Chapter 1 Introduction to Economics 1
1.1 Definitions of Economics 2
1.1.1 Adam Smith 4
1.1.2 Alfred Marshall 5
1.1.3 John Maynard Keynes 6
1.2 Ten Concepts of Economics 7
1.2.1 Concept #1：Choice 7
1.2.2 Concept #2：Opportunity Cost 9
1.2.3 Concept #3：Marginal Analysis 10
1.2.4 Concept #4：Incentive 11
1.2.5 Concept #5：Trade 14
1.2.6 Concept #6：Market 16
1.2.7 Concept #7：Government 17
1.2.8 Concept #8：Productivity 20
1.2.9 Concept #9：Inflation 21
1.2.10 Concept #10：Short-run vs.Long-run 22
Key Concepts 25
Questions for Review 25
Supplementary Reading Nobel Prizes in Economics（1969—2000） 26
Chapter 2 Economic Analysis Framework 30
2.1 Microeconomics and Macroeconomics 30
2.1.1 Microeconomics 30
2.1.2 Macroeconomics 31
2.2 Positive Economics and Normative Economics 32
2.2.1 Positive Economics 32
2.2.2 Normative Economics 33
2.3 Goals of Economic Policy 34
2.3.1 Economic Growth 34
2.3.2 Full Employment 44
2.4 Economic System 46
2.4.1 Capitalism 47
2.4.2 Socialism 47
2.4.3 Mixed Economy 48
2.4.4 Planned Economy 49
2.4.5 Market Economy 50
2.5 Economic Analysis 51
2.5.1 General Equilibrium Analysis 51
2.5.2 Partial Equilibrium Analysis 57
Key Concepts 61
Questions for Review 61
Supplementary Reading New Method of Economic Analysis 61
Chapter 3 Demand， Supply and Elasticity 64
3.1 Demand 64
3.1.1 Determinants of Demand 64
3.1.2 Demand Curve 66
3.1.3 Shifts in Demand Curve 68
3.2 Supply 70
3.2.1 Determinants of Supply 70
3.2.2 Supply Curve 71
3.2.3 Shifts in Supply Curve 74
3.3 Market Equilibrium 75
3.3.1 Equilibrium Price 76
3.3.2 Changes in Equilibrium 78
3.4 Elasticity 82
3.4.1 Price Elasticity of Demand 83
3.4.2 The Total Revenue 88
3.4.3 Determinants of Demand Elasticity 90
3.4.4 Other Demand Elasticity 92
3.4.5 Price Elasticity of Supply 92
3.4.6 Determinants of Price Elasticity of Supply 95
Key Concepts 96
Questions for Review 96
Supplementary Reading How Does Policy Affect the Sale of Mooncakes？ 97
Chapter 4 Theory of the Consumer 99
4.1 Utility 99
4.1.1 Cardinal Utility and Marginal Utility Analysis 99
4.1.2 The Rational Spending Rule 103
4.1.3 The Income and Substitution Effects 106
4.1.4 Ordinal Utility and Indifference Curve 107
4.1.5 Budget Line Constraint 109
4.1.6 Change of Consumer Choices 110
4.2 Consumer Surplus 114
4.3 Consumption in Uncertainty 118
4.3.1 Uncertainty and Risk 118
4.3.2 Expected Wealth and Its Utility 119
4.3.3 Expected Utility 120
4.3.4 Risk Attitude 121
4.3.5 How to Reduce Risks？ 123
Key Concepts 126
Questions for Review 126
Supplementary Reading Paradox of Value 127
Chapter 5 Theory of the Firm 128
5.1 Production 128
5.1.1 Factors of Production 128
5.1.2 Types of Business 129
5.2 Production Function 130
5.2.1 Production Function with One Variable Factor 131
5.2.2 Production Function with Two Variable Factors 135
5.2.3 Equal-cost Line 137
5.2.4 Optimal Production Point： Least-cost Tangency 138
5.3 Costs of Production 139
5.3.1 Opportunity Cost vs.Accounting Cost 139
5.3.2 The Short-run Cost Function 140
5.3.3 The Long-run Cost Curve 143
5.4 Economies of Scale 145
Key Concepts 146
Questions for Review 146
Supplementart Reading Huawei Technologies Co.，Ltd 147
Chapter 6 Perfect Competition and Monopoly 149
6.1 Perfect Competition 149
6.1.1 Conditions of Perfect Competition 149
6.1.2 Demand Curve in Perfect Competition Market 150
6.1.3 Short-run Supply Curve in Perfect Competition Market 151
6.1.4 Short-run Equilibrium of Perfect Competition Market 152
6.1.5 Long-run Equilibrium of Perfect Competition Market 153
6.2 Monopoly 155
6.2.1 Characteristics of Monopoly 155
6.2.2 Price Discrimination 156
6.2.3 Short-run and Long-run Equilibriums in Monopoly 160
6.2.4 Marginal Revenue and Elasticity of Demand in Monopoly 163
6.2.5 Monopoly and Efficiency 165
6.2.6 Monopoly Regulation 168
Key Concepts 171
Questions for Review 172
Supplementart Reading Examples of Price Discrimination 172
Chapter 7 Monopolistic Competition and Oligopoly 174
7.1 The Monopolistic Competition Market 174
7.1.1 Characteristics of Monopolistic Competition 175
7.1.2 Short-run Equilibrium 178
7.1.3 Long-run Equilibrium 179
7.1.4 Efficiency Analysis 181
7.1.5 Model of Product Differentiation 182
7.2 Oligopoly 184
7.2.1 Characteristics of Oligopoly 185
7.2.2 Cournot Model and Stackelberg Model 187
7.2.3 Bertrand Model and Sweezy Model 189
7.2.4 Public Policy Toward Oligopolies 191
Key Concepts 192
Questions for Review 192
Supplementart Reading The OPEC 193
Chapter 8 Game Theory and Information Economics 195
8.1 Game Theory 195
8.1.1 Game Representation 197
8.1.2 Types of Games 199
8.2 Information Economics 209
8.2.1 Adverse Selection 210
8.2.2 Moral Hazard 212
8.2.3 Signaling Model 214
8.2.4 Screening 216
8.3 Incentive Compatibility 217
Key Concepts 217
Questions for Review 218
Supplementary Reading John Forbes Nash，Jr 218
Chapter 9 National Income 224
9.1 An Economy Producing Consumption Goods 224
9.2 The Measurement of Gross Domestic Product 226
9.3 GDP Components 227
9.4 How Does the Government Measure GDP？ 229
9.5 Real GDP and Nominal GDP 229
9.6 The GDP Deflator 231
9.7 What Does GDP Not Measure？ 232
9.8 Shortcomings of GDP as a Measure of Total Production 233
9.9 Limitations of GDP When Measuring Living Standards 234
9.10 The Income Approach to GDP Calculation 235
Key Concepts 239
Questions for Review 239
Supplementart Reading China Income， China National Income and Underground Economy 240
Chapter 10 Inflation and Unemployment 246
10.1 Inflation 246
10.1.1 Consumer Price Index 246
10.1.2 CPI Construction 247
10.1.3 Inflation Rate Computation 248
10.1.4 CPI and Other Measures 249
10.1.5 Producer Price Index 251
10.1.6 Inflation Adjustment 251
10.1.7 Real vs.Nominal Interest Rates 252
10.1.8 The Costs of Inflation 254
10.2 Unemployment 257
10.2.1 Measuring Unemployment 257
10.2.2 Problems with Measuring the Unemployment Rate 258
10.2.3 The Cost of Unemployment 258
10.2.4 The Duration of Unemployment 259
10.2.5 Types of Unemployment 260
10.3 Inflation and Unemployment 261
10.3.1 Theoretical Phillips Curve 261
10.3.2 Empirical Evidence behind Tradeoff 262
10.3.3 The Breakdown of the Phillips Curve 262
10.3.4 Conclusion on Phillips Curve 263
Key Concepts 264
Questions for Review 264
Supplementart Reading China’s Inflation And Youth Unemployment Problem 265
Chapter 11 Economic Growth 270
11.1 Harrod-Domar Model 270
11.2 The Neoclassical Growth Model 271
11.2.1 Steady State and Steady-state Equilibrium 274
11.2.2 Implications of Solow Growth Model 274
11.2.3 Capital Accumulation 275
11.2.4 Population Growth 277
11.2.5 Technological Progress 278
11.2.6 Factors Other than Capital and Labor 279
11.2.7 Empirical Evidence of Neoclassical Growth Model and Criticisms 280
11.3 Endogenous or New Growth Model 281
Key Concepts 283
Questions for Review 283
Supplementart Reading Understanding Economic Growth： Review Article of Why Economies Grow 284
Chapter 12 Aggregate Demand and Supply 288
12.1 Aggregate Demand and Supply 288
12.1.1 Aggregate Demand 288
12.1.2 Aggregate Supply 289
12.1.3 Equilibrium of Aggregate Supply and Demand 291
12.1.4 Shifts in Aggregate Supply 292
12.1.5 Shifts in Aggregate Demand 292
12.1.6 Shifts in Aggregate Supply and Demand 294
12.2 The Goods Market and the IS Curve 294
12.2.1 Consumption and Marginal Propensity to Consume 294
12.2.2 Investment and the Investment Rate 295
12.2.3 Equilibrium of Goods Market and the IS Curve 295
12.2.4 The Slope of the IS Curve and the Multiplier 296
12.2.5 The Economic Impact and Implementation of Fiscal Policy 297
12.3 The Money Market and the LM Curve 297
12.3.1 The Demand for Money 297
12.3.2 The Supply of Money 298
12.3.3 Money Market Equilibrium and the LM Curve 298
12.3.4 The Economic Impact and Implementation of Monetary Policy 300
12.4 The Short-run Equilibrium of Goods and Money Markets 300
12.4.1 Shift on IS Curve and Fiscal Policy 301
12.4.2 Shift on LM Curve and Monetary Policy 302
12.5 Aggregate Supply Models 303
12.5.1 Sticky-wage Model 303
12.5.2 Worker-misperception Model 304
12.5.3 Imperfect-information Model 304
12.5.4 Sticky-price Model 305
Key Concepts 306
Questions for Review 306
Supplementary Reading Monetary Policy and Exchange Rate Pass-through 309
Chapter 13 Short-run Economic Fluctuations 315
13.1 How Do the Short Run and Long Run Differ？ 315
13.2 Fiscal and Monetary Policy 317
13.2.1 Fiscal Policy 317
13.2.2 Monetary Policy 321
13.3 The Fiscal-monetary Mix 325
13.4 The Macroeconomic Policy Debate 326
13.4.1 Uncertainty and Policy 326
13.4.2 Expectation and Policy 327
13.4.3 Self-stabilization and Policy 327
Key Concepts 329
Questions for Review 329
Supplementary Reading China’s Monetary Policy 329
Chapter 14 China in the World Economy 333
14.1 China：before 1949 333
14.2 China：1949—1978 336
14.2.1 Great Leap Forward 338
14.2.2 The Great Proletarian Cultural Revolution 340
14.3 China： since 1978 343
14.3.1 Reform in the Rural Sector 343
14.3.2 Reform in the Urban Sector 344
14.3.3 Foreign Direct Investment 346
14.4 Problems and Prospect 348
Key Concepts 351
Questions for Review 352
Supplementary Reading China’s Achilles Heel：A Comparison with America Reveals a Deep Flaw in China’s Model ofGrowth 352
Chapter 15 International Economics 358
15.1 International Trade 358
15.1.1 Free Trade Development 359
15.1.2 Trade Development with Government Intervention 363
15.1.3 Trade War 368
15.1.4 Trade Policy 371
15.1.5 Trade Research 373
15.2 Economic Integration 376
15.2.1 Seven Stages of Economic Integration 376
15.2.2 Reasons for Economic Integration 377
15.2.3 Theory of Economic Integration 378
15.3 International Finance 380
15.3.1 Global Financial System 380
15.3.2 International Monetary Systems 381
15.3.3 Balance of Payments 385
15.3.4 Exchange Rates 386
15.3.5 Foreign Direct investment 390
15.3.6 International Financial Stability 391
15.4 Globalization 392
Key Concepts 394
Questions for Review 394
Supplementary Reading A Brief History of RMB 395
参考文献 397