ten principles of economics answers

... through policies that promote economic growth. Most of this chapter is summarized in one of the Ten Principles of Economics: A country’s standard of living depends on its ability to produce goods ... some of this additional income back to the United States in the form of profit. Sim- ilarly, when an American investor buys Mexican stock, the investor has a right to a portion of the profit ... techniques. The final way in which a country can influence population growth is to apply one of the Ten Principles of Economics: People respond to incentives. Bearing a child, like any decision, has an

Ngày tải lên: 08/11/2013, 00:15

... quantity of ice cream you are willing to produce and offer for sale? Here are some possible answers. Price The price of ice cream is one determinant of the quantity supplied. When the price of ice ... CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 75 SUPPLY We now turn to the other side of the market and examine the behavior of sellers. The quantity supplied of any good or service is the ... the price of the good. This relationship between price and quantity supplied is called the law of supply: Other things equal, when the price of a good rises, the quantity supplied of the good

Ngày tải lên: 15/12/2013, 11:15

... responsiveness of quantity demanded or quantity supplied to one of its determinants price elasticity of demand a measure of how much the quantity demanded of a good responds to a change in the price of that ... bagels and cream cheese are often eaten together, they are complements. a. We observe that both the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. What could ... dramatically alter the number of times they go to the doctor, although they might go somewhat less often. By contrast, when the price of sailboats rises, the quantity of sailboats demanded falls

Ngày tải lên: 15/12/2013, 11:15

... the midpoint method gives the same answer regardless of the direc- tion of change, it is often used when calculating the price elasticity of demand be- tween two points. In our example, the midpoint ... attendance at the various museums around the country to see how the admission price affects attendance. In studying either of these sets of data, the statisticians would need to take account of ... affect attendance— weather, population, size of collection, and so forth—to isolate the effect of price. In the end, such data analysis would provide an estimate of the price elas- ticity of demand,

Ngày tải lên: 15/12/2013, 11:15

... LASTICITY OF S UPPLY C AN V ARY . Because firms often have a maximum capacity for production, the elasticity of supply may be very high at low levels of quantity supplied and very low at high levels of ... reducing the supply of farm products may raise the in- comes of farmers, but it does so at the expense of consumers. WHY DID OPEC FAIL TO KEEP THE PRICE OF OIL HIGH? Many of the most disruptive ... Concepts 1. Define the price elasticity of demand and the income elasticity of demand. 2. List and explain some of the determinants of the price elasticity of demand. 3. If the elasticity is greater

Ngày tải lên: 15/12/2013, 11:15

... total price of an apartment (in- cluding the bribe) closer to the equilibrium price. To understand fully the effects of rent control, we have to remember one of the Ten Principles of Economics ... higher oil prices reduced the supply of gasoline. Long lines at gas stations became commonplace, and motorists often had to wait for hours to buy only a few gallons of gas. What was responsible for ... Ceiling on Gasoline Is Not Binding Quantity of Gasoline 0 Price of Gasoline (b) The Price Ceiling on Gasoline Is Binding P 2 P 1 Quantity of Gasoline 0 Price of Gasoline Q 1 Q D Demand S 1 S 2 Price

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... decree, they ob- scure the signals that normally guide the allocation of society’s resources. Another one of the Ten Principles of Economics is that governments can some- times improve market outcomes. ... outcome of some haphazard process. Prices, they contend, are the result of the millions of business and consumer decisions that lie behind the supply and demand curves. Prices have the crucial job of ... homes working at part-time jobs for extra spending money. EVALUATING PRICE CONTROLS One of the Ten Principles of Economics discussed in Chapter 1 is that markets are usually a good way to organize

Ngày tải lên: 15/12/2013, 11:15

... to the profits that the firm makes. For example, if Intel sells a total of 1,000,000 shares of stock, then each share represents owner- ship of 1/1,000,000 of the business. The sale of stock ... stock is a part owner of Intel; the owner of an Intel bond is a creditor of the corporation. If Intel is very profitable, the stockholders en- joy the benefits of these profits, whereas the bondholders ... little profit or even losses, the price of a share falls. Various stock indexes are available to monitor the overall level of stock prices. A stock index is computed as an average of a group of stock

Ngày tải lên: 15/12/2013, 11:15

... Second, debt financing of wars shifts part of the cost of wars to fu- ture generations, who will have to pay off the government debt. This is argu- ably a fair distribution of the burden, for future ... THE FINANCIAL SYSTEM 577 size of the changes to the $20 billion of extra government borrowing. c. How does the elasticity of supply of loanable funds affect the size of these changes? (Hint: See ... beginning of a period of large budget deficits that continued not only through Reagan’s time in office but also for many years thereafter. As a result, government debt rose from 26 percent of GDP

Ngày tải lên: 15/12/2013, 11:15

... campaigning for office often speak about how their proposed policies will help create jobs. In the preceding two chapters we have seen some of the forces that determine the level and growth of a country’s ... economy’s production of goods and services. Although some degree of unemployment is inevitable in a complex economy with thousands of firms and millions of workers, the amount of unemployment varies ... the typical spell of unemployment lasts. HOW IS UNEMPLOYMENT MEASURED? Measuring unemployment is the job of the Bureau of Labor Statistics (BLS), which is part of the Department of Labor. Every

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... percent of nonunion workers, said Barry Bluestone, a labor- friendly economics professor at the Uni- versity of Massachusetts. The conclusion draws no argument even from Prof. Leo Troy of Rutgers ... of workers belong to unions. THE ECONOMICS OF UNIONS A union is a type of cartel. Like any cartel, a union is a group of sellers acting to- gether in the hope of exerting their joint market power. ... binding most often for the least skilled and least experienced members of the labor force, such as teenagers. It is only among these workers that minimum-wage laws explain the existence of unemployment.

Ngày tải lên: 15/12/2013, 11:15

... variety of interesting problems for eco- nomic theory. Some of these problems were highlighted in our description of the theory of efficiency wages. These prob- lems, however, go beyond the study of ... surplus of workers, it might seem profitable to reduce the wage it is offering. But by reducing the wage, the firm induces an adverse change in the mix of workers. In this case, at a wage of $10, ... diagram of the labor market, show the effect of an increase in the minimum wage on the wage paid to workers, the number of workers supplied, the number of workers demanded, and the amount of unemployment.

Ngày tải lên: 15/12/2013, 11:15

... affect the economy. One of the Ten Principles of Economics in Chapter 1 is that prices rise when the government prints too much money. Another of the Ten Principles of Economics is that society ... bank has two kinds of assets: It has $10 of reserves in its vault, and it has loans of $90. (These loans are liabilities of the people taking out the loans but they are assets of the bank making ... of money, it also creates a corresponding liability for its borrowers. At the end of this process of money creation, the economy is more liquid in the sense that there is more of the medium of

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... quantity of money, the velocity of money, and the dollar value of the economy’s output of goods and services 636 PART TEN MONEY AND PRICES IN THE LONG RUN The price level must rise, the quantity of ... velocity of money, we divide the nominal value of output (nominal GDP) by the quantity of money. If P is the price level (the GDP deflator), Y the quantity of output (real GDP), and M the quantity of ... quantity of money (M) times the velocity of money (V) equals the price of output (P) times the amount of output (Y). It is called the quantity equation because it relates the quantity of money

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... amount of income— $100,000 in our example—were fixed. But, in fact, it is not. Utilitarians reject com- plete equalization of incomes because they accept one of the Ten Principles of Economics ... extent, the goal of utilitarians is to ap- ply the logic of individual decisionmaking to questions concerning morality and public policy. The starting point of utilitarianism is the notion of ... veil of ignorance would be to maximize the average utility of members of society, and the resulting notion of justice would be more utilitarian than Rawlsian. LIBERTARIANISM A third view of inequality...

Ngày tải lên: 18/10/2013, 00:15

... effect on labor supply of winning such a large prize is substantial. Similar results were found in a study, published in the May 1993 issue of the Quarterly Journal of Economics, of how receiving a ... cutting back on the luxury of meat and buying more of the staple food of potatoes. Thus, it is argued that a higher price of potatoes actually raised the quantity of potatoes demanded. Whether ... of consumer choice does allow demand curves to slope upward. Yet such occurrences are so unusual that the law of demand is as reliable a law as any in economics. Quantity of Meat A Quantity of Potatoes 0 E C I 2 I 1 Initial...

Ngày tải lên: 24/10/2013, 18:15

... the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate ... Americans. 506 PART EIGHT THE DATA OF MACROECONOMICS CASE STUDY INTERNATIONAL DIFFERENCES IN GDP AND THE QUALITY OF LIFE One way to gauge the usefulness of GDP as a measure of economic well-being is to ... value of final goods. The reason is that the value of intermediate goods is already included in the prices of the final goods. Adding the market value of the paper to the market value of the...

Ngày tải lên: 29/10/2013, 01:15

... Bureau of Labor Statistics did revise the basket of goods B EHIND EVERY MACROECONOMIC STATISTIC are thousands of individual pieces of data on the economy. This article fol- lows some of the people ... a higher or lower standard of liv- ing than today’s players. MEASURING THE COST OF LIVING 508 PART EIGHT THE DATA OF MACROECONOMICS maternal mortality, higher rates of child malnutrition, and ... and pro-reform director of the Institute of Economic Problems of the Transitional Period. “Seven years ago to report an increase in the amount of production was to become a Hero of Socialist Labor,”...

Ngày tải lên: 29/10/2013, 01:15

... ideas. In the rest of this chapter, we look at Ten Principles of Economics. These principles recur throughout this book and are introduced here to give you an overview of what economics is all ... incremental adjustments to a plan of action CHAPTER 1 TEN PRINCIPLES OF ECONOMICS 7 thinking at the margin. Imagine that a plane is about to take off with ten empty seats, and a standby passenger ... individuals who make up the economy, we start our study of economics with four principles of in- dividual decisionmaking. PRINCIPLE #1: PEOPLE FACE TRADEOFFS The first lesson about making decisions is...

Ngày tải lên: 08/11/2013, 00:15