Price theory and application doc

Chapter 1
/>“Why are we getting so fat? A few theories on America’s
weight problem”
/>“The readers weigh in: your theories on why America
is getting fatter”
Chapter 4
/>“Putting all your potatoes in one basket: the economic
lessons of the Great Famine”
Chapter 5
/>“One small step for man…and one giant step for economics”
Chapter 6
/>“The crazy incentives of the drug war”
Chapter 8
/>“How much should hotel web access cost?”
/>“The case for looting”
/>“Is your life worth $10 million?”
/>“Phony Generosity: economics Nobelist Vernon Smith’s
alarming discovery about human nature”
/>“Click, Clack and Car Talk”
/>“Flying pork barrels: the airline bailout enriches stockholders
at the expense of taxpayers”
/>“Making your tax rebate pay”
/>“The fi rst one now will be last: a foolproof method to
shorten queues”
Chapter 9
/>“Great expectations? The war’s going worse than expected.
So what?”
/>“Afghanistan after the war: don’t give them democracy.
Give them capitalism”
Chapter 11

/>“Is housing too expensive?”
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 13
/>“We fi nd ourselves guilty: should we punish juries that
get it wrong?”
Chapter 14
/>“Short changed: why do tall people make more money?”
Chapter 16
/>“Why Jews don’t farm”
/>“Hey, gorgeous, here’s a raise”
/>“Microwave oven liberation”
Chapter 17
/>“No relief: why we shouldn’t aid Katrina’s victims too much”
/>“Don’t pay down the national debt”
Chapter 18
/>“The NFL’s party perplexity: the salary cap is one of
the mysteries of the universe”
Chapter 19
/>“Why do gays smoke so much?”
/>“Beat on the brat: the economics of spanking”
/>“The great banana revolution: should you peel bananas
from the bottom up?”
/>“Sell me a story: two skyscrapers, built in the same block.
One’s much taller. Why?”
/>“Don’t ask, don’t tell: campaign-fi nance reform”
/>“If eBay ran the election: who would buy the votes and
what would they pay?”
/>“Why God created junk food”
/>“Why men pay to stay married”

/>“Attack of the Giant Shopping Carts!!!”
/>“The Return of the Giant Shopping Carts!!!”
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States
PRICE THEORY
and Applications
EIGHTH EDITION
Steven E. Landsburg
University of Rochester
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may
be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall
learning experience. The publisher reserves the right to remove content from this title at any time if subsequent
restrictions require it. For valuable information on pricing, previous editions, changes to current editions,and
alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for
materials in your areas of interest.
Price Theory and Applications
Eighth Edition
Steven E. Landsburg
Vice President of Editorial, Business:
Jack W. Calhoun
Publisher: Joe Sabatino
Acquisitions Editor: Steven Scoble
Developmental Editor:
Michael Guendelsberger
Editorial Assistant: Allyn Bissmeyer

Marketing Manager: Betty Jung
Marketing Coordinator: Suellen Ruttkay
Associate Content Project Manager:
Jana Lewis
Media Editor: Deepak Kumar
Frontlist Buyer, Manufacturing:
Sandee Milewski
Senior Marketing Communications
Manager: Sarah Greber
Production Service: Integra Software
Services Pvt. Ltd
Senior Art Director: Michelle Kunkler
Internal Designer: c miller design
Cover Designer: c miller design
Cover Image: © Charles Wysocki, Inc.
Licensed by Mosaic Licensing.
Rights Acquisitions Specialist:
Timothy Sisler
© ,  South-Western, Cengage Learning
ALL RIGHTS RESERVED. No part of this work covered by the copyright
herein may be reproduced, transmitted, stored, or used in any form
or by any means graphic, electronic, or mechanical, including but not
limited to photocopying, recording, scanning, digitizing, taping, web
distribution, information networks, or information storage and retrieval
systems, except as permitted under Section  or  of the 
United States Copyright Act, without the prior written permission of
the publisher.
ExamView
®
is a registered trademark of eInstruction Corp. Windows is a

registered trademark of the Microsoft Corporation used herein under license.
Macintosh and Power Macintosh are registered trademarks of Apple Computer,
Inc. used herein under license. ©  Cengage Learning. All Rights Reserved.
Cengage Learning WebTutor™ is a trademark of Cengage Learning.
Library of Congress Control Number: 
ISBN: 
ISBN: 
TEXT ISBN: 
TEXT ISBN: 
South-Western Cengage Learning
 Natorp Boulevard
Mason, OH 
USA
Cengage Learning products are represented in Canada by
Nelson Education, Ltd.
For your course and learning solutions, visit www.cengage.com
Purchase any of our products at your local college store or at our
preferred online store www.CengageBrain.com
For product information and technology assistance, contact us at
Cengage Learning Customer & Sales Support, 1-800-423-0563
For permission to use material from this text or product,
submit all requests online at www.cengage.com/permissions
Further permissions questions can be emailed to

Printed in United States of America
1 2 3 4 5 6 7 14 13 12 11 10
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
iii
Steven E. Landsburg is a Professor of Economics at the University of Rochester. His

articles have appeared in the Journal of Political Economy, the Journal of Economic
Theory, and many other journals of economics, mathematics, and philosophy. He is
the author of six books, including More Sex Is Safer Sex: The Unconventional Wisdom
of Economics (Free Press/Simon and Schuster 2006) and *The Big Questions: Tackling
the Problems of Philosophy with Ideas from Mathematics, Economics and Physics (Free
Press/Simon and Schuster 2009). He writes regularly for Slate magazine and has written
for Forbes, the New York Times, the Washington Post, and dozens of other publications.
He blogs regularly at www.ThebigQuestions.com/blog.
Dedication:
To the Red-Headed Snippet
About the Author
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
v
Brief Contents
Chapter 1 Supply, Demand, and Equilibrium 1
Chapter 2 Prices, Costs, and the Gains from Trade 31
Chapter 3 The Behavior of Consumers
45
Appendix: Cardinal Utility 77
Chapter 4 Consumers in the Marketplace 81
Chapter 5 The Behavior of Firms 115
Chapter 6 Production and Costs 137
Chapter 7 Competition 171
Chapter 8 Welfare Economics and the Gains from Trade 223
Appendix: Normative Criteria 275
Chapter 9 Knowledge and Information 283
Chapter 10 Monopoly 317

Chapter 11 Market Power, Collusion, and Oligopoly 357
Chapter 12 The Theory of Games 399
Chapter 13 External Costs and Benefits 417
Chapter 14 Common Property and Public Goods
459
Chapter 15 The Demands for Factors of Production 477
Chapter 16 The Market for Labor 501
Chapter 17 Allocating Goods Over Time 525
Chapter 18 Risk and Uncertainty 563
Chapter 19 What Is Economics? 599
Appendix A Calculus Supplement 619
Appendix B Answers to All the Exercises 645
Appendix C Answers to Problem Sets 657
Glossary 673
Index 681
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
vi
Preface xiii
CHAPTER 1
Supply, Demand,
and Equilibrium 1
1.1 Demand 1
Demand versus Quantity
Demanded 1
Demand Curves 2
Changes in Demand 3
Market Demand 7
The Shape of the Demand Curve 7
The Wide Scope of Economics 10

1.2 Supply 10
Supply versus Quantity Supplied 10
1.3 Equilibrium 13
The Equilibrium Point 13
Changes in the Equilibrium Point 15
Summary 23
Author Commentary 24
Review Questions 25
Numerical Exercises 25
Problem Set 26
CHAPTER 2
Prices, Costs, and the Gains
from Trade

31
2.1 Prices 31
Absolute versus Relative Prices 32
Some Applications 34
2.2 Costs, Efficiency, and Gains from
Trade 35
Costs and Efficiency 35
Specialization and the Gains from
Trade 37
Why People Trade 39
Summary 41
Author Commentary 41
Review Question 41
Numerical Exercises 42
Problem Set 42
CHAPTER 3

The Behavior of Consumers 45
3.1 Tastes 45
Indifference Curves 45
Marginal Values 48
More on Indifference Curves 53
3.2 The Budget Line and the
Consumer’s Choice 53
The Budget Line 54
The Consumer’s Choice 56
3.3 Applications of Indifference
Curves 59
Standards of Living 59
The Least Bad Tax 64
Summary 69
Author Commentary 69
Review Questions 70
Numerical Exercises 70
Problem Set 71
Appendix to Chapter 3 77
Cardinal Utility 77
The Consumer’s Optimum 79
CHAPTER 4
Consumers in the Marketplace

81
4.1 Changes in Income 81
Changes in Income and Changes in the
Budget Line 81
Changes in Income and Changes in the
Optimum Point 82

The Engel Curve 84
4.2 Changes in Price 85
Changes in Price and Changes in the
Budget Line 85
Changes in Price and Changes in the
Optimum Point 86
The Demand Curve 88
4.3 Income and Substitution
Effects 90
Two Effects of a Price Increase 90
Why Demand Curves Slope
Downward 94
The Compensated Demand Curve 99
Contents
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CONTENTS vii
4.4 Elasticities 100
Income Elasticity of Demand 100
Price Elasticity of Demand 102
Summary 105
Author Commentary 106
Review Questions
106
Numerical Exercises 107
Problem Set 109
CHAPTER 5
The Behavior of Firms

115

5.1 Weighing Costs and
Benefits 116
A Farmer’s Problem 116
The Equimarginal Principle 120
5.2 Firms in the Marketplace 121
Revenue 122
Costs 125
Summary 131
Author Commentary 131
Review Questions 131
Numerical Exercises 132
Problem Set 133
CHAPTER 6
Production and Costs

137
6.1 Production and Costs in the
Short Run 137
The Total, Marginal, and Average
Products of Labor 138
Costs in the Short Run 141
6.2 Production and Costs in the
Long Run 147
Isoquants 147
Choosing a Production Process 151
The Long-Run Cost Curves 154
Returns to Scale and the Shape
of the Long-Run Cost Curves 157
6.3 Relations Between the Short Run
and the Long Run 159

From Isoquants to Short-Run Total
Cost 159
From Isoquants to Long-Run Total
Cost 160
Short-Run Total Cost versus Long-Run
Total Cost 161
A Multitude of Short Runs 162
Short-Run Average Cost versus
Long-Run Average Cost 163
Summary 164
Author Commentary
165
Review Questions 165
Numerical Exercises 166
Problem Set 167
CHAPTER 7
Competition

171
7.1 The Competitive Firm 171
Revenue 173
The Firm’s Supply Decision 174
Shutdowns 177
The Elasticity of Supply 180
7.2 The Competitive Industry in the
Short Run 180
Defining the Short Run 180
The Competitive Industry’s Short-Run
Supply Curve 181
Supply, Demand, and Equilibrium 182

Competitive Equilibrium 182
The Industry’s Costs 185
7.3 The Competitive Firm in the Long
Run 186
Long-Run Marginal Cost and
Supply 186
Profit and the Exit Decision 186
The Firm’s Long-Run Supply
Curve 188
7.4 The Competitive Industry in the
Long Run 189
The Long-Run Supply Curve 190
Equilibrium 193
Changes in Equilibrium 195
Application: The Government as a
Supplier 198
Some Lessons Learned 199
7.5 Relaxing the Assumptions 199
The Break-Even Price 200
Constant-Cost Industries 201
Increasing-Cost Industries 201
Decreasing-Cost Industries 203
Equilibrium 204
7.6 Applications 204
Removing a Rent Control 204
A Tax on Motel Rooms 207
Tipping the Busboy 208
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
viii CONTENTS

7.7 Using the Competitive Model 209
Summary 211
Author Commentary 212
Review Questions
212
Numerical Exercises 213
Problem Set 217
CHAPTER 8
Welfare Economics and the Gains
from Trade

223
8.1 Measuring the Gains from
Trade 224
Consumers’ and Producers’
Surplus 224
8.2 The Efficiency Criterion 233
Consumers’ Surplus and the Efficiency
Criterion 234
Understanding Deadweight Loss 238
Other Normative Criteria 241
8.3 Examples and Applications 242
Subsidies 242
Price Ceilings 244
Tariffs 247
Theories of Value 252
8.4 General Equilibrium and the
Invisible Hand 254
The Fundamental Theorem of Welfare
Economics 255

An Edgeworth Box Economy 257
General Equilibrium with
Production 260
Summary 265
Author Commentary 266
Review Questions 266
Problem Set 267
Appendix to Chapter 8 275
Normative Criteria 275
Some Normative Criteria 276
Optimal Population 280
Author Commentary 281
CHAPTER 9
Knowledge and Information 283
9.1 The Informational Content of
Prices 283
Prices and Information 283
The Costs of Misallocation 288
9.2 Asymmetric Information 297
Signaling: Should Colleges Be
Outlawed? 297
Adverse Selection and the Market
for Lemons 300
Moral Hazard 302
Principal–Agent Problems 303
A Theory of Unemployment 306
9.3 Financial Markets 308
Efficient Markets for Financial
Securities 308
Stock Market Crashes 310

Summary 311
Author Commentary 311
Review Questions 311
Problem Set 312
CHAPTER 10
Monopoly 317
10.1 Price and Output under
Monopoly 318
Monopoly Pricing 318
Elasticity and Marginal
Revenue 319
Measuring Monopoly
Power 320
Welfare 323
Monopoly and Public Policy 324
10.2 Sources of Monopoly
Power 328
Natural Monopoly 328
Patents 330
The History of Photography: Patents in
the Public Domain 331
Resource Monopolies 332
Economies of Scope 332
Legal Barriers to Entry 332
10.3 Price Discrimination 333
First-Degree Price Discrimination 334
Third-Degree Price Discrimination 336
Two-Part Tariffs 345
Summary 348
Author Commentary 349

Review Questions 349
Numerical Exercises 350
Problem Set 351
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CONTENTS ix
CHAPTER 11
Market Power, Collusion,
and Oligopoly

357
11.1 Acquiring Market Power 358
Mergers 358
Horizontal Integration 358
Vertical Integration 361
Predatory Pricing 363
Resale Price Maintenance 365
11.2 Collusion and the Prisoner’s
Dilemma: An Introduction to
Game Theory 369
Game Theory and the Prisoner’s
Dilemma 370
The Prisoner’s Dilemma and the
Breakdown of Cartels 373
11.3 Regulation 377
Examples of Regulation 377
What Can Regulators Regulate? 382
Creative Response and Unexpected
Consequences 382
Positive Theories of Regulation 384

11.4 Oligopoly 385
Contestable Markets 385
Oligopoly with a Fixed Number
of Firms 387
11.5 Monopolistic Competition and
Product Differentiation 390
Monopolistic Competition 390
The Economics of Location 392
Summary 392
Author Commentary 393
Review Questions 393
Numerical Exercises 394
Problem Set 396
CHAPTER 12
The Theory of Games

399
12.1 Game Matrices 399
Pigs in a Box 399
The Prisoner’s Dilemma Revisited 401
Pigs in a Box Revisited 402
The Copycat Game 405
Nash Equilibrium as a Solution
Concept 405
Mixed Strategies 407
Pareto Optima 408
Pareto Optima versus Nash
Equilibria 410
12.2 Sequential Games 411
An Oligopoly Problem 411

Summary 413
Author Commentary 414
Problem Set 414
CHAPTER 13
External Costs and Benefits 417
13.1 The Problem of Pollution 417
Private Costs, Social Costs, and
Externalities 417
Government Policies 420
13.2 The Coase Theorem 424
The Doctor and the Confectioner 425
The Coase Theorem 427
The Coase Theorem in the
Marketplace 429
External Benefits 432
Income Effects and the Coase
Theorem 433
13.3 Transactions Costs 436
Trains, Sparks, and Crops 436
The Reciprocal Nature of the
Problem 438
Sources of Transactions Costs 439
13.4 The Law and Economics 443
The Law of Torts 443
A Positive Theory of the Common
Law 446
Normative Theories of the Common
Law 448
Optimal Systems of Law 449
Summary 449

Author Commentary 450
Review Questions 450
Problem Set 451
CHAPTER 14
Common Property and Public
Goods 459
14.1 The Tragedy of the
Commons 459
The Springfield Aquarium 459
It Can Pay to Be Different 463
Common Property 465
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
x CONTENTS
14.2 Public Goods 467
Some Market Failures 467
The Provision of Public Goods 468
The Role of Government 469
Schemes for Eliciting Information 471
Reaching the Efficient Outcome 471
Summary 472
Review Questions 473
Numerical Exercises 473
Problem Set 473
CHAPTER 15
The Demand for Factors of
Production 477
15.1 The Firm’s Demand for Factors
in the Short Run 477
The Marginal Revenue Product

of Labor 477
The Algebra of Profit Maximization 479
The Effect of Plant Size 482
15.2 The Firm’s Demand for Factors
in the Long Run 483
Constructing the Long-Run Labor
Demand Curve 483
Substitution and Scale
Effects 485
Relationships Between the Short Run
and the Long Run 488
15.3 The Industry’s Demand Curve for
Factors of Production 490
Monopsony 490
15.4 The Distribution of
Income 492
Factor Shares and Rents 492
Producers’ Surplus 494
Summary 496
Review Questions 497
Numerical Exercises 498
Problem Set 499
CHAPTER 16
The Market for Labor 501
16.1 Individual Labor Supply 501
Consumption versus Leisure 501
Changes in the Budget Line 504
The Worker’s Supply of Labor 506
16.2 Labor Market Equilibrium 509
Changes in Nonlabor Income 510

Changes in Productivity 510
16.3 Differences in Wages 514
Human Capital 514
Compensating Differentials 515
Access to Capital 516
16.4 Discrimination 517
Theories of Discrimination 518
Wage Differences Due to Worker
Preferences 519
Human Capital Inheritance 519
Summary 520
Review Questions 521
Problem Set 521
CHAPTER 17
Allocating Goods Over
Time 525
17.1 Bonds and Interest Rates 525
Relative Prices, Interest Rates, and
Present Values 526
Bonds Denominated in Dollars 529
Default Risk 530
17.2 Applications 531
Valuing a Productive Asset 531
Valuing Durable Commodities:
Is Art a Good Investment? 532
Should You Pay with Cash or Credit? 533
Government Debt 534
Planned Obsolescence 535
Artists’ Royalties 536
Old Taxes Are Fair Taxes 537

The Pricing of Exhaustible
Resources 538
17.3 The Market for Current
Consumption 539
The Consumer’s Choice 539
The Demand for Current
Consumption 542
Equilibrium and the Representative
Agent 544
Changes in Equilibrium 546
17.4 Production and Investment 552
The Demand for Capital 552
The Supply of Current
Consumption 553
Equilibrium 554
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CONTENTS xi
Summary 556
Author Commentary 556
Review Questions 556
Problem Set
557
CHAPTER 18
Risk and Uncertainty

563
18.1 Attitudes Toward Risk 563
Characterizing Baskets 565
Opportunities 566

Preferences and the Consumer’s
Optimum 568
Gambling at Favorable Odds 573
Risk and Society 575
18.2 The Market for Insurance 576
Imperfect Information 576
Uninsurable Risks 578
18.3 Futures Markets 578
Speculation 579
18.4 Markets for Risky Assets 581
Portfolios 582
The Geometry of Portfolios 583
The Investor’s Choice 585
Constructing a Market Portfolio 588
18.5 Rational Expectations 589
A Market with Uncertain Demand 589
Why Economists Make Wrong
Predictions 592
Summary 595
Author Commentary 596
Review Questions 596
Problem Set 597
CHAPTER 19
What Is Economics? 599
19.1 The Nature of Economic
Analysis 599
Stages of Economic Analysis 599
The Value of Economic Analysis 602
19.2 The Rationality Assumption 603
The Role of Assumptions in Science 603

All We Really Need: No Unexploited
Profit Opportunities 604
19.3 What Is an Economic
Explanation? 606
Celebrity Endorsements 606
The Size of Shopping Carts 607
Why Is There Mandatory
Retirement? 608
Why Rock Concerts Sell Out 609
99¢ Pricing 610
Rationality Revisited 611
19.4 The Scope of Economic
Analysis 611
Laboratory Animals as Rational
Agents 611
Author Commentary 615
Problem Set 615
APPENDIX A
Calculus Supplement

619
APPENDIX B
Answers to All the Exercises

645
APPENDIX C
Answers to Problem Sets

657
Glossary 673

Index 681
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xiii
To the Student
Price theory is a challenging and rewarding subject. The student who masters price
theory acquires a powerful tool for understanding a remarkable range of social phe-
nomena. How does a sales tax affect the price of coffee? Why do people trade? What
happens to ticket prices when a baseball player gets a raise? How does free agency affect
the allocation of baseball players to teams? Why might the revenue of orange growers
increase when there is an unexpected frost—and what may we infer about the existence
of monopoly power if it does?
Price theory teaches you how to solve similar puzzles. Better yet, it poses new ones.
You will learn to be intrigued by phenomena you might previously have considered
unremarkable. When rock concerts predictably sell out in advance, why don’t the pro-
moters raise prices? Why are bank buildings fancier than supermarkets? Why do ski
resorts sell lift tickets on a per-day basis rather than a per-ride basis?
Throughout this book, such questions are used to motivate a careful and rigorous
development of microeconomic theory. New concepts are immediately illustrated with
entertaining and informative examples, both verbal and numerical. Ideas and tech-
niques are allowed to arise naturally in the discussion, and they are given names (like
“marginal value”) only after you have discovered their usefulness. You are encouraged
to develop a strong economic intuition and then to test your intuition by submitting it
to rigorous graphical and verbal analysis.
I think that you will find this book inviting. There are neither mathematical
demands nor prerequisites and no lists of axioms to memorize. At the same time, the
level of economic rigor and sophistication is quite high. In many cases, I have carried
analysis beyond what is found in most other books at this level. There are digressions,

examples, and especially problems that will challenge even the most ambitious and
talented students.
Using This Book
This is a book about how the world works. When you finish the first chapter, you will
know how to analyze the effects of sales and excise taxes, and you will have discovered
the surprising result that a tax on buyers and a tax on sellers have exactly the same
effects. When you finish the second chapter, you will understand why oranges, on aver-
age, taste better in New York than in Florida. In each succeeding chapter, you will be
exposed to new ideas in economics and to their surprising consequences for the world
around you.
To learn what price theory is, dig in and begin reading. The next few paragraphs
give you a hint of what it’s all about.
Price theory, or microeconomics, is the study of the ways in which individuals and
firms make choices, and the ways in which these choices interact with each other. We
assume that individuals have certain well-defined preferences and limits to their behav-
ior. For example, you might enjoy eating both cake and ice cream, but the size of your
Preface
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xiv PREFACE
stomach limits your ability to pursue these pleasures; moreover, the amount of cake
that you eat affects the amount of ice cream you can eat, and vice versa.
In predicting behavior, we assume that individuals behave rationally, which is to
say that they make themselves as well-off as possible, as measured by their own prefer-
ences, and within the limitations imposed on them. While this assumption (like any
assumption in any science) is only an approximation to reality, it is an extraordinarily
powerful one, and it leads to many profound and surprising conclusions.
Price theory is made richer by the fact that each individual’s choices can affect the
opportunities available to others. If you decide to eat all of the cake, your roommate
cannot decide to eat some too. An equilibrium is an outcome in which each person’s

behavior is compatible with the restrictions imposed by everybody else’s behavior. In
many situations, it is possible to say both that there is only one possible equilibrium
and that there are good reasons to expect that equilibrium to actually come about. This
enables the economist to make predictions about the world.
Thus, price theory is most often concerned with two sorts of questions: those that
are positive and those that are normative. A positive question is a question about what
is or will be, whereas a normative question is a question about what ought to be. Positive
questions have definite, correct answers (which may or may not be known), whereas
the answers to normative questions depend on values.
For example, suppose that a law is proposed that would prohibit any bank
from foreclosing on any farmer’s mortgage. Some positive questions are: How will
this law affect the incomes of bankers? How will it affect the incomes of farmers?
What effect will it have on the number of people who decide to become farmers
and on the number of people who decide to start banks? Will it indirectly affect
the average size of farms or of banks? Will it indirectly affect the price of land?
How will it affect the price of food and the well-being of people who are neither
farmers nor bankers? and so forth. A normative question is: Is this law, on bal-
ance, a good thing?
Economics can, at least in principle, provide answers to the positive questions.
Economics by itself can never answer a normative question; in this case your answer to
the normative question must depend on how you feel about the relative merits of help-
ing farmers and helping bankers.
Therefore, we will be concerned in this book primarily with positive questions.
However, price theory is relevant in the consideration of normative questions as
well. This is so in two ways. First, even if you are quite sure of your own values, it
is often impossible to decide whether you consider some course of action desirable
unless you know its consequences. Your decision about whether to support the
antiforeclosure law will depend not only on your feelings about farmers and bank-
ers, but also on what effects you believe the law will have. Thus, it can be important
to study positive questions even when the questions of ultimate interest are norma-

tive ones.
For another example, suppose that you have decided to start recycling newspapers
to help preserve large forests. One of your friends tells you that in fact recycling leads to
smaller forests because it lowers the demand for trees and induces paper companies to
do less planting. Whether or not your friend is correct is a positive question. You might
want the answer to that positive question before returning to the normative question:
Should I continue to recycle?
The second way in which price theory can assist us in thinking about normative
questions is by showing us the consequences of consistently applying a given normative
criterion. For example, if your criterion is “I am always for anything that will benefit
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
PREFACE xv
farmers, provided that it does not drive any bankers out of business,” the price theorist
might be able to respond, “In that case, you must support such-and-such law, because
I can use economic reasoning to show that such-and-such law will indeed benefit farm-
ers without driving any bankers out of business.” If such-and-such law does not sound
like a good idea to you, you might want to rethink your normative criterion.
In the first seven chapters of this book, you will receive a thorough ground-
ing in the positive aspects of price theory. You will learn how consumers make
decisions, how firms make decisions, and how these decisions interact in the
competitive marketplace. In Chapter 8, you will examine the desirability of
these outcomes from the viewpoints of various normative criteria. Chapter
9 rounds out the discussion of the competitive price system by examining
the role of prices as conveyors of information. In Chapters 10 through 14, you
will learn about various situations in which the competitive model does not
fully apply. These include conditions of monopoly and oligopoly, and circum-
stances in which the activities of one person or firm affect others involuntarily
(e.g., factories create pollution that their neighbors must breathe).
The first 14 chapters complete the discussion of the market for goods, which are

supplied by firms and purchased by individuals. In Chapters 15 through 17 you will
learn about the other side of the economy: the market for inputs to the production
process (such as labor) that are supplied by individuals and purchased by firms. In
Chapter 17, you will study the market for the productive input called capital and exam-
ine the way that individuals allocate goods across time, consuming less on one day so
that they can consume more on another.
Chapter 18 concerns a special topic: the role of risk.
Chapter 19 provides an overview of what economics in general, and price theory
in particular, is all about. Most of the discussion in that final chapter could have been
included here. However, we believe that the discussion will be more meaningful after you
have seen some examples of price theory in action, rather than before. Therefore, we make
the following suggestion: Dip into Chapter 19. Not all of it will make sense at this point, but
much of it will. After you have been through a few chapters of the book, dip into Chapter 19
again. Even the parts you understood the first time will be more meaningful now. Later
on—say, after you have finished Chapter 7—try it yet again. You will get the most from the
final chapter if you read it one last time, thoroughly, at the end of the course.
Features
This book provides many tools to help you learn. Here are a few hints on how to use
them.
Exhibits
Most of the exhibits have extensive explanatory captions that summarize key points
from the discussion in the text.
Exercises
Exercises are sprinkled throughout the text. They are intended to slow you down
and make sure that you understand one paragraph before going on to the next. If
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xvi PREFACE
you cannot do an exercise quickly and accurately, you have probably missed an
important point. In that case, it is wise to pause and reread the preceding few para-

graphs. Answers to all of the exercises are provided in Appendix B at the back of
the book.
Dangerous Curves
The dangerous curve symbol appears periodically to warn you against the most com-
mon misunderstandings. Passages marked with this symbol describe mistakes that
students and theorists often make and explain how to avoid them.
Marginal Glossary
Each new term is defined in bold in the text and in the margin, where you can easily
find it. All of the definitions in the margin glossary are gathered in alphabetical order
in the Glossary at the back of the book.
Chapter Summaries
The summaries at the end of each chapter provide concise descriptions of the main
ideas. You will find them useful in organizing your study.
Author Commentaries
I’ve written a number of magazine articles that use price theory to illuminate every
aspect of human behavior. Many of these can be found on the text Web site at http://
www.cengage.com/economics/landsburg. Click on the companion site for the
text, select a chapter from the drop-down list at the left of the screen, and click on
the Author Commentaries link in the left menu. Finally, click the download link to
download the commentary. Slate articles can also be accessed on this companion site.
Additional articles can be found through an archive search on the Slate magazine home
page at . Magazine articles, featuring examples that are relevant to
many chapters, are noted on the inside cover of this text. The author regularly blogs at
www.TheBigQuestions.com/blog, where you will often find material directly related to
what you are learning in this book.
Review Questions
The Review Questions at the end of each chapter test to see whether you have learned
and can repeat the main ideas of the chapter.
Numerical Exercises
About half of the chapters have Numerical Exercises at the end. By working these, you

apply economic theory to data to make precise predictions. For example, at the end of
Chapter 7, you are given some information about the costs of producing kites and the
demand for kites. Using this and the theory that you have learned, you will be able to
deduce the price of kites, the number of kites sold by each firm, and the number of
firms in the industry.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
PREFACE xvii
Problem Sets
The extensive Problem Sets at the end of each chapter occupy a wide range of difficulty.
Some are quite straightforward. Others are challenging and open-ended and give you
the opportunity to think deeply and creatively. Often, problems require additional
assumptions that are not explicitly stated. Learning to make additional assumptions is a
large part of learning to do economics. In some cases there will be more than one cor-
rect answer, depending on what assumptions you made. Thus, in answering problems
you should always spell out your reasoning very carefully. This is particularly impor-
tant in “true or false” problems, where the quality of your explanations will usually mat-
ter far more than your conclusion.
About one third of the problems are discussed in Appendix C at the end of the
book. These problems are indicated by a shaded box around the problem number. The
discussions in Appendix C range from hints to complete answers. In many cases, the
answer section lists only conclusions without the reasoning necessary to support them;
your instructor will probably require you to provide that reasoning.
If your instructor allows it, you will learn a lot by working on problems together
with your classmates. You may find that you and they have different answers to the
same problem, and that both you and they are equally sure of your answers. In attempt-
ing to convince each other, and in trying to pinpoint the spot at which your thinking
diverged, you will be forced to clarify your ideas and you will discover which concepts
you need to study further. Now you are ready to begin.
To the Instructor

One advantage of teaching the same course every semester is that you constantly dis-
cover new ways to help students understand and enjoy the subject. I’ve taught price
theory 50 times now, and am eager to share the best of my recent discoveries.
The seventh edition of this book, like the six that preceded it, was well received
by both students and instructors. I’ve therefore continued to preserve the book’s basic
structure and the many features that have been recognized as highlights—the clarity
of the writing, the careful pedagogy (including “Dangerous Curves” signals to warn
students of common misunderstandings), the lively examples, and the wide range of
exercises and problems.
At the same time, I’ve continued my practice of rewriting several sections for even
greater clarity. These include discussions of Giffen goods in Chapter 4 and a of long
run competitive equilibrium (including the break-even condition) in Chapter 7. In
Chapter 8, I’ve added a passage to emphasize that economic inefficiency always entails
a missed opportunity to do good, and in Chapter 9 I’ve added some discussion of the
extraordinary series of economic events that began in 2008. The biggest change is
in Chapter 13, on externalities, which I’ve extensively reorganized to emphasize the
importance of both Pigovian and Coasian insights.
But I’ll repeat here what I said in the previous edition: While I am very pleased
with these improvements and innovations, I have not tampered with the fundamental
structure and content of the book, which I expect will be as satisfactory to the next
generation of students as it was to the previous. The standard topics of intermediate
price theory are covered in this edition, and in the previous versions. I have retained all
of the book’s unique features, of which the following are the most important.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xviii PREFACE
Use of Social Welfare as a Unifying Concept
Consumers’ and producers’ surplus are introduced in Chapter 8, immediately follow-
ing the theory of the competitive. There they are used to analyze the effects of various
forms of market interference. Thereafter, most new concepts are related to social wel-

fare and analyzed in this light.
The Economics of Information
Chapter 9 (Knowledge and Information) surveys the key role of prices in disseminat-
ing information and relates this to their key role in equilibrating markets. Section9.1
emphasizes the price system’s remarkable success in this regard while Section 9.3 sur-
veys some of its equally remarkable failures. Section 9.2 studies information in financial
markets.
Treatment of Theory of the Firm
It is often difficult for students to understand the importance of production functions,
average cost curves, and the like until after they have been asked to study them for sev-
eral weeks. To remedy this, Chapter 5 (The Behavior of Firms) provides an overview of
how firms make decisions, introducing the general principle of equating marginal costs
with marginal benefits and relating this principle back to the consumer theory that the
student has just learned.
Having seen the importance of cost curves, students may be more motivated to
study their derivation in Chapter 6 (Production and Costs). The material on firms is
presented in a manner that gives a lot of flexibility to the instructor. Those who prefer
the more traditional approach of starting immediately with production can easily skip
Chapter 5 or postpone it until after Chapter 6. Chapter 6 itself has been organized to
rigorously separate the short-run theory (in Section 6.1) from the long-run theory (in
Section 6.2). Relations between the short and the long run are thoroughly explored in
Section 6.3. Instructors who want to defer the more difficult topic of long-run produc-
tion will find it easy to simply cover Section 6.1 and then move directly on to Chapter 7.
Extended Analysis of Market Failures, Property Rights,
and Rules of Law
This is the material of Chapter 13, which I have found to be very popular with students.
The theory of externalities is developed in great detail, using a series of extended exam-
ples and illustrated with actual court cases. Section 13.4 (The Law and Economics)
analyzes various legal theories from the point of view of economic efficiency.
Relationships to Macroeconomics

The topic coverage provides a solid preparation for a rigorous course in macroeco-
nomics. In addition, several purely “micro” topics are illustrated with “macro” applica-
tions. (None of these applications is central to the book, and all can be skipped easily
by instructors who wish to do so.) There are sections on information, intertemporal
decision making, labor markets in general equilibrium, and rational expectations. In
the chapter on interest rates, there is a purely microeconomic analysis of the effects
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
PREFACE xix
of federal deficits, including Ricardian Equivalence, the hypotheses necessary for it
to hold, and the consequences of relaxing these hypotheses. (This material has been
extensively rewritten and simplified for this edition.) The section on rational expecta-
tions, in Chapter 18, is presented in the context of a purely micro problem, involving
agricultural prices, but it includes a discussion of “why economists make wrong predic-
tions” with a moral that applies to macroeconomics.
Other Nontraditional Topics
There are extensive sections devoted to topics excluded from many standard inter-
mediate textbooks. Among these are alternative normative criteria, efficient asset
markets, contestable markets, antitrust law, mechanisms for eliciting private infor-
mation about the demand for public goods, human capital (including the external
effects of human capital accumulation), the role of increasing returns in economic
growth, the Capital Asset Pricing Model, and the pricing of stock options. The
book concludes with a chapter on the methods and scope of economic analysis
(titled What Is Economics?), with examples drawn from biology, sociology, and
history.
Supplements
The Instructor’s Manual contains the following features in each chapter: general discus-
sion, teaching suggestions, suggested additional problems, and solutions to all of the
end-of-chapter problems in the textbook. The Manual can be downloaded by instruc-
tors from the text Web site.

The Test Bank, prepared by Brett Katzman, Kennesaw State University, Kennesaw,
GA, offers true/false questions, multiple-choice questions, and essay questions for each
chapter. It has been significantly expanded for this edition.
The Study Guide, prepared by William V. Weber, Eastern Illinois University,
Charleston, IL, has chapters that correspond to the textbook. Each chapter contains
key terms, key ideas, completion exercises, graphical analyses, multiple-choice
questions, questions for review, and problems for analysis. Artwork from the text is
reprinted in the Study Guide, with ample space to take notes during classroom dis-
cussion.
PowerPoint
®
slides of exhibits from the text are also available for classroom use,
and can be accessed at the text Web site. PowerPoint slides incorporating lecture notes
and exhibits, also available on the Web site, were prepared by Raymonda Burgman,
DePauw University, Greencastle, IN.
Text Web Site
The text Web site is located at On
the Price Theory Web site are several of the text supplements, teaching resources, learn-
ing resources, links to the Author Commentary articles, and additional Slate articles.
In addition, easy access is provided to the EconNews, EconDebate, EconData, and
EconLinks Online features at the South-Western Economics Resource Center.
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xx PREFACE
Acknowledgments
I first learned economics at the University of Chicago in the 1970s, which means
that I learned most of it, directly or indirectly, from Dee McCloskey. Generations of
Chicago graduate students were infected by Dee’s enthusiasm for economics as a tool
for understanding the world, and the members of one generation communicated their
exuberance to me. They, and consequently I, learned from Dee that the world is full of

puzzles—not the abstract or technical puzzles of formal economic theory, but puzzles
like: Could the advent of free public education cause less education to be consumed?
We learned to see puzzles everywhere and to delight in their solutions. Later, I had the
privilege to know Dee as a friend, a colleague, and the greatest of my teachers. Without
Dee, this book would not exist. The exuberance that Dee personifies is endemic at
Chicago, and I had the great good fortune to encounter it every day. I absorbed ideas
and garnered examples in cafeterias, the library’s coffee lounge, and especially in all-
night seminars at Jimmy’s Woodlawn Tap. Many of those ideas and examples appear in
this book, their exact sources long forgotten. To all who contributed, thank you.
Among the many Chicago students who deserve explicit mention are Craig Hakkio,
Eric Hirschhorn, and Maury Wolff, who were there from the beginning. John Martin
and Russell Roberts taught me much and contributed many valuable suggestions
specifically for this book. Ken Judd gave me a theory of executive compensation. Dan
Gressell taught me the two ways to get a chicken to lay more eggs.
I received further education, and much encouragement, from the Chicago faculty. I
thank Gary Becker, who enticed me to think more seriously about economics; Sherwin
Rosen, who had planted the seeds of all this years before; and José Scheinkman, who
listened to my ideas even when they were foolish. Above all, Bob Lucas can have no
idea of how grateful I have been for his many gracious kindnesses. I remember them
all, and value his generosity as I value the inspiration of his intellectual depth, honesty,
and rigor.
Since leaving Chicago, my good fortune in colleagues followed me to Iowa and
Cornell, and especially to Rochester, where this book was written. There is no faculty
member in economics at Rochester who did not contribute to this book in one way
or another. Some suggested examples and problems; others helped me learn material
that I had thought I understood until I tried to write about it; and many did both. I
should name them all, but have space for only a few. William Thomson taught me
about mechanisms for revealing the demand for public goods and suggested that they
belonged in a book at this level. Walter Oi contributed more entertaining ideas and
illustrations than I can remember and told me how Chinese bargemen were paid. Ken

McLaughlin dazzled me with insights on pretty much a daily basis. And the late Alan
Stockman started teaching me both economics and the joys of economics from the day
I met him until the day he died.
I must also mention the contributions of the daily lunch group at the Hillside
Restaurant, where no subject is off limits and no opinion too outrageous for consider-
ation. The daily discussions about how society is or should be structured were punctu-
ated by numerous tangential discussions of how various ideas could best be presented
in an intermediate textbook. I thank especially Stockman, McLaughlin, Mark Bils, John
Boyd, Jim Kahn, Marvin Goodfriend (the first inductee into the Hillside Hall of Fame),
and various part-time members.
Harold Winter’s extensive written criticism of Chapter 11 led to substantial
improvements. His many contributions specifically for this edition are acknowledged
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
PREFACE xxi
above and gratefully acknowledged again here. Wendy Betts gave me the epigram for
Section 9.3.
We gratefully acknowledge the contributions of the following reviewers whose
comments and suggestions have improved this project:
Ted Amato, University of North Carolina—Charlotte
John Antel, University of Houston
Charles A. Berry, University of Cincinnati
Jay Bloom, SUNY—New Paltz
James Bradfield, Hamilton College
Victor Brajer, California State University—Fullerton
Raymonda Burgman, DePauw University
Satyajit Chatterjee, University of Iowa
Jennifer Coats, St. Louis University
John Conant, Indiana State University
John P. Conley, University of Illinois

John Conley, University of Illinois—Urbana
John Devereux, University of Miami
Arthur M. Diamond, University of Nebraska—Omaha
John Dodge, Calvin College
Richard Eastin, University of Southern California
Carl E. Enomoto, New Mexico State University
Claire Holton Hammond, Wake Forest University
Dean Hiebert, Illinois State University
John B. Horowitz, Ball State University
Roberto Ifill, Williams College
Paul Jonas, University of New Mexico
Kenneth Judd, University of Chicago
Elizabeth Sawyer Kelly, University of Wisconsin—Madison
Edward R. Kittrell, Northern Illinois University
Vicky C. Langston, Austin Peay State University
Daniel Y. Lee, Shippensburg University
Luis Locay, University of Miami
Barry Love, Emory & Henry College
Chris Brown Mahoney, University of Minnesota
Devinder Malhotra, University of Akron
Joseph A. Martellaro, Northern Illinois University
John Martin, Baruch College
Scott Masten, University of Michigan
J. Peter Mattila, Iowa State University
Sharon Megdal, Northern Arizona University
Jack Meyer, Michigan State University
Robert J. Michaels, California State University—Fullerton
John Miller, Clarkson University
David Mills, University of Virginia
H. Brian Moehring, Ball State University

Robert Molina, Colorado State University
John Mullen, Clarkson University
Kathryn A. Nantz, Fairfield University
Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.