Economics For Dummies

Understand the science of wealth and prosperity

• Find FREE quizzes for every chapter online
• Learn about good markets, bad monopolies, and inflation
• Decode budget deficits and trade gains

This book gives you everything you need to understand our rapidly evolving economy--as well as the economic fundamentals that never change. What's the best way to fight poverty? How can governments spur employment and wage growth? What can be done to protect endangered species and the environment? This book explains the answers to those questions--and many more--in plain English.

Inside...

• Get the fascinating scoop on behavioral economics
• Understand the model of supply and demand
• See how governments use monetary and fiscal policy to fight recessions
• Discover game theory and the secrets of cooperation

Auteur

Sean Flynn, PhD, is an associate professor of economics at Scripps College in Claremont, California. A specialist in behavioral economics, Dr. Flynn has provided economic commentary for numerous news outlets, including NPR, ABC, FOX Business, and Forbes.

Résumé
Understand the science of wealth and prosperity

• Find FREE quizzes for every chapter online
• Learn about good markets, bad monopolies, and inflation
• Decode budget deficits and trade gains This book gives you everything you need to understand our rapidly evolving economyas well as the economic fundamentals that never change. What's the best way to fight poverty? How can governments spur employment and wage growth? What can be done to protect endangered species and the environment? This book explains the answers to those questionsand many morein plain English.

Inside

• Get the fascinating scoop on behavioral economics
• Understand the model of supply and demand
• See how governments use monetary and fiscal policy to fight recessions
• Discover game theory and the secrets of cooperation

Contenu

Introduction 1

About This Book 1

Foolish Assumptions 3

Icons Used in This Book 3

Beyond the Book 4

Where to Go from Here 4

Part 1: Economics: The Science of How People Deal with Scarcity 5

Chapter 1: What Economics Is and Why You Should Care 7

Considering a Little Economic History 8

Pondering just how nasty, brutish, and short life used to be 8

Identifying the institutions that raise living standards 9

Looking toward the future 10

Framing Economics as the Science of Scarcity 10

Sending Microeconomics and Macroeconomics to

Separate Corners 11

Getting up close and personal: Microeconomics 11

Zooming out: Macroeconomics and the big picture 14

Understanding How Economists Use Models and Graphs 16

Introducing your first model: The demand curve 17

Drawing your own demand curve 20

Chapter 2: Cookies or Ice Cream? Exploring Consumer Choices 21

Describing Human Behavior with a Choice Model 22

Pursuing Personal Happiness 23

Using utility to measure happiness 23

Taking selfless actions into account 23

Self-interest can promote the common good 24

You Can't Have Everything: Examining Limitations 25

Resource constraints 25

Technology constraints 25

Time constraints 26

Opportunity cost: The unavoidable cost 26

Making Your Choice: Deciding What and How Much You Want 27

Exploring Violations and Limitations of the Economist's Choice Model 29

Understanding uninformed decision-making 29

Making sense of irrationality 30

Chapter 3: Producing Stuff to Maximize Happiness 33

Figuring Out What's Possible to Produce 34

Classifying resources 35

Clarifying human capital 35

Diminishing returns 36

Allocating resources 37

Graphing your production possibilities 38

Reaching new frontiers with better technology 41

Deciding What to Produce 42

Comparing market results and government interventions 43

Opting for a mixed economy 49

Promoting Technology and Innovation 52

Part 2: Microeconomics: The Science of Consumer and Firm Behavior 55

Chapter 4: Supply and Demand Made Easy 57

Deconstructing Demand 58

Prices and other stuff: Looking at what affects quantity demanded 59

Graphing the demand curve 60

Opportunity costs: Setting the slope of the demand curve 62

Elasticity: Looking at extreme demand cases 63

Sorting Out Supply 65

Graphing the supply curve 65

Using elasticity to understand extreme supply cases 69

Bringing Supply and Demand Together 70

Market equilibrium: Seeking a balance 71

Demonstrating the stability of the market equilibrium 72

Adjusting to new market equilibriums when supply or demand changes 74

Price Controls: Keeping Prices Away from Market Equilibrium 76

Setting upper limits with price ceilings 77

Propping up prices with price floors 79

Chapter 5: Introducing Homo Economicus, the Utility-Maximizing Consumer 83

Choosing by Ranking 84

Getting Less from More: Diminishing Marginal Utility 85

Choosing Among Many Options When Facing a Limited Budget 88

Trying to buy as much (marginal) utility as you can 88

Purchasing the best combination of two goods to maximize total utility 91

Aiming for equal marginal utility per dollar 93

Deriving Demand Curves from Diminishing Marginal Utility 95

Seeing how price changes affect quantities demanded 96

Graphing the price and quantity changes to form a demand curve 97 **Chapter 6: The Core of Capitali...