Microeconomics PDF
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GLobAL GLobAL edITIon edITIon eG dL ITo IobA nL M For these Global editions, the editorial team at Pearson has collaborated with educators across the world to address a wide range i c of subjects and requirements, equipping students with the best possible r o learning tools. This Global edition preserves the cutting-edge approach e and pedagogy of the original, but also features alterations, customization, c o and adaptation from the north American version. n o m i c s A c e m M icroeconomics o g l u • Daron Acemoglu • David Laibson • John A. List L a i b s o n • L i s t This is a special edition of an established title widely used by colleges and universities throughout the world. Pearson published this exclusive edition for the benefit of students outside the United States and Canada. If you purchased this book within the United States or Canada, you should be aware that it has been imported without the approval of the Publisher or Author. Pearson Global Edition Acemoglu_1292079576_mech.indd 1 04/03/15 8:10 PM CChohiociecses MyEconLab® Provides the Power of Practice ProPvriodivnidg inOgp Otiopntiso anns da nVda lVuea luine Einc oEncoomnoicmsics Optimize your study time with MyEconLab’s tutorial and assessment solution that personalizes CoCmopmleptele Dtei gDitiagli tEaxl pEexrpieenriceence AllowA ylloowur ysotuudre sntutsd teon tssa vtoe sbayv ep ubryc hpausrincgh aas isntga nad s-taalonnde-a lMonyeE cMonyELcaob ndLiraebc tdlyir efrcotlmy from the learning experience, giving students the practice and immediate feedback they need. 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T yroimur ytoeuxrt tteox itn ctolu dinec ljuudste tjhuest cthhaep tcehrasp ters available for select problems. o o t t = =you nyeoeud n oere da dodr cahdadp tcehrasp ftreorms f rmoumlt impluel tbipoloe kbso. oWksi.t h W noit hu nnuos eudn umseadte mriaalt eorri al or s s • eText links are specific to the problem at hand so u u unneucnensseacreys esaxrpye enxsep,e Pnesea,r sPoena rLseoanr nLienagr nSionlgu tSioonlust ipornosv ipdreosv tidhees rtighhet rcigohntt ecnotn t ent Find out more at www.myeconlab.com C C that related concepts are easy to review just when they you nyeoeud n feoerd a focor uar sceo uthrsaet’ st heantt’sir eelnyt iyroeluyr yoowurn .o wwwnw..p weawrwso.npleeaarrsnoinnlgesaorlnuitnigosnosl.ucotimons.com are needed. • A graphing tool enables you to build and manipulate ContCacotn ytoacutr yPoeuarr sPoena rrseopnr erseepnrteasteivnet aftoivr em foorr em inofroer minafotiromna otino nP eoanr sPoena rCsohno icCehso.ices. graphs to better understand how concepts, numbers, and graphs connect. Acemoglu_1292079576_ifc-ibc.indd 1 10/03/15 3:32 PM A02_AAC0E2M_3A9C5E2M_0319_5I2R_C0_1F_MIR.Cin_dFdM .1indd 1 15/10/1145 / 1 80:/2194 P M8:29 PM A02_ACEM1582_01_SE_ES.indd 2 21/10/14 3:35 PM Real-Time Data Analysis Exercises Up-to-date macro data is a great way to engage in and understand the usefulness of macro variables and their impact on the economy. Real-Time Data Analysis exercises communicate directly with the Federal Reserve Bank of St. Louis’s FRED® site, so every time FRED posts new data, students see new data. End-of-chapter exercises accompanied by the Real-Time Data Analysis icon include Real-Time Data versions in MyEconLab. Select in-text figures labeled MyEconLab Real-Time Data update in the electronic version of the text using FRED data. Current News Exercises Posted weekly, we find the latest microeconomic and macroeconomic news stories, post them, and write auto-graded multi-part exercises that illustrate the economic way of thinking about the news. Interactive Homework Exercises Participate in a fun and engaging activity that helps promote active learning and mastery of important economic concepts. Pearson’s experiments program is flexible and easy for instructors and students to use. For a complete list of available experiments, visit www.myeconlab.com. A02_ACEM9578_01_GE_FM.indd 1 17/03/15 7:47 PM The Pearson Series in Economics Abel/Bernanke/Croushore Fort Klein Pindyck/Rubinfeld Macroeconomics* Sports Economics Mathematical Methods for Microeconomics* Economics Acemoglu/Laibson/List Froyen Riddell/Shackelford/Stamos/ Economics* Macroeconomics Krugman/Obstfeld/Melitz Schneider International Economics: Theory & Economics: A Tool for Critically Bade/Parkin Fusfeld Policy* Understanding Society Foundations of Economics* The Age of the Economist Laidler Roberts Berck/Helfand Gerber The Demand for Money The Choice: A Fable of Free Trade The Economics of the Environment International Economics* and Protection Leeds/von Allmen Bierman/Fernandez González-Rivera The Economics of Sports Rohlf Game Theory with Economic Forecasting for Economics Introduction to Economic Applications and Business Leeds/von Allmen/Schiming Reasoning Economics* Blanchard Gordon Roland Macroeconomics* Macroeconomics* Lynn Development Economics Economic Development: Theory Blau/Ferber/Winkler Greene and Practice for a Divided World Scherer The Economics of Women, Men, Econometric Analysis Industry Structure, Strategy, and and Work Miller Gregory Public Policy Economics Today* Boardman/Greenberg/Vining/ Essentials of Economics Weimer Understanding Modern Economics Schiller Gregory/Stuart The Economics of Poverty and Cost-Benefit Analysis Russian and Soviet Miller/Benjamin Discrimination Boyer Economic Performance The Economics of Macro Issues Sherman Principles of Transportation and Structure Miller/Benjamin/North Market Regulation Economics Hartwick/Olewiler The Economics of Public Issues Stock/Watson Branson The Economics of Natural Mills/Hamilton Introduction to Econometrics Macroeconomic Theory and Policy Resource Use Urban Economics Studenmund Bruce Heilbroner/Milberg Mishkin Using Econometrics: A Practical Public Finance and the American The Making of the Economic The Economics of Money, Guide Economy Society Banking, and Financial Markets* Tietenberg/Lewis Carlton/Perloff Heyne/Boettke/Prychitko The Economics of Money, Environmental and Natural Modern Industrial Organization The Economic Way of Thinking Banking, and Financial Markets, Resource Economics Business School Edition* Case/Fair/Oster Holt Environmental Economics and Principles of Economics* Markets, Games, and Strategic Macroeconomics: Policy and Policy Behavior Practice* Chapman Todaro/Smith Environmental Economics: Hubbard/O’Brien Murray Economic Development Theory, Application, and Policy Economics* Econometrics: A Modern Introduction Waldman/Jensen Cooter/Ulen Money, Banking, and the Industrial Organization: Law & Economics Financial System* O’Sullivan/Sheffrin/Perez Theory and Practice Economics: Principles, Daniels/VanHoose Hubbard/O’Brien/Rafferty Applications and Tools* Walters/Walters/Appel/ International Monetary & Macroeconomics* Callahan/Centanni/ Financial Economics Parkin Maex/O’Neill Hughes/Cain Economics* Econversations: Today’s Students Downs American Economic History Discuss Today’s Issues An Economic Theory of Democracy Perloff Husted/Melvin Microeconomics* Weil Ehrenberg/Smith International Economics Microeconomics: Theory and Economic Growth Modern Labor Economics Jehle/Reny Applications with Calculus* Williamson Farnham Advanced Microeconomic Theory Perloff/Brander Macroeconomics Economics for Managers Johnson-Lans Managerial Economics and Folland/Goodman/Stano A Health Economics Primer Strategy* The Economics of Health and Keat/Young/Erfle Phelps Health Care Managerial Economics Health Economics *denotes MyEconLab titles Visit www.myeconlab.com to learn more. 2 A02_ACEM9578_01_GE_FM.indd 2 17/03/15 7:47 PM GLObAL EDITION MICROECONOMICS Daron Acemoglu Massachusetts Institute of Technology David Laibson Harvard University John A. List University of Chicago Boston Columbus Indianapolis New York San Francisco Hoboken Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Preface 3 A02_ACEM9578_01_GE_FM.indd 3 17/03/15 7:47 PM Vice President, Product Management: Donna Battista Executive Acquisitions Editor: Adrienne D’Ambrosio Executive Development Editor: Mary Clare McEwing Senior Acquisitions Editor, Global Editions: Steven Jackson Project Editor, Global Editions: Suchismita Ukil Editorial Project Manager: Sarah Dumouchelle Editorial Coordinator: Elissa Senra-Sargent Executive Field Marketing Manager: Lori DeShazo Product Marketing Manager: Alison Haskins Product Testing and Learning Validation: Kathleen McLellan Managing Editor: Jeff Holcomb Production Project Manager: Nancy Freihofer Media Production Manager, Global Editions: M. Vikram Kumar Senior Production Controller, Global Editions: Trudy Kimber Operations Specialist: Carol Melville Art Director: Jonathan Boylan Text Designer: Jonathan Boylan Digital Publisher, Economics: Denise Clinton Digital Studio Content Integration Team Lead: Noel Lotz Executive Media Producer: Melissa Honig Full-Service Project Management: S4Carlisle Publishing Services Composition: S4Carlisle Publishing Services Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on pp. 439–440. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited 2016 The rights of Daron Acemoglu, David Laibson, and John A. List to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled Microeconomics, 1st edition, ISBN 978-0-321-39157-5, by Daron Acemoglu, David Laibson, and John A. List, published by Pearson Education, Inc. © 2015. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN 10: 1-292-07957-6 ISBN 13: 978-1-292-07957-8 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 9 8 7 6 5 4 3 2 1 14 13 12 11 Typeset in Times LT Std by S4Carlisle Publishing Services Printed and bound by CPI Digital in the United Kingdom A02_ACEM9578_01_GE_FM.indd 4 17/03/15 7:47 PM Dedication With love for Asu, Nina, and Jennifer, who inspire us every day. A02_ACEM9578_01_GE_FM.indd 5 17/03/15 7:47 PM About the Authors Daron Acemoglu is Elizabeth and James Killian Professor of Economics in the Depart- ment of Economics at the Massachusetts Institute of Technology. He has received a B.A. in economics at the University of York, 1989, M.Sc. in mathematical economics and econo- metrics at the London School of Economics, 1990, and Ph.D. in economics at the London School of Economics in 1992. He is an elected fellow of the National Academy of Sciences, the American Academy of Arts and Sciences, the Econometric Society, the European Economic Association, and the Society of Labor Economists. He has received numerous awards and fellowships, in- cluding the inaugural T. W. Shultz Prize from the University of Chicago in 2004, and the inaugural Sherwin Rosen Award for outstanding contribution to labor economics in 2004, Distinguished Science Award from the Turkish Sciences Association in 2006, and the John von Neumann Award, Rajk College, Budapest in 2007. He was also the recipient of the John Bates Clark Medal in 2005, awarded every two years to the best economist in the United States under the age of 40 by the American Eco- nomic Association, and the Erwin Plein Nemmers prize awarded every two years for work of lasting significance in economics. He holds Honorary Doctorates from the University of Utrecht and Bosporus University. His research interests include political economy, economic development and growth, human capital theory, growth theory, innovation, search theory, network economics, and learning. His books include Economic Origins of Dictatorship and Democracy (jointly with James A. Robinson), which was awarded the Woodrow Wilson and the William Riker prizes, Introduction to Modern Economic Growth, and Why Nations Fail: The Origins of Power, Prosperity, and Poverty (jointly with James A. Robinson), which has become a New York Times bestseller. David Laibson is the Robert I. Goldman Professor of Economics at Harvard University. He is also a member of the National Bureau of Economic Research, where he is Research Associate in the Asset Pricing, Economic Fluctuations, and Aging Working Groups. His research focuses on the topic of behavioral economics, and he leads Harvard University’s Foundations of Human Behavior Initiative. He serves on several editorial boards, as well as the boards of the Health and Retirement Study (National Institutes of Health) and the Pension Research Council (Wharton). He serves on Harvard’s Pension Investment Committee and on the Academic Research Council of the Consumer Financial Protection Bureau. He is a recipient of a Marshall Scholarship and a Fellow of the Econometric Society and the American Academy of Arts and Sciences. He is also a recipient of the TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security. Laibson holds degrees from Harvard University (A.B. in Economics, Summa), the London School of Economics (M.Sc. in Econometrics and Mathematical Economics), and the Massachusetts Institute of Technology (Ph.D. in Economics). He received his Ph.D. in 1994 and has taught at Harvard since then. In recognition of his teaching, he has been awarded Harvard’s Phi Beta Kappa Prize and a Harvard College Professorship. 6 A02_ACEM9578_01_GE_FM.indd 6 17/03/15 7:47 PM John A. List is the Homer J. Livingston Professor in Economics at the University of Chicago, and Chairman of the Department of Economics. List received the Kenneth Galbraith Award, Agricultural and Applied Economics Association, 2010. He is a Member of the American Academy of Arts and Sciences, 2011; Editor, Journal of Economic Perspectives; Associate Editor, American Economic Review; and Associate Editor, Journal of Economic Literature. His research focuses on questions in microeconomics, with a particular emphasis on the use of experimental methods to address both positive and normative issues. Much of his time has been spent developing experimental methods in the field to explore economic aspects of environmental regulations, incentives, preferences, values, and institutions. Recently, he has focused on issues related to the economics of charity, exploring why people give, plus optimal incentive schemes for first-time as well as warm-list donors. About the Authors 7 A02_ACEM9578_01_GE_FM.indd 7 17/03/15 7:47 PM A02_ACEM9578_01_GE_FM.indd 8 17/03/15 7:47 PM
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