Macroeconomics > INSTRUCTOR MANUALS > Principles Of Macroeconomics 9th Edition By N. Gregory Mankiw, Ronald D. Kneebone, Kenneth J McKenzi (All)

Principles Of Macroeconomics 9th Edition By N. Gregory Mankiw, Ronald D. Kneebone, Kenneth J McKenzie INSTRUCTOR SOLUTION MANUAL

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Instructor Solution Manual For Principles of Macroeconomics, 9th Edition N. Gregory Mankiw Ronald D. Kneebone Kenneth J McKenzie Chapter 1-18 Chapter 1 Ten Principles of Economics SOLUTION... S TO TEXTBOOK PROBLEMS Questions for Review 1. 2. 3. 4. 5. What is a tradeoff? Give two examples of tradeoffs that you face in your life. A tradeoff is what you give up in order to get something else. Examples of tradeoffs include time tradeoffs (such as studying one subject over another, or studying at all compared to engaging in social activities), and spending tradeoffs (such as whether to use your last $15 to purchase a pizza or to buy an online study guide for that tough economics course). What is the opportunity cost of seeing a movie? The opportunity cost of seeing a movie includes the monetary cost of admission plus the time cost of going to the theatre and attending the show. The time cost depends on what else you might do with that time; if it’s staying home and watching TV, the time cost may be small, but if it’s working an extra three hours at your job, the time cost is the money you could have earned. Water is necessary for life. Is the marginal benefit of a glass of water large or small? The marginal benefit of a glass of water depends on your circumstances. If you’ve just run a marathon, or you’ve been walking in the desert sun for three hours, the marginal benefit is very high. But if you’ve been drinking a lot of liquids recently, the marginal benefit is quite low. The point is that even the necessities of life, like water, don’t always have large marginal benefits. Why should policymakers 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 examples of seat belts and crosswalk countdown signals show that policy actions can have quite unintended consequences. If incentives matter a lot, they may lead to a very different type of policy; for example, some economists have suggested putting knives in steering columns so that people will drive much more carefully! While this suggestion is silly, it highlights the importance of incentives. Why isn’t trade among countries like a game, with some winners and some losers? Trade among countries isn’t a game with some losers and some winners because trade can make everyone better off. By allowing specialization, trade between people and trade between countries can improve everyone’s welfare. [Show More]

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