曼昆经济学原理复习

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Q4Why should policy makers think about incentives?

Policymakers need to think about incentives so they can understand how people will respond to the policies they put in place. The text's example of seat belts shows that policy actions can have quite unintended consequences. If

though

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to verify or refute their theories about how the world works. Economists use theory and observation like other scientists, but they are limited in their ability to run controlled experiments. Instead, they must rely on natural experiments.

Q5 Use a production possibilities frontier to describe the idea of

“efficiency”?

The idea of efficiency is that an outcome is efficient if the economy is getting all it can from the scarce resources it has available. In terms of the production possibilities frontier, an efficient point is a point on the frontier, such as point A in Figure 4. A point inside the frontier, such as point B, is inefficient since more of one good could be produced without

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firm, or nation to that of another, while comparative advantage is based on the relative opportunity costs of the persons, firms, or nations. While a person, firm, or nation may have an absolute advantage in producing every good, they can't have a comparative advantage in every good.

Q4Will a nation tend to export or import goods to Question2.

A nation will export goods for which it has a comparative advantage because

it has a smaller opportunity cost of producing those goods. As a result, citizens of all nations are able to consume quantities of goods that are outside their production possibilities frontiers.

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Q5Propeye’s income declines, and as a result, he buys more spinach. Is spinach an inferior or a normal goods? What happens to Popeye’s demand curve

Q8 supply

Q9 market towards its equilibrium.

The equilibrium of a market is the point at which the quantity demanded is equal to quantity supplied. If the price is above the equilibrium price, sellers want to sell more than buyers want to buy, so there is a surplus. Sellers try to increase their sales by cutting prices. That continues until they reach the equilibrium price. If the price is below the equilibrium

price, buyers want to buy more than sellers want to sell, so there is a shortage. Sellers can raise their price without losing customers. That continues until they reach the equilibrium price.

Q11 Describe the role of prices in market economies.

Prices play a vital role in market economies because they bring markets into equilibrium. If the price is different from its equilibrium level, quantity

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demand

have greater elastic ties, goods in more narrowly defined markets have greater elastic ties, and the elasticity of demand is higher the longer the time horizon.

Q4 On a supply-and-demand diagram, show equilibrium price, equilibrium quantity, and the total revenue received by producers.

Figure 1 presents a supply-and-demand diagram, showing equilibrium price,