Economics, 3rd Edition

ad valorem, 192, 194–6

aggregate demand, 711–13

average rates, 212

benefits principle, 214

canons of, 211

capital gains tax, 596

deadweight loss, 204–10, 213

direct, 192

and efficiency, 203–4

and equity, 214–16

flat, 215

indirect, 192

inefficiencies, 259

interest income, 596

lump-sum, 212

marginal rates, 212

Pigovian, 248–9

principles of, 211

progressive, 215

proportional, 215

reform, 750–1

regressive, 215

specific, 192–4

system design, 211–12

and welfare, 204–7

tax avoidance, 217–18

tax distortions, 596–7

tax incidence, 192–3, 196–7, 215–16

Taylor rule, 712

technological knowledge, 480–1

technological progress, 492–3

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INDEX  819

10 principles of economics, 3–11

text messaging, 165–6

theories, 18–19

theory of liquidity preference, 703–5

threshold concepts, 17

time series data, 638

time-series graphs, 32

tools, 30–40

total cost curves, 138

total expenditure, 78–81, 94–5

total revenue, 88–9, 94–5

total surplus, 180

total utility, 110–11

toxic debt, 578

tradable pollution permits, 249–51, 

252–4

trade, 6, 405–33

determinants of, 418–20

restrictions on, 423–30

winners and losers, 420–3

trade balance, 606

trade deficit, 606

trade integration, 767–8

trade-offs, 3–4, 546–7

trade policy, 630–2

trade surplus, 606

trade unions, 508–9

Tragedy of the Commons, 230–1

training, 755–6

transaction costs, 246, 595, 762

transfer earnings, 379

transfer payments, 443

Transitivity, Axiom of, 108

trend growth, 476

trend growth rates, 638–43

trends, 641–2

troughs, 640

tying, 349–50

unemployment, 497–515, 651–2, 680

cost of, 511–13

cyclical, 501

frictional, 503, 504–5

and inflation, 721–42

long-term, 502

natural rate of, 501–2, 726

structural, 503

and vacancies, 514–16

unemployment-inflation trade-off, 

728–30

unemployment insurance, 505–6

unemployment rate, 499–500

union density, 508

unions, 371–2, 508–9

units of account, 559–60

unmeasured quality change, 459–61

used cars, 267–8

U-shaped average total cost, 142

utilitarianism, 395–6

utility, 103

vacancies, 514–16

value, 102–3

stores of, 560

value of money, 584

value of the marginal product, 358

variable costs, 140

velocity of money, 589–91

vertical equity, 214–15

very large ships, 287–8

voter incentives, 256

wage curve theory, 737–9

wage differentials, 367–73

wage flexibility, 766, 768–9

waste, 179–80

wealth, 560

Weizsäcker, Jakob von, 674

welfare, 204–7, 318–19 see also  

well-being

welfare economics, 169, 241

welfare policy, 750–1

well-being, 169, 184–5, 449–52 see also 

welfare

whaling, 231–2

wildlife conservation, 231–2

willingness to pay, 170–1

willingness to sell, 176

worker effort, 510–11

worker health, 510

worker quality, 511

worker turnover, 511–13

work incentives, 400–1

world prices, 419–20

Xerox stores, 350–1

zero risk, 547–8

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820

All Figures, Tables and artwork not listed on this credit page are the authors’ own work and so do not require any 

credit lines, permissions acknowledgements or referencing citations.

IMAGES

The following Images have been reproduced with the kind 

permission of the copyright holders:

Image 1.1 A typical supermarket shelf … p. 4.  

Source: © Kumar Sriskandan/Alamy

Image 1.2 Adam Smith, p. 7. Source: © Classic Image/

Alamy

Image 1.3 Providing a monetary incentive … p. 13. 

Source: © Shutterstock

Image 2.1 Models are used in many different disciplines … 

p. 21. Source: © Shutterstock

Image 3.1 The fracking process … p. 55. Source: 

© Shutterstock

Image 3.2 Changes in the price of cotton … p. 69. 

Source: © Andrew Ashwin

Image 4.1 Fish farms like this in China … p. 82.  

Source: © Shutterstock

Image 4.2 As supplies of oil start to diminish … p. 98. 

Source: © Shutterstock

Image 5.A Would you pay 

€75 for these shoes … p. 103.  

Source: © Shutterstock

Image 5.1 Many stores provide information on their 

receipt … p. 116. Source: © Shutterstock

Image 5.2 The brain plays a crucial role in decision making … 

p. 131. Source: © Shutterstock

Image 6.1 Thinking about average and marginal costs … 

p. 143. Source: © Shutterstock

Image 6.1a Thinking at the margin means that famers … 

p. 154 Source: © Shutterstock

Image 6.2 With 1/1000th of a cent being the average cost … 

p. 165. Source: © Lana Rastro/Alamy

Image 7.1 The car in Pakistan … p. 175. Source:  

© Asianet-Pakistan/Alamy

Image 7.2 Poverty and wealth often cohabit side-by-side … 

p. 184. Source: © Shutterstock

Image 8.1 Taxes on the sale of goods and services … 

p. 192. Source: © theodore liasi/Alamy

Image 8.2 The carbon price floor … p. 200. Source: 

© Shutterstock

Image 9.1 The size of the deadweight loss … p. 213. 

Source: © Shutterstock

Image 9.2 Amazon, Google and Starbucks attracted a good 

deal of publicity … p. 218. Sources: © Marek Stepan/

Alamy (left); © Steve Stock/Alamy (center); and © Biz/

ed (right)

Image 10.1 Accidents will happen … p. 228. Source: 

© Shutterstock

Image 10.2 The dumping of potentially hazardous waste … 

p. 236. Source: © Shutterstock

Image 11.1 How does a village become carbon neutral … 

p. 253 Source: © Dave Ellison/Alamy

Images 11.2a and 11.2b The costs of gun crime can be 

substantial … p. 261. Source: © Shutterstock

Image 12.1 Giving gifts is fraught with difficulty … p. 269. 

Source: © Caro/Alamy

Image 12.2 Joseph Stiglitz won the Nobel Peace Prize … 

p. 275. Source: © Gallo Images/Alamy

Image 13.1 Levels of education have a significant impact 

on labour … p. 286. Source: © Shutterstock

Image 13.2 Very large ships help reduce unit costs … 

p. 287. Source: © Shutterstock

Image 14.1 Pfizer held the patent for the drug Viagra until 

July 2013 … p. 300. Source: © Shutterstock

Image 14.2 Where competition law and regulation is weak … 

p. 311. Source: © Shutterstock

Image 15.1 Could you tell the difference between Pepsi 

and Coca-Cola … p. 320. Source: © Lux Igitur/Alamy

Image 15.2 Staples Office Superstores … p. 326. 

Source: © Ian Dagnall/Alamy

Image 16.1 Go into any electronics retailer … p. 332. 

Source: © Shutterstock

Image 16.2 Photocopying shops in one part of India … 

p. 351. Source: © Peter Horree/Alamy

Images 17.1a and 17.1b If you won the lottery … p. 363. 

Source: © Shutterstock

Image 17.2 An empty platform at the Gare de l’Est railway 

station … p. 381. Source: © Shutterstock

Image 18.1 Countries with relatively high Gini coefficients … 

p. 391. Source: © Shutterstock

Image 18.2 Family relationship problems can have … 

p. 402. Source: © Shutterstock

Image 19.1 A country’s comparative advantage changes 

over time … p. 417. Source: © Henry Westheim 

Photography/Alamy

Image 19.2 Lee Kuan Yew, the first prime minister of 

independent Singapore … p. 433. Source: © Asia  

File/Alamy

Image 20.1 The complexity of capturing data … p. 444. 

Source: © Shutterstock

Image 20.2 Observe the similarities between this 1930s 

Depression … p. 453. Sources: © Everett Collection 

Historical/Alamy (left) and © Geoffrey Robinson/ 

Alamy (right)

Image 21.1 The number one film of all time … p. 466. 

Source: © Robert Harding Picture Library Ltd/Alamy

Image 21.2 Technology changes over time … p. 470. 

Source: © Shutterstock

Image 22.1 Copper prices fluctuate over short periods of 

time … p. 482. Source: © Shutterstock