ten principles of economics by gregory mankiw pdf

... 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 ... receive for the sale of their crops If farmers are made worse off by the discovery of this new hybrid, why do they adopt it? The answer to this question goes to the heart of how competitive markets ... very different in the long run Over long periods of time, pro-ducers of oil outside of OPEC respond to high prices by increasing oil exploration and by building new extraction capacity Consumers

Ngày tải lên: 15/12/2013, 11:15

... source of the supply of loanable funds—is composed of private saving and public saving. A change in the government budget deficit represents a change in public saving and, thereby, in the supply of ... 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 ... i c a t i o n s Trang 9size of the changes to the $20 billion of extragovernment borrowing. c How does the elasticity of supply of loanable funds affect the size of these changes? (Hint: See

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... tax treatment of capital gains—the profits made by selling an asset for more than its purchase price Sup-pose that in 1980 you used some of your savings to buy stock in Microsoft Corpo-ration ... tax on a gain of $40 Thus, inflation exaggerates the size of capital gains and inadvertently in-creases the tax burden on this type of income. Another example is the tax treatment of interest ... the job of the Bureau of Stan-dards—to ensure the reliability of a commonly used unit of measurement When the Fed increases the money supply and creates inflation, it erodes the real value of the

Ngày tải lên: 15/12/2013, 11:15

... surprising: When firms choose to produce a smaller quantity of goods and services, they lay off workers, expanding the pool of unemployed Panel (c) of Figure 31-1 shows the unemployment rate in the U.S ... I O N S Our model of short-run economic fluctuations focuses on the behavior of two vari-ables The first variable is the economy’s output of goods and services, as mea-sured by real GDP The second ... predicted by classical macroeconomic theory This level of production is sometimes called potential output or full-employment output To be more accurate, we call it the natural rate of output

Ngày tải lên: 24/12/2013, 17:15

... market of 500,000 potential readers It is a matter of simple arithmetic to solve Readalot’s problem At a price of $30, Readalot sells 100,000 copies, has revenue of $3 million, and makes profit of ... makes profit of $1 million At a price of $5, it sells 500,000 copies, has revenue of $2.5 million, and makes profit of $500,000 Thus, Readalot maximizes profit by charging $30 and forgoing the opportunity ... the proper role of the government in the economy requires judgments about politics as well as economics. inefficiencies caused by monopolies List a potential problem with each of these policy

Ngày tải lên: 21/01/2014, 23:20

... rate of interest, the rate of unemployment, the level of real national income, the real quantity of money, the rate of growth of real national income, or the rate of growth of the real quantity of ... a paper denying the existence of a long-run tradeoff between inflation and unemployment. Friedman and Phelps based their conclusions on classical principles of macro- economics, which we discussed ... Effects of Low Unemployment CHAPTER 33 THE SHORT-RUN TRADEOFF BETWEEN INFLATION AND UNEMPLOYMENT 767 growth or decline in nominal national income, the rate of growth of the quantity of money.

Ngày tải lên: 21/01/2014, 23:20

... 18-1 The number of workers is on the horizontal axis, and the amount of output is on the vertical axis This figure illustrates the production function One of the Ten Principles of Economics introduced ... supply of computer software, and the demand for gas station attendants is inextricably tied to the supply of gasoline In this chapter we analyze factor demand by considering how a competitive, profit-maximizing ... about the number of workers it has or the number of apples it pro-duces It cares only about profit, which equals the total revenue from the sale of Quantity of Apples 0 Price of Apples P Q Demand

Ngày tải lên: 26/01/2014, 18:20

... the various mixes of output that an economy can produce It illustrates one of the Ten Principles of Economics in Chapter 1: People face tradeoffs Here the farmer faces a tradeoff between produc-ing ... ac-tivities of millions of people with varying tastes and abilities As a starting point for this analysis, here we consider the reasons for economic interdependence One of the Ten Principles of Economics ... of meat and 2 pounds of potatoes After I give you 3 pounds of meat in exchange for 1 pound of potatoes, I’ll have 21 pounds of meat and 3 pounds of potatoes In the end, I will also get more of

Ngày tải lên: 15/12/2013, 11:15

... that offered by other sellers The price of ice cream and the quantity of ice cream sold are not de-termined by any single buyer or seller Rather, price and quantity are dede-termined by all buyers ... M A N D We begin our study of markets by examining the behavior of buyers Here we con-sider what determines the quantity demanded of any good, which is the amount of the good that buyers are ... When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes.Substitutes are often pairs of goods that are used in place of each other, such as

Ngày tải lên: 15/12/2013, 11:15

... variable we often want to study is total revenue, the amount paid by buyers and received by sellers of the good In any market, total revenue is P  Q, the price of the good times the quantity of the ... rises by 50 percent, and the quantity falls by 33 percent, indicating that the price elasticity of demand is 33/50, or 0.66. By contrast, going from point B to point A, the price falls by 33 ... change using the standard way (by dividing the change by the initial level), the midpoint method computes a percentage change by dividing the change by the midpoint of the initial and final levels

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 ... ceiling on rents that landlords may charge their tenants. The goal of this policy is to help the poor by making housing more affordable. Economists often criticize rent control, arguing that it is ... waiting to get in as it is? In the end, ten- ants get lower rents, but they also get lower-quality housing. Policymakers often react to the effects of rent control by imposing additional regulations.

Ngày tải lên: 15/12/2013, 11:15

... claim 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 to ... 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 ... of the stock’s price. ◆ Price-earnings ratio A corporation’s earnings, or profit, is the amount of revenue it receives for the sale of its products minus its costs of production as measured by

Ngày tải lên: 15/12/2013, 11:15

... are often skeptical of this second argument. With thousands of money managers paying close attention to each company’s prospects, the price of a company’s stock is usually a good reflection of ... many U.S policymakers view the low level of U.S saving as a major problem One of the Ten Principles of Economics in Chapter 1 is that a country’s standard of living depends on its ability to produce ... advantage of active management by professional money man-agers The explanation for the superior performance of index funds is that they keep costs low by buying and selling very rarely and by not

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 ... spell of unemployment lasts H O W I S U N E M P L O Y M E N T M E A S U R E D ? Measuring unemployment is the job of the Bureau of Labor Statistics (BLS), which is part of the Department of Labor

Ngày tải lên: 15/12/2013, 11:15

... 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 ... 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. ... process by which unions and firms agree on the terms of employment s t r i k e the organized withdrawal of labor from a firm by a union Trang 6Legislation affecting the market power of unions

Ngày tải lên: 15/12/2013, 11:15

... 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, ... variety of interesting problems for eco-nomic theor y Some of these problems were highlighted in our description of the theor y of efficiency wages These prob-lems, however, go beyond the study of ... away, the firm has a fifty-fifty chance of hiring the compe-tent one By contrast, if the firm offers any lower wage, it is sure to hire the incom-petent worker. In many situations in life,

Ngày tải lên: 15/12/2013, 11:15

... profoundly 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 ... Federal Open Market Committee is made up of the seven members of the Board of Governors and five of the 12 regional bank presidents All 12 regional presidents attend each FOMC meeting, but only five ... are out of the hands of the public Thus, an open-market sale of bonds by the Fed decreases the money supply. The Fed is an important institution because changes in the money supply can profoundly

Ngày tải lên: 15/12/2013, 11:15

... the value of the unit of account falls by half A similar change would occur if the gov-ernment were to reduce the length of the yard from 36 to 18 inches: As a result of the new unit of measurement, ... 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, the velocity of money, and the dollar value of the economy’s output of goods and services Trang 6The price level must rise, the quantity of output must rise, or the velocity of money

Ngày tải lên: 15/12/2013, 11:15

... 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 ... MARKET FORCES OF SUPPLY AND DEMAND 77 MARKET SUPPLY VERSUS INDIVIDUAL SUPPLY Just as market demand is the sum of the demands of all buyers, market supply is the sum of the supplies of all sellers. ... cream is profitable, and so the quantity supplied is large. As a seller of ice cream, you work long hours, buy many ice- cream machines, and hire many workers. By contrast, when the price of ice...

Ngày tải lên: 15/12/2013, 11:15

... 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 ... 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 ... is temporarily high. How does this baby boom affect the price of baby-sitting services in 2010 and 2020? (Hint: 5-year-olds need baby-sitters, whereas 15-year-olds can be baby-sitters.) 7. Ketchup is a...

Ngày tải lên: 15/12/2013, 11:15