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Economics, 11th edition

Published by Pearson (December 15, 2021) © 2022

  • John Sloman University of Bristol
  • Dean Garratt Aston Business School
  • Jon Guest Aston Business School

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Help your students think like an economist.

Economics, 11th edition by Sloman, Garratt, and Guest, is the ultimate guide to the fascinating subject of Economics, with content extensively revised and improved to reflect some of the major issues the world is facing today.

Accessible and easy to follow, the text takes an analytical and critical approach to the subject, by prompting your students to reflect on both the economic problems and opportunities it presents. A comprehensive introduction to the world of economic theory, this leading student text is the ideal support to their learning, encouraging them to adopt the economist way of thinking from theory to practice.

Hallmark Features in This Edition

  • The accessible writing style balances micro with macro content for those new to economics, providing numerous examples and questions that will test and reinforce your students' understanding of the field.
  • Chapter introductions and a map of content make your teaching plan easier to organise.
  • All economic terms are accessible, either highlighted and defined in the text or indexed.
  • The wealth of material applied in 170 boxes is ideal for class exercises, aiming to keep your students engaged by showcasing the role of economics in the real world.
  • Help your students think like an economist: the fifteen 'Threshold Concepts' help students relate economic concepts together.
  • End-of-chapter questions are included for your students to do in class or at home.

New and updated features of this title

  • Many new boxes have been included on topical and controversial issues, while the existing ones have been extensively revised. New topics include the market for vaccines, social media influencers, immigration and labour market, worker motivation and behavioural economics.
  • Further emphasis and analysis on behavioural economics, both on consumer and business levels, have been given on aspects such as present bias, prospect theory, and bias when making decisions in an uncertain environment.
  • The strengthened theoretical coverage reflects and further emphasises up-to-date developments in the field, such as the role of money and banking, debt, or balance sheets, with frequent references to the impact of the COVID-19 pandemic.
  • Updates to policy sections reflect changes since the previous edition, emphasising the protection of the environment, the regulation of businesses, and the implications of the COVID-19 pandemic on the well-being of governments.
  • Further development on macroeconomic models (IS/MP, DAD/DAS, Phillips Curve) is illustrated and reworks of the Solow model in terms of output per worker.
  • A deeper exploration of game theory and further analysis on price discrimination, externalities, and public goods, is developed throughout the book.
  • Updated tables and charts are now current as of April 2021.

Preface

Part A INTRODUCTION

  1. Economics and Economies
    • Economics and Global Issues
    • The Core of Economics
    • Different Economic Systems
    • The Nature of Economic Reasoning

Boxes

  • What's the Latest Economics News?
  • Looking at Macroeconomic Data
  • The Opportunity Costs of Studying
  • Scarcity and Abundance
  • Command Economies
  • Adam Smith (1723-90)
  • Ceteris Paribus

Part B FOUNDATIONS OF MICROECONOMICS

  1. Supply and Demand
    • Demand
    • Supply
    • Price and Output Determination
    • Elasticity
    • The Time Dimension

Boxes

  • UK House Prices
  • Stock Market Prices
  • Social Media Influencers and Their Effect on Demand Curves
  • Any More Fares?
  • *Using Calculus to Calculate the Price Elasticity Of Demand
  • Digital Platforms
  • Short Selling
  • Dealing in Futures Markets
  1. Government and the Market
    • The Control of Prices
    • Indirect Taxes and subsidies
    • Government Rejection of Market Allocation
    • Agriculture and Agricultural Policy

Boxes

  • A Minimum Unit Price for Alcohol
  • The Impact on Prices Of Natural Disasters/Health Crises
  • How Can Ticket Touts Make So Much Money?
  • Ashes To Ashes?
  • The Fallacy of Composition

Part C MICROECONOMIC THEORY

  1. Background to Demand: The Rational Consumer
    • Marginal utility theory
    • *The timing of costs and benefits
    • *Indifference analysis

Boxes

  • *Using Calculus to Derive a Marginal Utility Function
  • The Marginal Utility Revolution: Jevons, Menger, Walras
  • Taking Account of Time
  • *Cash Versus Vouchers
  • *Giffen Goods Versus Giffen Behaviour
  • *Consumer Theory: A Further Approach
  1. Consumer Behaviour in an Uncertain World
    • Demand under conditions of risk and uncertainty
    • Behavioural economics

Boxes

  • Experimental Economics
  • *the Endowment Effect
  • The Best Made Plans
  • *A Simple Experiment to Test For Social Preferences
  • Nudging People
  1. Background to Supply
    • The Short-Run Theory of Production
    • Costs in the Short Run
    • The Long-Run Theory of Production
    • Costs in the Long Run
    • Revenue
    • Profit Maximisation

Boxes

  • Malthus and the Dismal Science of Economics
  • Diminishing Returns in The Bread Shop
  • The Relationship Between Averages and Marginals
  • *The Relationship Between TPP, MPP and APP
  • The Fallacy of Using Historic Costs
  • Are Fixed Costs Always the Same as Sunk Costs?
  • Cost Curves in Practice
  • *The Cobb-Douglas Production Function
  • Minimum Efficient Scale
  • *Using Calculus to Find the Maximum Profit Output
  • The Logic of Logistics
  1. Profit Maximising under Perfect Competition and Monopoly
    • Alternative Market Structures
    • Perfect Competition
    • Monopoly
    • The Theory of Contestable Markets

Boxes

  • Concentration Ratios
  • Is Perfect Best?
  • E-Commerce and Market Structure
  • Google: A Monopoly Abusing Its Market Power?
  • X Inefficiency
  • Cut-Throat Competition
  • Airline Deregulation in The USA And Europe
  1. Profit Maximising under Imperfect Competition
    • Monopolistic Competition
    • Oligopoly
    • Game Theory
    • Price Discrimination

Boxes

  • Selling Ice Cream as A Student
  • Declining Levels of Competition
  • OPEC
  • Buying Power
  • The Prisoner's Dilemma
  • What's The Train Fare to London?
  • Personalised Pricing in Digital Markets
  • Just the Ticket?
  1. The Behaviour of Firms
    • Problems With Traditional Theory
    • Behavioural Economics of the Firm
    • Alternative Maximising Theories
    • Asymmetric Information and the Principal Agent Problem
    • Multiple Aims
    • Pricing in Practice

Boxes

  • What Do You Maximise?
  • How Firms Increase Profits by Understanding Irrational Consumers
  • Constraints On Firms Pricing
  • When Is a Theory Not a Theory?
  • Merger Activity
  • Stakeholder Power?
  • How Do Companies Set Prices?
  1. The Theory of Distribution of Income
    • Wage Determination Under Perfect Competition
    • Wage Determination in Imperfect Markets
    • Capital and Profit
    • Land and Rent

Boxes

  • Labour As a Factor of Production
  • *Using Indifference Curve Analysis to Derive the Individuals Supply Curve of Labour
  • Immigration and the UK Labour Market
  • Life at the Mill
  • The Rise and Decline of The Labour Movement In The UK
  • How Useful Is Marginal Productivity Theory?
  • The Persistent Gender Pay Gap?
  • Flexible Labour Markets and the Flexible Firm
  • Behaviour at Work
  • Stocks snd Flows
  • The Economics of Non-Renewable Resources

Part D MICROECONOMIC POLICY

  1. Inequality, Poverty and Policies to Redistribute Income
    • Inequality and Poverty
    • Taxes, Benefits, and the Redistribution of Income

Boxes

  • Poverty in the Past
  • Minimum Wage Legislation
  • The Laffer Curve
  • *Tax Cuts and Incentives
  • Replacing tax Credits with Universal Credit
  • What the Future Holds
  1. Markets, Efficiency, and the Public Interest
    • Efficiency Under Perfect Competition
    • The Case for Government Intervention
    • Forms of Government Intervention
    • *Cost/Benefit Analysis
    • Government Failure and the Case for the Market

Boxes

  • The Market for Vaccines
  • The Police as a Public Service
  • Should Health-Care Provision Be Left to The Market?
  • Deadweight Loss from Taxes on Goods and Services
  • *What Price a Human Life?
  • *HS2: Is it Really Worth It?
  • Mises, Hayek, and The Mont Pelerin Society
  1. Environmental Policy
    • Economics of the Environment
    • Policies to Tackle Pollution and its Effects
    • The Economics of Traffic Congestion
    • Urban Transport Policies

Boxes

  • The Economics of Biodiversity
  • Green Taxes
  • Placing A Price on CO2 emissions
  • International Co-Ordination on Climate Change
  • Trading Our Way Out of Climate Change
  • Road Pricing in Singapore
  1. Government Policy towards Business
    • Competition Policy
    • Privatisation and Regulation

Boxes

  • Fixing Prices at Mini-Golf Meetings?
  • Expensive Chips?
  • Ticketing Takeovers
  • Selling Power to the People

 

Part E FOUNDATIONS OF MACROECONOMICS

  1. An Introduction to Macroeconomic Issues and Ideas
    • An Overview of Key Macroeconomic Issues
    • Measuring National Income and Output
    • The Business Cycle
    • The Circular Flow of Income
    • Unemployment
    • Inflation
    • The Open Economy

Appendix: Calculating GDP

Boxes

  • Which Country is Better Off?
  • Can GDP Measure National Happiness?
  • Output Gaps
  • The Costs of Unemployment
  • The Costs of Inflation
  • The Phillips Curve
  • Dealing In Foreign Exchange
  1. The Development of Macroeconomic Thinking: a Historical Perspective
    • The Macroeconomic Environment and Debates
    • Classical Macroeconomics
    • The Keynesian Revolution
    • The Rise of The Monetarist and New Classical Schools
    • The Keynesian Response
    • An Emerging Consensus Up to The Crisis Of 2008
    • The Financial Crisis and The Covid-19 Pandemic

Boxes

  • Balance the Budget at all Costs
  • The Crowding-Out Effect
  • Will Wage Cuts Cure Unemployment?
  • Menu Costs
  • The Paradox of Thrift

Part F MACROECONOMIC MODELS, THEORIES AND POLICY

  1. Short-Run Macroeconomic Equilibrium
    • Background To the Theory
    • The Determination of National Income
    • The Simple Keynesian Analysis of Unemployment and Inflation
    • The Keynesian Analysis of The Business Cycle

Boxes

  • *Using Calculus to Derive the MPC
  • Confidence and Spending
  • Deriving the Multiplier Formula
  • Allowing for Inflation in the 45°- Line Diagram
  • Has There Been an Accelerator Effect in the UK?
  • Balance Sheets and the Business Cycle
  1. Banking, Money, and Interest Rates
    • The Meaning and Functions of Money
    • The Financial System
    • The Supply of Money
    • The Demand for Money
    • Equilibrium

Boxes

  • Money Supply, National Income and National Wealth
  • the Growth of Banks Balance Sheets
  • The Rise of Securitisation
  • UK and Eurozone Monetary Aggregates
  • *Calculating the Money Multiplier
  1. The Relationship between the Money and Goods Markets
    • The Effects of Monetary Changes on National Income
    • The Monetary Effects of Changes in The Goods Market
    • Modelling The Interaction of Monetary Policy And The Goods Market
    • Credit Cycles and The Goods Market

Appendix: The IS/LM Model

Boxes

  • Choosing the Exchange Rate or the Money Supply
  • Party Games and the Velocity of Money
  • The Stability of the Velocity of Circulation
  • Crowding out in an Open Economy
  • Amplifiers and Economic Shocks
  1. Aggregate Supply, Inflation and Unemployment
    • The AD/AS model
    • AD/AS and Inflation
    • Aggregate Demand and Supply with Inflation Targeting: The DAD/DAS model
    • The Labour Market and Aggregate Supply
    •  AD/AS and Macroeconomic Controversies

Boxes

  • The Aggregate Demand Curve
  • Cost-Push Inflation and Supply Shocks
  • Analysing Demand-Pull and Cost-Push Inflation Using the DAD/DAS model
  • Common Ground Between Economists?
  1. The Relationship between Inflation, Unemployment and Output
    • The EAPC and the Inflation/Unemployment Relationship
    • Inflation and Unemployment: The Monetarist Perspective
    • Inflation and Unemployment: The New Classical Position
    • Inflation and Unemployment: The Modern Keynesian Position
    • Central Banks and Inflation Targeting
    • Central Banks, Economic Shocks and the Macroeconomy: An Integrated Model

Boxes

  • *Basing Expectations on the Past
  • The Accelerationist Hypothesis
  • The Rational Expectations Revolution
  • Forecasting the Weather
  • The boy who Cried Wolf
  • *A Model of Inflation Bias
  • Inflation Targeting
  1. Fiscal and Monetary Policy
    • Fiscal policy and the public finances
    • The use of fiscal policy
    • Monetary policy
    • The policy-making environment

Boxes

  • COVID, Crises and Public Sector Spending
  • The Fiscal Impulse
  • Riding a Switchback
  • The Evolution of the Stability and Growth Pact
  • The Operation of Monetary Policy in the UK
  • Central Banking and Monetary Policy in the USA
  • Quantitative Easing
  • Monetary Policy in the Eurozone
  • Goodhart's Law
  • Using Interest Rates to Control Both Aggregate Demand and the Exchange Rate
  1. Long-term Economic Growth and Supply-side Policies
    • Introduction to Long-Term Economic Growth
    • Economic Growth Without Technological Progress
    • Economic Growth with Technological Progress
    • Approaches To Supply-Side Policy
    • Supply-Side Policies in Practice: Market-Orientated Policies
    • Supply-Side Policies in Practice: Interventionist Policies

Boxes

  • Labour Productivity
  • Getting Intensive with Capital
  • UK Human Capital
  • The Supply-Side Revolution in the USA
  • A Modern Approach to Industrial Policy

Part G THE WORLD ECONOMY

  1.  International Trade
    • The Advantages of Trade
    • Arguments for Restricting Trade
    • Preferential Trading
    • The European Union
    • The UK and Brexit

Boxes

  • Trading Places
  • Sharing Out the Jobs
  • Trade as Exploitation?
  • Free Trade and the Environment
  • Strategic Trade Theory
  • *The Optimum Tariff or Export Tax
  • Giving Trade a Bad Name
  • The Doha Development Agenda
  • Mutual Recognition: The Cassis De Dijon Case
  • Features of the Single Market
  1. The Balance of Payments and Exchange Rates
    • Alternative Exchange Rate Regimes
    • Fixed Exchange Rates
    • Free-Floating Exchange Rates
    • Exchange Rate Systems in Practice

*Appendix: The Open Economy and IS/LM analysis

Boxes

  • The Balance of Trade and the Public-Sector Budget Balance
  • The UK’s Balance of Payments Deficit
  • The Effectiveness of Fiscal and Monetary Policies Under Fixed Exchange Rates
  • The Price of a Big Mac
  • The Euro/Dollar Seesaw
  • The Effectiveness of Monetary and Fiscal Policies Under Floating Exchange Rates
  • Sterling Since the 1990s
  • Do Inflation Rates Explain Longer-Term Exchange Rate Movements?
  1. Economies in an Interdependent World
    • Globalisation And the Problem of Instability
    • European Economic and Monetary Union (EMU)
    • Global Inequality
    • Trade and Developing Countries
    • The Problem of Debt

Boxes

  • Economic and Financial Interdependencies: Trade Imbalance in The US And China
  • Optimal Currency Areas
  • The Human Development Index (HDI)
  • When Driving and Alcohol do Mix
  • The Evolving Comparative Advantage of China
  • A Debt to the Planet

Postscript: Reality Island

Appendix 1:Some Techniques of Economic Analysis

Appendix 2: Websites

Threshold Concepts and Key Ideas

Glossary

John Sloman was Director of the Economics Network from its foundation in 1999 until 2012 and is now Visiting Fellow at the University of Bristol, where the network is based. He is also Visiting Professor at the University of the West of England, Bristol.

Dean Garratt is a Senior Teaching Fellow at Aston University, having previously been a Principal Lecturer at Nottingham Business School.

Jon Guest is a Senior Teaching Fellow at Aston University and a Teaching Associate at Warwick Business School.

Discover more on our Sloman Economics news site.

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