not Just Another Good 260 Implications of Public Insurance 261 Effciency Problems with Private Insurance 262 Major Changes to Insurance
Resulting from PPACA 263 The Blood and Organ Problem 265
Comparing the United States with the Rest of the World 265
Summary 267
Chapter 24 Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program 269
Medicaid: What, Who, and How Much 270 Why Medicaid Costs So Much 271
Why Spending Is Greater on the Elderly 272 Cost-Saving Measures in Medicaid 273
Medicare: Public Insurance and the Elderly 273 Why Private Insurance May Not Work 273 Why Medicare's Costs Are High 274
Medicare's Nuts and Bolts 275 Provider Types 275 AwA 275 Awfg 276 Prescription Drug Coverage (Part D) 276 Cost Control Provisions in Medicare 277
The Medicare Trust Fund 277 The Relationship between Medicaid and Medicare 279
Child Health Insurance Program 279 Summary 279
Chapter25 The Economics of Prescription Drugs 282
Profiteers or Benevolent Scientists? 283 Monopoly Power Applied to Drugs 283 Important Questions 285
Expensive Necessities or Relatively Inexpensive Godsends? 285
Price Controls: Are They the Answer? 287 FDA Approval: Too Stringent or Too Lax? 287
Summary 288
Table of Contents xiii
Chapter26 So You Waiit to Be a Lawyer: Economics and the Law 290
The Government's Role in Protecting Property and Enforcing Contracts 290
Private Property 290 Intellectual Property 291 Contracts 291 Enforcing Various Property
Rights and Contracts 291 Negative Consequences of
Private Property Rights 292 Bankruptcy 292 Civil Liability 292 Summary 294
Chapter 27 The Economics of Crime 296
Who Commits Crimes and Why 296 The Rational Criminal Model 297
Crime Falls When Legal Income Rises 297 Crime Falls When the Likelihood and Consequences of
Getting Caught Rise 298 Problems with the Rationality Assumption 298
The Costs of Crime 298 How Much Does an Average Crime Cost? 299 How Much Crime Does an Average
Criminal Commit? 299 Optimal Spending on Crime Control 300
What Is the Optimal Amount to Spend? 300 Is the Money Spent in the Right Way? 301 Are the Right People in Jail? 301 What Laws Should We Rigorously Enforce ? 301 What Is the Optimal Sentence? 302
Summary 303
Chapter 28 The Economics of Race and Sex Discrimination 305
The Economic Status of Women and Minorities 305 Women 305 Minorities 306
Definitions and Detection of Discrimination 308 Discrimination, Definitions, and the Law 308 Detecting and Measuring Discrimination 309
Discrimination in Labor, Consumption, and Lending 310
Labor Market Discrimination 310 Consumption Market and Lending
Market Discrimination 311 Affirmative Action 312
The Economics of Affirmative Action 312 What Is Affirmative Action? 313 Gradations of Affirmative Action 313
Summary 314
Chapter 29 Income and Wealth Inequality: What's Fair? 317
Introduction 317 Measurement of Inequality 317
Income Inequality 317 Wealth Inequality 320
Causes of Household Income and Wealth Inequality 321
Costs and Benefits of Income Inequality 322 Summary 324
Chapter 30 Farm Policy 326
Farm Prices Since 1950 326 Com and Gasoline 327
Price Variation as a Justification for Government Intervention 328 The Case for Price Supports 328 The Case against Price Supports 329
Consumer and Producer Surplus Analysis of Price Floors 329 One Floor in One Market 329 Variable Floors in Multiple Markets 330 What Would Happen without Price Supports? 330
Price Support Mechanisms and Their History 330 Price Support Mechanisms 330 History of Price Supports 332
Is There a Bubble on the Farm? 332 Kick It Up a Notch 333 Summary 333
Chapter 31 Minimum Wage 335
Traditional Economic Analysis of a Minimum Wage 336
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Labor Markets and Consumer and Producer Surplus 336 A Relevant versus an Irrelevant
Minimum Wage 337 What Is Wrong with a Minimum Wage ? 337 Real-WorldImplications of
the Minimum Wage 338 Alternatives to the Minimum Wage 338
Rebuttals to the Traditional Analysis 339 The Macroeconomics Argument 339 The Work Effort Argument 339 The Elasticity Argument 340
Where Are Economists Now? 340 Kick It Up a Notch 341 Summary 341
Chapter 32 Ticket Brokers and Ticket Scalping 343
Defining Brokering and Scalping 344 An Economic Model of Ticket Sales 344
Marginal Cost 344 The Promoter as Monopolist 344 The Perfect Arena 345
Why Promoters Charge Less Than They Could 346
An Economic Model of Scalping 346 Legitimate Scalpers 347 Summary 348
Chapter 33 The Economics of K-12 Education 350
Investments in Human Capital 351 Present Value Analysis 351 External Benefts 351
Should We Spend More? 352 The Basic Data 352 Cautions about Quick Conclusions 354 Literature on Whether More Money Will Improve
Educational Outcomes 355 School Reform Issues 356
The Public School Monopoly 356 Merit Pay and Tenure 357 Private versus Public Education 357 School Vouchers 358 Collective Bargaining 358
Summary 359
Chapter 34 College and University Education: Why Is It So Expensive? 361
Introduction 361 Why Are the Costs So High? 361 Why Are College Costs Rising So Fast? 363 Why Have Textbook Costs Risen So Rapidly? 364 What a College Degree Is Worth 366 How Do People Pay for College? 367 Summary 369
Chapter 35 Poverty and Weifare 371
Measuring Poverty 372 The Poverty Line 372 Who's Poor? 372 Poverty through History 373 Problems with Our Measure of Poverty 374 Poverty in the United States versus Europe 375
Programs for the Poor 375 In Kind versus In Cash 375 Why Spend $685 Billion on
a $91 Billion Problem? 377 Is $685 Billion Even a Lot Compared
to Other Countries? 377 Incentives, Disincentives, Myths, and Truths 377 Weifare Reform 378
Is There a Solution? 378 Weifare as We Now Know It 379 Is Poverty Necessarily Bad? 379
Summary 379
Chapter 36 Social Security 382
The Basics 382 The Beginning 382 Taxes 383 Benefits 383 Changes over Time 383
Why Do We Need Social Security? 384 Social Security's Effect on the Economy 385
Effect on Work 385 Effect on Saving 385
Whom Is the Program Good For? 386 Will the System Be There for Me? 388
Why Social Security Is in Trouble 388
The Social Security Trust Fund 388 Options for Fixing Social Security 389
Summary 390
Chapter 37 Personal Income Taxes 393
How Income Taxes Work 393 Issues in Income Taxation 398
Horizontal and Vertical Equity 398 Equity versus Simplicity 398
Incentives and the Tax Code 398 Do Taxes Alter Work Decisions? 399 Do Taxes Alter Savings Decisions ? 399 Taxes for Social Engineering 399
Who Pays Income Taxes? 399 The Tax Debates of the Last Decade 400 Summary 401
Chapter 38 Energy Prices 404
The Historical View 404 Oil and Gasoline Price History 404 Geopolitical History 405
OPEC 406 What OPEC Does 406 How Cartels Work 407 Why Cartels Are Not Stahle 407 Backfrom the Dead 408
Why Do Prices Change So Fast? 408 Is It All a Conspiracy ? 409 From $1 to $4 per Gallon in lOYears? 409
Electric Utilities 411 Electricity Production 411 Why Are Electric Utilities a
Regulated Monopoly? 412 What Will the Future Hold? 413 Kick It Up a Notch 414 Summary 415
Chapter 39 If We Build It, Will They Come? And Other Sports Questions 417
The Problem for Cities 418 Expansion versus Luring a Team 418 Does a Team Enhance the Local Economy? 419 Why Are Stadiums Publicly Funded? 420
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The Problem for Owners 420 To Move or to Stay 420 To Win or to Profit 421 Don 't Feel Sorryfor Them Just Yet 422
The Sports Labor Market 423 What Owners Will Pay 423 What Players Will Accept 423
The Vocabulary of Sports Economics 423 What a Monopoly Will Do for You 426
Summary 427
Chapter 40 The Stock Market and Crashes 429
Stock Prices 430 How Stock Prices Are
Determined 430 What Stock Markets Do 431
Efficient Markets 432 Stock Market Crashes 432
Bubbles 433 Example ofa Crash: NASDAQ 2000 433
The Accounting Scandals of 2001 and 2002 434 Bankruptcy 435 Why Capitalism Needs Bankruptcy Laws 435 The Kmart and Global Crossing Cases 435 What Happened in the Enron Case 436 Why the Enron Case Matters More
Than the Others 437 Rebound of 2006-2007 and
the Drop of 2008-2009 437 Summary 438
Chapter 41 Unions 440
Why Unions Exist 440 The Perfectly Competitive
Labor Market 440 A Reaction to Monopsony 441 A Way to Restrict Competition and
Improve Quality 442 A Reaction to Information Issues 443
A Union as a Monopolist 443 The History of Labor Unions 444 Where Unions Go from Here 447 Kick It Up a Notch 448 Summary 448
xvi Table of Contents
Chapter 42 Walmart: Always Low Prices (and Low Wages)—Always 450
The Market Form 450 Who Is Affected? 452
Most Consumers Stand to Gain—Some Lose Options 452
Workers Probably Lose 452 Sales Tax Revenues Won 't Be Affected Much 453 Some Businesses Will Get Hurt;
Others Will Be Helped 453 Community Effects 453
Summary 453
Chapter 43 The Economic Impact of Casino Gambling 455
The Perceived Impact of Casino Gambling 455 Local Substitution 455 The "Modest" Upside
of Casino Gambling 456 The Economic Reasons for
Opposing Casino Gambling 456 Summary 457
Index 459
Web Chapters
NAFTA, CAFTA, GATT, WTO: Are Trade Agreements Good for Us?
The Benefits of Free Trade Why Do We Need Trade Agreements?
Strategie Trade Special Interests What Trade Agreements Prevent
Trade Agreements and Institutions Alphabet Soup Are They Working?
Economic and Political Impacts of Trade The Bottom Line
Summary
The International Monetary Fund: Doctor Witch Doctor?
Before the IMF and Its Birth Foreign Exchange Markets Today's IMF
How the IMF Works How IMF Decisions Are Made
The Asian Financial Crisis The Cause The IMF to the Rescue?
Summary
The Cost of War
Opportunity Cost Present Value and the Value of a Human Life Economic versus Accounting Cost
Personnel, Food, and Supplies Cost of Munitions Cost ofGetting Personnel and Equipment in Position Fuel
How GDP Was Affected Environmental and Cultural Costs Summary
The Economics of Terrorism
The Economic Impact of September 1 Ith and of Terrorism in General
Modeling the Economic Impact of the Attacks Insurance Aspects of Terrorism Buy Insurance or Self-Protect or Both
Terrorism from the Perspective of the Terrorist Summary
Rent Control
Rents in a Free Market Reasons for Controlling Rents Consequences of Rent Control Why Does Rent Control Survive? Summary
Table of Contents xvii
Antitrust
What's Wrong with Monopoly? High Prices, Low Output, and Deadweight Loss
Reduced Innovation Natural Monopolies and Necessary Monopolies
Natural Monopoly Patents, Copyrights, and Other Necessary Monopolies
Monopolies and the Law The Sherman Anti-Trust Act What Constitutes a Monopoly?
Examples of Antitrust Action Standard Oil IBM Microsoft iTunes, iPods, iPhones, and the European Union
Summary
Head Start
Head Start as an Investment The Early Invention Premise Present Value Analysis External Benefits The Early Evidence The Remaining Doubts
The Head Start Program The Current Evidence
Evidence that Head Start Works Evidence that Head Start Does Not Work More Evidence is Coming and Some is In
The Opportunity Cost of Fully Funding Head Start Summary