Page 19 - Krugmans Economics for AP Text Book_Neat

Calculating the Price Elasticity of Demand 460 Price Elasticities and Tax Incidence 502
An Alternative Way to Calculate Elasticities: The Benefits and Costs of Taxation 505
The Midpoint Method 462 The Revenue from an Excise Tax 505
FYI: Estimating Elasticities 463 The Costs of Taxation 506
Module 46 AP Review 464 Module 50 AP Review 509

Module 47 Interpreting Price Elasticity Module 51 Utility Maximization 511
of Demand 466 Utility: It’s All About Getting Satisfaction 511
Interpreting the Price Elasticity of Demand 466 Utility and Consumption 511
How Elastic is Elastic? 466 The Principle of Diminishing Marginal Utility 513
Price Elasticity Along the Demand Curve 471 FYI: Is Marginal Utility Really Diminishing? 513
What Factors Determine the Price Elasticity Budgets and Optimal Consumption 514
of Demand ? 472
Budget Constraints and Budget Lines 514
FYI: Responding to Your Tuition Bill 473
The Optimal Consumption Bundle 515
Module 47 AP Review 473
Spending the Marginal Dollar 518
Marginal Utility per Dollar 518
Module 48 Other Elasticities 475
Optimal Consumption 519
Other Elasticities 475
Module 51 AP Review 521
The Cross-Price Elasticity of Demand 475
Section 9 Review 522
The Income Elasticity of Demand 476
FYI: Where Have All the Farmers Gone? 477
Section 10
The Price Elasticity of Supply 477
Behind the Supply Curve: Profit, Production,
Measuring the Price Elasticity of Supply 477
and Costs 529
An Elasticity Menagerie 479
Module 48 AP Review 480
Module 52 Defining Profit 530
Understanding Profit 530
Module 49 Consumer and Producer Surplus 482
Explicit versus Implicit Costs 530
Consumer Surplus and the Demand Curve 483
Accounting Profit versus Economic Profit 531
Willingness to Pay and the Demand Curve 483
FYI: Farming in the Shadow of Suburbia 533
Willingness to Pay and the Consumer Surplus 484
Normal Profit 533
How Changing Prices Affect Consumer Surplus 486
Module 52 AP Review 534
FYI: A Matter of Life and Death 488
Producer Surplus and the Supply Curve 489
Module 53 Profit Maximization 536
Cost and Producer Surplus 489
Maximizing Profit 536
How Changing Prices Affect Producer Surplus 492
Using Marginal Analysis to Choose the
Module 49 AP Review 493 Profit-Maximizing Quantity of Output 537
When Is Production Profitable? 539
Module 50 Efficiency and Deadweight Loss 495 Module 53 AP Review 540
Consumer Surplus, Producer Surplus, and Efficiency 495
The Gains from Trade 495 Module 54 The Production Function 542
The Efficiency of Markets 496 The Production Function 542
Equity and Efficiency 499 Inputs and Output 542
The Effects of Taxes on Total Surplus 499 FYI: Was Malthus Right? 546
The Effect of an Excise Tax on Quantities and Prices 500 Module 54 AP Review 546

CONTENTS xvii