Mark Skousen - Economic Logic

COPYRIGHT 2017, 2014, 2010, 2008, 2000 BY MARK SKOUSEN

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Dedicated to two giants

of the 20th Century,

Friedrich Hayek and Milton

Friedman.

OTHER ACADEMIC BOOKS BY MARK SKOUSEN

Playing the Price Controls Game

The Structure of Production

Economics on Trial

Dissent on Keynes (editor)

The Investors Bible: Mark Skousens Principles of Investment

Puzzles and Paradoxes in Economics (co-authored with Kenna C. Taylor)

The Making of Modern Economics

Vienna and Chicago, Friends or Foes?

The Big Three in Economics

Econo Power

The Maxims of Wall Street

A Viennese Waltz Down Wall Street

While the earth remaineth, seedtime and harvest, and cold and heat, and summer and winter, and day and night shall not cease.

GENESIS 8:22

After all, the chief business of the American people is business. They are profoundly concerned with the producing, buying, selling, investing, and prospering in the world. I am strongly of the opinion that the great majority of people will always find these are moving impulses of our life.

CALVIN COOLIDGE (1925)

No science in the world is more elevated, more necessary, and more useful than economics.

CARL LINNAEUS, Swedish naturalist

CONTENTS

Thanks especially to my assistant Ned Piplovic for editing and updating the fifth edition of Economic Logic, both for micro and macro editions. Every chapter has been revised and updated, and with the addition of a glossary. I also thank Jim Cox at Georgia Perimeter College for preparing the test bank. For a copy of the test bank, instructors should contact Jim Cox at . Id also like to thank the following economists, colleagues, and friends who have reviewed, edited, or made suggestions for Economic Logic over the various editions. While their advice has been invaluable, none can be held responsible for the final product. I would especially like to thank my wife, Jo Ann, for her editing skills. Her suggestions and changes were invaluable. In addition, Id like to thank the following for their assistance in this and past editions:

Brian Addis, Grantham University

Martin Anderson, Hoover Institution

Dominick T. Armentano, University of Hartford

Manuel F. Ayau, Universidad Francisco Marroquin

Charles W. Baird, California State University East Bay

Peter Bach, University of Relands Whitehead College

Richard Band, Profitable Investing

Bret Barker, Schurr High School, California

Bruce Barlett, Alexis de Tocqueville Institution

Robert Barro, Harvard University

Robert Batemarco, Marymount College

P. T. Bauer, London School of Economics

Gary S. Becker, University of Chicago

Don Bellante, University of South Florida

Peter L. Bernstein, Peter L. Bernstein, Inc., New York

Mark Blaug, University of London

Walter Block, Loyola University

Peter Boettke, George Mason University

Donald J. Boudreaux, George Mason University

H. L. Brockman, Central Piedmont Community College

Stanley Brue, Pacific Lutheran University

Eamonn Butler, Adam Smith Institute

Roger Gilles, Milligan College

Jay Carlson, Utah Valley University

David Colander, Middlebury College

Kent Cowie, Henry Hazlitt Foundation

Jim Cox, Georgia Perimeter College

Thomas J. DiLorenzo, Loyola College

Edwin G. Dolan, George Mason University

Jim Doti, Chapman University

Peter F. Drucker, Claremont Graduate University

Richard M. Ebeling, The Cidadel

Kenneth G. Elzinga, University of Virginia

Sean Flynn, Scripts College

Fred Foldvary, Santa Clara University

Burton W. Folsom, Jr., Hillsdale College

Milton Friedman, Hoover Institution

Lowell E. Gallaway, Ohio University

Roger W. Garrison, Auburn University

George Gilder

Bettina B. Greaves, Foundation for Economic Education

James D. Gwartney, Florida State University

Steve H. Hanke, Johns Hopkins University

G. C. Harcourt, Cambridge University

Fred Harwood, American Institute for Economic Research

Friedrich A. Hayek, University of Freiberg

Robert L. Heilbroner, New School for Social Research

David R. Henderson, Naval Postgraduate School

Paul Heyne, University of Washington

John Hicks, Oxford University

Robert Higgs, Seattle University

Randall Holcombe, Florida State University

John M. Hood, John Locke Foundation

Glenn Hubbard, Columbia Business School

Arthur M. Hughes, University of Maryland

Joseph Kecheissen, Universidad Francisco Marroquin

Matt King, Rollins College

Israel M. Kirzner, New York University

Martin Krause, University of Buenos Aires

Don Lavoie, George Mason University

Stanley Lebergott, Wesleyan University

Kary Ledbetter, Grantham University

Dwight R. Lee, University of Georgia

Henri Lepage, Institut Euro 92

John List, University of Chicago

John Mackey, CEO, Whole Foods Market

Burton G. Malkiel, Princeton University

Yuri N. Maltsev, Carthage College

N. Gregory Mankiw, Harvard University

Deidre N. McCloskey, University of Illinois at Chicago

Richard B. McKenzie, University of California, Irvine

Roger LeRoy Miller, University of Texas, Arlington

Hyman P. Minsky, Washington University

Glenn Moots, Northwood University

Charles Murray, American Enterprise Institute

Charles R. Nelson, University of Washington

Gary North, Institute of Christian Economics

E. C. Pasour, Jr., North Carolina State University

Judd W. Patton, Bellevue University

William H. Peterson, Campbell University

Mark J. Perry, University of Michigan, Flint

Madsen Pirie, Adam Smith Institute

Robert Poole, Jr., Reason Foundation

Alvin Rabushka, Hoover Institution

Lawrence Reed, Foundation for Economic Education

George G. Reisman, Pepperdine University

Alan Reynolds, Cato Institute

Benjamin Rogge, Wabash College

Murray N. Rothbard, University of Nevada at Las Vegas

Roy J. Ruffin, University of Houston

Joseph Salerno, Pace University

Paul A. Samuelson, Massachusetts Institute of Technology

Ken Schoolland, Pacific Hawaii University

George A. Selgin, University of Georgia

Hans F. Sennholz, Grove City College