Paul Krugman, Robin Wells
ISBN #9781464143847
4th Edition
458 Questions
Homework Questions
Economics is a comprehensive textbook that introduces readers to the fundamental principles governing individual choices, market operations, and broader macroeconomic phenomena. The book interweaves microeconomic concepts—like opportunity cost, supply and demand, and various market structures—with macroeconomic frameworks concerning growth, fiscal and monetary policies, and international trade. It methodically builds from basic decision-making models to intricate discussions on government interventions, externalities, and the subtleties of public goods and income distribution. Blending theoretical models with real-world applications, the book offers a robust foundation for understanding both everyday economic behavior and large-scale economic systems.
Chapter 1
First Principles
Chapter 2
Economic Models: Trade-offs and Trade
Chapter 3
Supply and Demand
Chapter 4
Consumer and Producer Surplus
Chapter 5
Price Controls and Quotas: Meddling with Markets
Chapter 6
Elasticity
Chapter 7
Taxes
Chapter 8
International Trade
Chapter 9
Decision Making by Individuals and Firms
Chapter 10
The Rational Consumer
Chapter 11
Behind the Supply Curve: Inputs and Costs
Chapter 12
Perfect Competition and the Supply Curve
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Chapter 13
Monopoly
Chapter 14
Oligopoly
Chapter 15
Monopolistic Competition and Product Differentiation
Chapter 16
Externalities
Chapter 17
Public Goods and Common Resources
Chapter 18
The Economics of the Welfare State
Chapter 19
Factor Markets and the Distribution of Income
Chapter 20
Uncertainty, Risk, and Private Information
Chapter 21
Macroeconomics: The Big Picture
Chapter 22
GDP and the CPI: Tracking the Macroeconomy
Chapter 23
Unemployment and Inflation
Chapter 24
Long-Run Economic Growth
Chapter 25
Savings, Investment Spending, and the Financial System
Chapter 26
Income and Expenditure
Chapter 27
Aggregate Demand and Aggregate Supply
Chapter 28
Fiscal Policy
Chapter 29
Money, Banking, and the Federal Reserve System
Chapter 30
Monetary Policy
Chapter 31
Inflation, Disinflation, and Deflation
Chapter 32
Crises and Consequences
Chapter 33
Macroeconomics: Events and Ideas
Chapter 34
Open-Economy Macroeconomics
Problem 1
Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVs) will increase, decrease, or remain the same when each of the following events occurs? Explain your answer. a. Other car manufacturers, such as General Motors, decide to make and sell SUVs. b. SUVs produced in foreign countries are banned from the American market. c. Due to ad campaigns, Americans believe that SUVs are much safer than ordinary passenger cars. d. The time period over which you measure the elasticity lengthens. During that longer time, new models such as four-wheel-drive cargo vans appear.
Kaylee Mcclellan Numerade Educator
Problem 2
In a supply and demand diagram, draw the shift of the demand curve for hamburgers in your hometown due to the following events. In each case, show the effect on equilibrium price and quantity. a. The price of tacos increases. b. All hamburger sellers raise the price of their french fries. c. Income falls in town. Assume that hamburgers are a normal good for most people. d. Income falls in town. Assume that hamburgers are an inferior good for most people. e. Hot dog stands cut the price of hot dogs.
Nick Johnson Numerade Educator
Problem 3
A survey indicated that chocolate is the most popular flavor of ice cream in America. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream. b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits. c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream. d. New technology for mixing and freezing ice cream lowers manufacturers' costs of producing chocolate ice cream.
Problem 4
Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. a. What are the fixed inputs and variable inputs in the production of cups of frozen yogurt? b. Draw the total product curve. Put the quantity of labor on the horizontal axis and the quantity of frozen yogurt on the vertical axis. c. What is the marginal product of the first worker? The second worker? The third worker? Why does marginal product decline as the number of workers increases?
Doris Bennett Numerade Educator
Problem 5
In order to ingratiate himself with voters, the mayor of Gotham City decides to lower the price of taxi rides. Assume, for simplicity, that all taxi rides are the same distance and therefore cost the same. The accompanying table shows the demand and supply schedules for taxi rides. a. Assume that there are no restrictions on the number of taxi rides that can be supplied (there is no medallion system). Find the equilibrium price and quantity. b. Suppose that the mayor sets a price ceiling at $\$ 5.50$. How large is the shortage of rides? Illustrate with a diagram. Who loses and who benefits from this policy? c. Suppose that the stock market crashes and, as a result, people in Gotham City are poorer. This reduces the quantity of taxi rides demanded by 6 million rides per year at any given price. What effect will the mayor's new policy have now? Illustrate with a diagram. d. Suppose that the stock market rises and the demand for taxi rides returns to normal (that is, returns to the demand schedule given in the table). The mayor now decides to ingratiate himself with taxi drivers. He announces a policy in which operating licenses are given to existing taxi drivers; the number of licenses is restricted such that only 10 million rides per year can be given. Illustrate the effect of this policy on the market, and indicate the resulting price and quantity transacted. What is the quota rent per ride?
Problem 6
Determine the amount of consumer surplus generated in each of the following situations. a. Leon goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to $\$ 10 .$ He picks out one he likes with a price tag of exactly $\$ 10 .$ When he is paying for it, he learns that the T-shirt has been discounted by $50 \%$. b. Alberto goes to the music store hoping to find a used copy of Nirvana's Nevermind for up to $\$ 30$. The store has one copy of the record selling for $\$ 30,$ which he purchases. c. After soccer practice, Stacey is willing to pay $\$ 2$ for a bottle of mineral water. The 7 -Eleven sells mineral water for $\$ 2.25$ per bottle, so she declines to purchase it.
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