Mark Skousen - Economic Logic Fourth Edition

Fourth Edition

Fourth Edition

by Mark Skousen

Benjamin Franklin Chair of Management

Grantham University

COPYRIGHT 2014, 2010, 2008, 2000 BY MARK SKOUSEN

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopy, recording, or any information storage and retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a magazine, newspaper, or broadcast.

First ebook 2013

eISBN 978-1-62157-226-8

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Cover design by Elise Elswood

Book design by PittsLaVigne Associates

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

Influential Economist: Adam Smith

Influential Economist: Ludwig von Mises

Influential Economist: Carl Menger

Influential Economist: Edward Deming

Influential Economist: Alfred Marshall

Influential Economist: Gary S. Becker

Influential Economist: William Stanley Jevons

Influential Economist: George J. Stigler

Influential Economists: Thomas Malthus and David Ricardo

Influential Economist: John Bates Clark

Influential Economist: Eugen Bhm-Bawerk

Influential Economist: Peter F. Drucker

Influential Economist: Harry Markowitz

Influential Economist: Wassily Leontief

Influential Economist: Simon Kuznets

Influential Economist: Irving Fisher

Influential Economists: J. B. Say and Robert Solow

Influential Economist: Murray Rothbard

Influential Economist: Milton Friedman

Influential Economists: James Buchanan and Gordon Tullock

Influential Economists: A. C. Piguo and Arthur B. Laffer

Influential Economist: John Maynard Keynes

Influential Economist: Ronald Coase

Influential Economist: Julian L. Simon

Influential Economist: Friedrich Hayek

Influential Economist: Robert Mundell

Influential Economists: Karl Marx and Muhammad Yunus

Thanks especially to economics professor Jeffrey Zucker of McMaster University for editing and updating the Fourth Edition of Economic Logic, both for micro and macro editions. Every chapter has been revised and updated, and with the addition of a glossary, is 30 pages longer than the third edition. 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

P. T. Bauer, London School of Economics

Bret Barker, Schurr High School, California

Bruce Barlett, Alexis de Tocqueville Institution

Robert Barro, Harvard University

Robert Batemarco, Marymount College

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