ten principles of economics examples

... standard of living in a nation and how policymakers can endeavor to raise the standard of living through policies that promote economic growth Most of this chapter is summarized in one of the Ten Principles ... 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 ... takes 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 that

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 P r i c e The price of ice cream is one determinant of the quantity supplied When the price of ice ... to 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 ... s The amount of ice cream you supply today may depend on your expectations of the future For example, if you expect the price of ice cream to rise in the future, you will put some of your current

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 ... 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 ... 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

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 ... tools of supply and demand allow you to analyze many of the most important events and policies that shape P 2 P 1 Quantity of Drugs Price of Drugs Demand S 2 S 1 (a) Drug Interdiction Quantity of ... e p t s 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

Ngày tải lên: 15/12/2013, 11:15

... 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

... 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 ... would increase, and over time, U.S citizens would enjoy a higher standard of living. Another of the Ten Principles of Economics is that people respond to incentives. Many economists have used

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 ... forces of supply and demand, just as other prices in the economy are And we can analyze shifts in sup-ply or demand in financial markets as we do in other markets One of the Ten Prin-ciples of Economics ... 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

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. ... selected some of them and offered each a $500 bonus if they found new jobs within 11 weeks This group was then com-pared to a control group not offered the incentive The average spell of unemploy-ment

Ngày tải lên: 15/12/2013, 11:15

... 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 ... 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

Ngày tải lên: 15/12/2013, 11:15

... 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 ... 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

Ngày tải lên: 15/12/2013, 11:15

... 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 ... there are costs of changing prices. Costs of price adjustment are called menu costs, a term derived from a restaurant’s cost of printing a new menu Menu costs include the cost of deciding on new

Ngày tải lên: 15/12/2013, 11:15

... the property of a resource allocation of maximizing the total surplus received by all members of society e q u i t y the fairness of the distribution of well-being among the members of society ... of the producer surplus of all sellers. Quantity of Houses Painted Quantity of Houses Painted Price of House Painting 500 800 $900 0 Supply 600 (b) Price = $800 Price of House Painting 500 800 ... is composed of two parts First, those buy-ers who were already buying Q1of the good at the higher price P1are better off be-cause they now pay less The increase in consumer surplus of existing

Ngày tải lên: 24/12/2013, 17:15

... tax revenue. This chapter has shed some light on how high the price of civilized society can be One of the Ten Principles of Economics discussed in Chapter 1 is that markets are usually a good ... of supply is zero, the landowners bear the entire burden of the tax. Consider next the question of efficiency As we just discussed, the deadweight loss of a tax depends on the elastici-ties of ... on raw land Yet the value of land often comes from improvements, such as clearing trees, providing sewers, and building roads Unlike the supply of raw land, the supply of improvements has an elasticity

Ngày tải lên: 24/12/2013, 17:15

... the losses of the losers Now that we have completed our analysis of trade, we can better understand one of the Ten Principles of Economics in Chapter 1: Trade can make everyone better off. If Isoland ... importer of a good, domestic consumers of the good are better off, and domestic producers of the good are worse off ◆ Trade raises the economic well-being of a nation in the sense that the gains of ... becomes an exporter of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off Price of Steel Price before trade Price after trade of Steel Domestic

Ngày tải lên: 24/12/2013, 17:15

... 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