Principles of Political Economy - Third Edition List of Figures

LIST OF FIGURES Figure Two Identical Plants Figure Representing Points in a Space Figure Relationships between Variables Figure A Graph of the Total Cost ( Function Figure The Relationship between Output and Total Cost Figure An Upward Shift of the Total Cost Function Figure Two Extreme Cases Figure The Slope of a Nonlinear Curve Figure A Graph of the Absolute Value Function Figure A Straight Line Connecting Two Points Figure Problem Figure The Economic Problem Figure A Production Possibilities Table Figure Marginal Benefit and Marginal Cost

DANIEL SAROS Figure The Condition for Efficiency Figure Relaxing the Assumptions of the Model Figure The Role of Investment Figure Unbalanced Growth Figure A Combination of Growth and Contraction Figure Historical Application Recycling Figure A Neoclassical Classification Scheme for Economic Systems Figure Market Capitalism and the Figure A Classification Scheme for Modes of Production Figure Problem Figure Problem Figure The Neoclassical Circular Flow Model Figure The Basic Structure of the Neoclassical Supply and Demand Model Figure Representations of Demand Figure The Horizontal Summation of Individual Demands Figure The Market Demand Curve Figure A Change in Quantity Demanded

PRINCIPLES Figure Changes in Demand Figure Changes in Demand due to an Increase in Consumers Incomes Figure Representations of Supply Figure Horizontal Summation and the Market Supply Curve Figure A Change in Quantity Supplied Figure A Rise in Supply Figure An Increase in the Price of a Related Good Figure Competitive Market Equilibrium Figure Changes in Demand Figure Changes in Supply Figure A Simultaneous Rise in Supply and Demand Figure Consumers Surplus Figure Producers Surplus Figure A Price Ceiling in the Gasoline Market Figure A Price Floor in the Gasoline Market Figure A Negative Externality in Production Figure A Positive Externality in Consumption Figure Problem Figure Problem

DANIEL SAROS Figure A Circular Flow Model Figure The Simple Form of Value Figure The Expanded Form of Value Figure The General Form of Value Figure The Money Form of Value Figure The Figure Paper as the Symbol of Value Figure Supply and Demand Figure A Commodity Circuit Figure The General Formula for Capital Figure The Inclusion of in the World of Commodities Figure The Division of the Working Day Figure The Component Parts of the Total Value Figure The Relationship between the Value Components and the Total Product Figure The Expanded Version of the Circuit of Capital Figure The Production of Absolute Surplus Value Figure The Production of Relative Surplus Value

PRINCIPLES Figure Calculating the Slope of a Linear Demand Curve Figure The Inadequacy of Slope as a Measure of Consumer Responsiveness Figure A Situation that Requires the Arc Elasticity Formula Figure A Situation that Requires the Point Elasticity Formula Figure The Decline in Price Elasticity of Demand along a Linear Demand Curve Figure The Division of a Linear Demand Curve into Elastic and Inelastic Sections Figure A Perfectly Inelastic Demand Curve Figure A Perfectly Elastic Demand Curve Figure The Demand Curve and Total Revenue Figure The Relationship between Elasticity and Revenue Figure Price Elasticity of Supply in the Short Run and Long Run Figure Total Utility and Marginal Utility Figure The Economic Problem Facing the Consumer Figure The Derivation of the Individual Demand Curve

. SAROS Figure The Marginal Utility Solution to the Paradox of Value Figure The Commodity Space Figure The Budget Set Figure An Example of a Budget Line Figure Changes in the Budget Set Figure An Indifference Curve Figure The Marginal Rate of Substitution ( Figure An Indifference Map Figure The Utility Maximizing Choice Figure The Modern Derivation of the Individual Demand Curve Figure A Fall in the Price of a Good Figure A Rise in the Price of Cigarettes with Endogenous Preferences Figure Problem Figure The Total Product Curve Figure The Marginal Product and Average Product Curves Figure The Derivation of the Total Variable Cost Curve Figure The Total Cost Curves

PRINCIPLES Figure The Average Fixed Cost Curve Figure Relationships among the Curves Figure The Relationship between the Product Curves and the Unit Cost Curves Figure The Total Product Curve as Generated in Excel Figure The AP and Curves as Generated in Excel Figure The Scale Expansion of an Oil Pipeline Opening Figure The Average Total Cost Curve Figure The Relationship between the Long Run and Short Run Average Total Cost Curves Figure Minimum Efficient Scale ( MES ) Figure Variation in by Industry Figure A Curve with Many Output Levels that Minimize Unit Cost Figure Differing Degrees of Market Power Figure The Market Power Spectrum Figure Market Demand and the Demand Facing a Perfectly Competitive Firm Figure The Total Revenue Curve

Iii DANIEL SAROS Figure The Marginal Revenue and Average Revenue Curves Figure Graphical Representations of Maximum Economic Profit Figure Profit Maximization Using Marginal Adjustments to Output Figure Case A Positive Economic Profit ( ATC ) Figure Case The Point ( ATC ) Figure Case Operating at a Loss ( ATC ) Figure Case The Shutdown Point ( Figure Case The Shutdown Case ( Figure Marginal Cost and Short Run Output Supply Figure The Supply Curve of a Perfectly Competitive Firm Figure Market Demand and Market Supply Figure Equilibrium Figure Adjustment to Equilibrium The Case of Profits Figure Adjustment to Equilibrium The Case of Losses Figure The Optimal Plant Size

PRINCIPLES Figure The Industry Supply Curve for a Industry Figure The Industry Supply Curve for an Industry Figure The Industry Supply Curve for a Decreasing Cost Industry Figure Problem Figure Problem Figure Problem Figure Economies of Scale as a Barrier to Entry Figure The Demand Curves Facing the Monopolist and the Perfectly Competitive Firm Figure The Average Revenue Curve Facing a Monopolist Figure The Total Revenue Curve Facing a Monopolist Figure The Marginal Revenue Curve Facing a Monopolist Figure The Marginal Revenue Curve Facing a Perfectly Competitive Firm Figure The Relationship between the and Curves Facing a Monopolist Figure Case The Monopolist Earning Economic Profits ( ATC )

DANIEL SAROS Figure Case The Monopolist at the Point ( ATC ) Figure Case The Monopolist Operating at a Loss ( ATC ) Figure Case The Monopolist at the Shutdown Point ( Figure Case The Monopolist Shuts Down in the Short Run ( Figure The Triangle and the Rectangle of Redistribution in Monopolistic Markets Figure A Natural Monopoly in the Electricity Industry Figure Perfect Price Discrimination Figure The Range of Political Responses to Monopoly Figure The Demand Curves Facing Two Different Firms Figure Equilibrium Positions for a Monopolistically Competitive Firm Figure A Profit Equilibrium for a Monopolistically Competitive Firm ( ATC ) Figure A Price War Erupts in a Duopoly Market Figure The Curve Facing One Firm

PRINCIPLES Figure The Marginal Revenue Curve of a Firm Facing a Kinked Demand Curve Figure The Price Leadership Model Figure A Duopoly Game ( Example ) Figure A Duopoly Game ( Example ) Figure A Duopoly Game ( Example ) Figure The Sets of All Possible Nash Equilibria and Dominant Equilibria Figure A Duopoly Game ( Example ) Figure A Duopoly Game ( Example ) Figure A Markup Pricing Model Figure Problem Figure Problem Figure Problem Figure The Labor Supply Curve Facing a Firm in a Perfectly Competitive Labor Market Figure The Total Resource Cost Curve Figure The Average Resource Cost Curve and the Marginal Resource Cost Curve Figure The Total Product and Marginal Product Curves

DANIEL SAROS Figure The Marginal Revenue Product ( for a Perfectly Competitive Firm Figure The Marginal Revenue Product Curve and the Average Revenue Product Curve for a Perfectly Competitive Firm Figure A New Rule Figure The Curve as the Labor Demand Curve Figure The Market Demand for Labor Figure The Time Constraint ( The Leisure Tradeoff ) Figure A Worker Indifference Curve Figure Worker Equilibrium Utility Maximization Figure The Derivation of the Individual Worker Labor Supply Curve Figure The Labor Supply Curve Figure The Labor Market Supply Curve Figure Labor Market Equilibrium Figure The and Supply Figure The Average Resource Cost Curve of the Figure Marginal Resource Cost for a

PRINCIPLES Figure The Marginal Resource Cost Curve for a Figure Equilibrium in a Monopsonistic Labor Market Figure An Industrial Union in a Market with Many Employers Figure The Bilateral Monopoly Model Figure Three Expressions of the Value Produced in a Day ( in a specific industry ) Figure A 30 Productivity Increase ( in this industry but not in the wage goods industry ) Figure A Productivity Increase ( in the wage goods industry but not in this industry ) Figure A 30 Extension of the Working Day ( in this industry ) Figure A 30 Increase in the Intensity of Labor ( in this industry but not across all industries ) Figure The Official Poverty Rate , Figure The Curve Figure Curves Representing Income Distribution and Wealth Distribution Figure Two Combinations of Goods on a Production Possibilities Frontier ( in 2001 and 2002

DANIEL SAROS Figure Income and Expenditure A Neoclassical Identity Figure The Effect of Gross Investment and Depreciation on the Private Capital Stock Figure The Key Measures in the Transition from Gross National Product ( to Gross Domestic Product ( Figure A Diagram Representing the Two Approaches to Measurement Figure Real Fluctuations Around a Trend Line , 1990 to 2017 ( in billions of 2009 chained dollars ) Figure Structural Cycles The Cobweb Model Figure Real Gross Domestic Product Per Capita , Figure The Breakdown of the Population Using Labor Force Figure The . Civilian Labor Force Participation Rate , Figure The . Civilian Unemployment Rate , Figure The Special Unemployment Rate Unemployed and Discouraged Workers , Figure The Natural Rate of Unemployment and the Civilian Unemployment Rate ,

PRINCIPLES Figure The Rate , Figure The Effect of on the Real Value of 1000 Figure The Classical Theory of Employment and Output Figure Keynes Objection to Say Law of Markets Figure The Loanable Funds Market and the Equilibrium Rate of Interest Figure The Consumption Function Figure The Saving Function Figure of Consumption Relaxing the Assumption Figure The Building Blocks of Keynes Theory Figure The Consumption Function and the Reference Line Figure The Saving Function and the Income Level Figure The Determination of Planned Investment Spending Figure The Planned Aggregate Expenditures Curve Figure The Determination of Equilibrium Real

IX DANIEL SAROS Figure The Calculation of Equilibrium Real in the Cross Model Figure The Approach to the Determination of Equilibrium Figure Injections of Investment and of Saving Figure The Calculation of Real in the Investment Graph Figure A National Income Accounts Identity Saving Actual Investment Figure The Theory of Employment and Output Figure Application The Paradox of Thrift Figure The Investment Multiplier in the Aggregate Expenditures Model Figure The Net Export Curve Figure The Balance of Trade from ( in millions of dollars ) Figure Net Exports as a Component of Aggregate Expenditures Figure Equilibrium in an Open , Private Economy Figure The Government Expenditures Curve

PRINCIPLES Figure Government Expenditures as a Component of Aggregate Expenditures Figure Equilibrium in an Open , Mixed Economy Figure Lump Sum Taxation and Consumption Figure Consumption as a Component of Aggregate Expenditures Figure Equilibrium in an Open , Mixed Economy with Lump Sum Taxation Figure The Calculation of Equilibrium Real in the Expanded Cross Model Figure The Aggregate Demand ( AD ) Curve Figure The Derivation of the Aggregate Demand Curve Figure of Aggregate Demand An Example Figure The Aggregate Supply ( AS ) Curve and Rising Production Costs Figure The of Aggregate Supply An Example Figure Equilibrium Figure A Horizontal Aggregate Supply Curve Figure Case

DANIEL SAROS Figure Case The Great Depression Figure Case Figure Case Full Employment with Stable Prices Figure Case The Great Recession Figure The Long Run Aggregate Supply ( Curve Figure in the Neoclassical Synthesis Model Figure The Investment Multiplier and the Marginal to Consume and Save Figure The Lump Sum Tax Multiplier and the Marginal Propensity to Consume Figure The Changing Distribution of Wages and Profits Over the Course of the Business Cycle Figure Fluctuations in Wages and the General Rate of Profit Over Time Figure Factors that the Size of the Reserve Army of the Unemployed Figure The Pattern of the Real Wage and the Real Value Added Per Worker , Figure Key Linkages Contributing to the Growth of Systemic Risk in the to the 2008 Financial Crisis

PRINCIPLES Figure The Structure of Production as Captured in Garrison Version of the Triangle Figure The Market for Present Goods Figure A Change in the Structure of Production Due to a Change in the Time Preference of Laborers Figure A Change in the Structure of Production Due to a Change in the Time Preference of Capitalists Figure Neutral Versus Monetary Figure A Change in the Structure of Production Due to a Monetary Expansion ( short run and long run ) Figure The Growth of Principal Over Time Figure The Case of Compound Interest for a Loan Figure The Case of Compound Interest for a Loan Figure A Bond with a Fixed Coupon Payment Figure The Linkage Between the Loanable Funds Market and the Bond Market Figure Simultaneous Equilibrium in the Bond Market and Loanable Funds Market Figure The Division of a Household Assets into Component Parts

DANIEL SAROS Figure The Transactions Demand and the Precautionary Demand for Money Figure The Asset Demand for Money Figure The Total Demand for Money Figure The Money Market Figure An Increase in the Money Supply Figure 1513 A Decrease in the Money Supply Figure An Increase in the Demand for Money Figure A Decrease in the Demand for Money Figure The Discrepancy Between Stock Prices and Bond Prices Figure The Relationship between the Rate of Interest ( i ) and the Rate of Profit of Enterprise ( re ) Figure The Point at which the Rates of Interest , Profit , and Profit of Enterprise are All Equal Figure The Loan Capital Market and the Movement of the Rate of Interest Figure The Relationship Between the Neoclassical Money Supply Measures Figure Growth Rates of the and Money Stocks , Figure Fractional Reserve Banking in Gold Standard Economies and Fiat Money Economies

PRINCIPLES Figure The Balance Sheet of an Individual Figure The Consolidated Balance Sheet of all Commercial Banks , January 10 , 2018 , seasonally adjusted , billions of dollars Figure Changes in the Money Supply in the Money Market Figure Cash Deposits and Cash Withdrawals Involving Checkable Deposits Figure The Role of the Fed in Processing a Check Figure Cash Deposits and Cash Withdrawals Involving Savings Deposits Figure Transfers between Savings Deposits and Checkable Deposits Figure The Expansion of the Money Supply through A Bank Subject to a 10 Reserve Requirement Figure The Withdrawal of the Loan Amount Figure The Growth of the Loan Asset with the Accumulation of Anticipated Interest ( i ) Figure The Borrower Deposits Funds to Repay the Interest and Principal Amount of the Loan Figure The Contraction of the Money Supply through Loan Repayment

DANIEL SAROS Figure The Impact of a Monetary Expansion on the Financial Markets Figure The Impact of a Monetary Contraction on the Financial Markets Figure First Regional Bank Accepts a Deposit and Grants a Loan Figure Second Regional Bank Accepts a Deposit and Grants a Loan Figure Third Regional Bank Accepts a Deposit and Grants a Loan Figure The Formula for the Circuit of Money Capital Figure The Circulation of Bank Capital Figure The Dynamics of Profit Rate Equalization Under Normal Conditions ( market interest rate general interest rate ) Figure The Consolidated Statement of Condition of All Federal Reserve Banks ( in millions of dollars ) Figure The Fed Purchases Securities from a Bank Figure The Fed Sells Securities to a Bank Figure The Fed Grants a Discount Loan to a Bank Figure A Bank Repays the Fed for a Discount Loan Figure The Fed Reduces the Reserve Requirement Figure The Fed Raises the Reserve Requirement

PRINCIPLES Figure The Fed Pursues an Expansionary Monetary Policy Figure The Impact of Expansionary Monetary Policy on Investment Spending Figure The Impact of Expansionary Monetary Policy on Net Export Spending Figure The Fed Pursues a Monetary Policy Figure The Impact of Monetary Policy on Investment Spending Figure The Impact of Monetary Policy on Net Export Spending Figure The Impact of Expansionary Monetary Policy in the Short Run Figure The Impact of Expansionary Monetary Policy in the Long Run Figure The Historical Pattern of the Money Velocity , Figure The Impact of a Rise in Government Spending in the Model ( With accommodation from the central bank ) Figure The Fed Monetizing the Federal Debt Figure The Impact of a Rise in Government Spending in the Model ( with no accommodation from the central bank and consumer spending and investment spending falling )

DANIEL SAROS Figure The Impact of a Rise in Government Spending in the Model ( with no accommodation from the central bank and a decline in spending in input markets ) Figure The Impact of Rising Input Costs in the AS Model ( with no accommodation from the central bank ) Figure The Impact of the Spiral on the Financial Markets ( according to Theory ) Figure The Impact of the Spiral ( with accommodation from the central bank ) Figure Nonfarm Business Sector Labor Productivity , all employed persons Figure The , seasonally adjusted , Index 2009 100 Figure The Money Supply , seasonally adjusted , in billions of dollars Figure Median Weekly Real Earnings for Time Wage and Salary Workers , seasonally adjusted , dollars Figure Median Weekly Nominal Earnings for Time Wage and Salary Workers , seasonally adjusted , in dollars Figure The Impact of an Open Market Purchase of Securities on the Central Banks Balance Sheet Figure The Impact of an Open Market Purchase

PRINCIPLES and Discount Lending on the Central Balance Sheet Figure The Impact of Expansionary Fiscal Policy in the Short Run Lump Sum Tax Cuts Government Spending Increases Figure The Impact of Expansionary Fiscal Policy with Some Price Flexibility Lump Sum Tax Cuts or Government Spending Increases Figure The Impact of Fiscal Policy in the Short Run Lump Sum Tax Increases or Government Spending Reductions Figure The Impact of Fiscal Policy with Some Price Flexibility Lump Sum Tax Increases or Government Spending Reductions Figure Complete Crowding Out of Private Investment due to Government Borrowing Figure Partial Crowding Out of Private Investment due to Government Borrowing Figure Zero Crowding Out of Private Investment due to Government Borrowing Figure 1882 Partial Crowding Out due to Deficit Spending with Flexible Exchange Rates Figure Partial Crowding Out due to Deficit Spending with Fixed Exchange Rates Figure Partial Crowding Out due to Deficit Spending with a Regulated Trading Volume

DANIEL SAROS Figure Implications of Budget Surpluses and the Repayment of Federal Debt Figure Introducing a Proportional Income Tax into the Consumption Function Figure Introducing a Proportional Income Tax into the Cross Model Figure Progressive Tax Systems ( Rising Average Tax Rates ) Figure The Inherent Stability of a Progressive Tax System Figure Proportional Tax Systems ( Constant Average Tax Rates ) Figure The Stabilizing Power of Proportional Tax Systems Figure Regressive Tax Systems ( Falling Average Tax Rates ) Figure The Destabilizing Power of Regressive Tax Systems Figure A Balanced Full Employment Budget Figure A Full Employment Budget Deficit Figure A Full Employment Budget Surplus Figure The Impact of a Balanced Budget Policy during a Recession

PRINCIPLES Figure The Impact of a Balanced Budget Policy during a Period of Expansion Figure Full Employment Policies versus Austerity Policies Figure Combinations of Tax Rates that Allow the Government to Pay the Interest Owed on its Debt Figure Production Possibilities Frontiers for Two Nations Figure The Limits to the International Terms of Trade Figure Expanded Consumption Possibilities The Trading Possibilities Frontier Figure for Two Nations Facing Increasing Marginal Opportunity Costs Figure Partial Specialization in the Case of Increasing Marginal Opportunity Cost Figure The Equilibrium International Terms of Trade in the Case of Increasing Marginal Opportunity Cost Figure The Adjustment to Equilibrium in the Case of an Excess Demand for Wheat Figure The Adjustment to Equilibrium in the Case of an Excess Demand for Coffee Figure Economies of Scale in Retainable Industries

DANIEL SAROS Figure The Effect on of Capturing Retainable Industries Figure The Distribution of Gains from Trade with the Capture of Retainable Industries Figure International Trade and the Supply and Demand Model Figure The Economic Consequences of an Import Tariff Figure The Economic Consequences of an Import Quota Figure A Metropolis and Its Satellites Figure A Case of Price and Profit Rate Equalization with Differential Wages Figure Problem Figure Problem Figure Foreign Exchange Rates Figure Fluctuations in the Exchange Rate Figure Two Perspectives of Foreign Exchange Markets Figure The Reciprocal Interaction between Exchange Rates Figure The Quantity Demanded of Foreign Exchange

Figure Changes in the Demand for Foreign Exchange Figure The Quantity Supplied of Foreign Exchange Figure Changes in the Supply of Foreign Exchange Figure Cases Involving Changes in Demand Figure Cases Involving Changes in Supply Figure The Elimination of a Balance of Payments Deficit in the Case of Floating Exchange Rates Figure A Fixed Exchange Rate Policy in the Case of a Shortage of Euros Figure The Elimination of a Balance of Payments Surplus in the Case of Floating Exchange Rates Figure A Fixed Exchange Rate Policy in the Case of a Surplus of Yen Figure Balance of Payments Deficits in Thailand Figure A Case of Arbitrage with a Common Currency Figure A Case of International Arbitrage ( assuming a fixed exchange rate of ) Figure A Case of International Arbitrage ( assuming exchange rates that adjust from to ) Figure An Imperialist Road Map

DANIEL SAROS Figure The of Supply and Demand on Exchange Rates in Economics