Economics 3e-Openstax.pdf

Principles of Economics 3e SENIOR CONTRIBUTING AUTHORS DAVID SHAPIRO,PENNSYLVANIA STATE UNIVERSITY DANIEL MACDONALD,CALIFORNIA STATE UNIVERSITY,SAN BERNADINO STEVEN A.GREENLAW,UNIVERSITY OF MARY WASHINGTON OpenStax Rice University 6100 Main Street MS-375 Houston,Texas 77005 To learn more about OpenStax,visit https:/openstax.org.Individual print copies and bulk orders can be purchased through our website.2022 Rice University.Textbook content produced by OpenStax is licensed under a Creative Commons Attribution 4.0 International License(CC BY 4.0).Under this license,any user of this textbook or the textbook contents herein must provide proper attribution as follows:-If you redistribute this textbook in a digital format(including but not limited to PDF and HTML),then you must retain on every page the following attribution:“Access for free at openstax.org.”-If you redistribute this textbook in a print format,then you must include on every physical page the following attribution:“Access for free at openstax.org.”-If you redistribute part of this textbook,then you must retain in every digital format page view(including but not limited to PDF and HTML)and on every physical printed page the following attribution:“Access for free at openstax.org.”-If you use this textbook as a bibliographic reference,please include https:/openstax.org/details/books/principles-economics-3e in your citation.For questions regarding this licensing,please contact supportopenstax.org.Trademarks The OpenStax name,OpenStax logo,OpenStax book covers,OpenStax CNX name,OpenStax CNX logo,OpenStax Tutor name,Openstax Tutor logo,Connexions name,Connexions logo,Rice University name,and Rice University logo are not subject to the license and may not be reproduced without the prior and express written consent of Rice University.Original version based on the 2nd edition of Principles of Economics,Economics and the Economy,2e by Timothy Taylor,published in 2011.Portions of the Demand and Supply chapter were derived from Why It Matters:Government in Action by Steve Greenlaw and Lumen Learning.Located at:https:/ BY 4.0.HARDCOVER BOOK ISBN-13 978-1-711471-45-7 B&W PAPERBACK BOOK ISBN-13 978-1-711471-46-4 DIGITAL VERSION ISBN-13 978-1-951693-63-3 ORIGINAL PUBLICATION YEAR 2022 1 2 3 4 5 6 7 8 9 10 JAY 22 OPENSTAX OpenStax provides free,peer-reviewed,openly licensed textbooks for introductory college and Advanced Placement courses and low-cost,personalized courseware that helps students learn.A nonprofit ed tech initiative based at Rice University,were committed to helping students access the tools they need to complete their courses and meet their educational goals.RICE UNIVERSITY OpenStax,OpenStax CNX,and OpenStax Tutor are initiatives of Rice University.As a leading research university with a distinctive commitment to undergraduate education,Rice University aspires to path-breaking research,unsurpassed teaching,and contributions to the betterment of our world.It seeks to fulfill this mission by cultivating a diverse community of learning and discovery that produces leaders across the spectrum of human endeavor.PHILANTHROPIC SUPPORT OpenStax is grateful for the generous philanthropic partners who advance our mission to improve educational access and learning for everyone.To see the impact of our supporter community and our most updated list of partners,please visit openstax.org/impact.Arnold Ventures Chan Zuckerberg Initiative Chegg,Inc.Arthur and Carlyse Ciocca Charitable Foundation Digital Promise Ann and John Doerr Bill&Melinda Gates Foundation Girard Foundation Google Inc.The William and Flora Hewlett Foundation The Hewlett-Packard Company Intel Inc.Rusty and John Jaggers The Calvin K.Kazanjian Economics Foundation Charles Koch Foundation Leon Lowenstein Foundation,Inc.The Maxfield Foundation Burt and Deedee McMurtry Michelson 20MM Foundation National Science Foundation The Open Society Foundations Jumee Yhu and David E.Park III Brian D.Patterson USA-International Foundation The Bill and Stephanie Sick Fund Steven L.Smith&Diana T.Go Stand Together Robin and Sandy Stuart Foundation The Stuart Family Foundation Tammy and Guillermo Trevio Valhalla Charitable Foundation White Star Education Foundation Schmidt Futures William Marsh Rice University Study where you want,what you want,when you want.Access.The future of education.openstax.org When you access your book in our web view,you can use our new onlinehighlighting and note-taking features to create your own study guides.Our books are free and flexible,forever.Get started at openstax.org/details/books/principles-economics-3eCONTENTSPreface1CHAPTER 1Welcome to Economics!9Introduction91.1 What Is Economics,and Why Is It Important?101.2 Microeconomics and Macroeconomics151.3 How Economists Use Theories and Models to Understand Economic Issues161.4 How To Organize Economies:An Overview of Economic Systems18Key Terms24Key Concepts and Summary24Self-Check Questions25Review Questions25Critical Thinking Quest