曼昆经济学原理微观经济学英文版习题答案.docx

曼昆经济学原理微观经济学英文版习题答案.docx

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Chapter1/TenPrinciplesofEconomicsF17

UNIT1

SOLUTIONSTOTEXTPROBLEMS:

QuickQuizzes

1.Thefourprinciplesofeconomicdecisionmakingare:

（1）peoplefacetradeoffs;

（2）thecostofsomethingiswhatyougiveuptogetit;（3）rationalpeoplethinkatthemargin;and（4）peoplerespondtoincentives.Peoplefacetradeoffsbecausetogetonethingthattheylike,theyusuallyhavetogiveupanotherthingthattheylike. Thecostofsomethingiswhatyougiveuptogetit,notjustintermsofmonetarycostsbutallopportunitycosts.Rationalpeoplethinkatthemarginbytakinganactionifandonlyifthemarginalbenefitsexceedthemarginalcosts. Peoplerespondtoincentivesbecauseastheycomparebenefitstocosts,achangeinincentivesmaycausetheirbehaviortochange.

2.Thethreeprinciplesconcerningeconomicinteractionsare:

（1）tradecanmakeeveryonebetteroff;

（2）marketsareusuallyagoodwaytoorganizeeconomicactivity;and（3）governmentscansometimesimprovemarketoutcomes. Tradecanmakeeveryonebetteroffbecauseitallowscountriestospecializeinwhattheydobestandtoenjoyawidervarietyofgoodsandservices. Marketsareusuallyagoodwaytoorganizeeconomicactivitybecausetheinvisiblehandleadsmarketstodesirableoutcomes. Governmentscansometimesimprovemarketoutcomesbecausesometimesmarketsfailtoallocateresourcesefficientlybecauseofanexternalityormarketpower.

3.Thethreeprinciplesthatdescribehowtheeconomyasawholeworksare:

（1）acountry’sstandardoflivingdependsonitsabilitytoproducegoodsandservices;

（2）pricesrisewhenthegovernmentprintstoomuchmoney;and（3）societyfacesashort-runtradeoffbetweeninflationandunemployment. Acountry’sstandardoflivingdependsonitsabilitytoproducegoodsandservices,whichinturndependsonitsproductivity,whichisafunctionoftheeducationofworkersandtheaccessworkershavetothenecessarytoolsandtechnology. Pricesrisewhenthegovernmentprintstoomuchmoneybecausemoremoneyincirculationreducesthevalueofmoney,causinginflation. Societyfacesashort-runtradeoffbetweeninflationandunemploymentthatisonlytemporaryandpolicymakershavesomeabilitytoexploitthisrelationshipusingvariouspolicyinstruments.

QuestionsforReview

1.Examplesoftradeoffsincludetimetradeoffs（suchasstudyingonesubjectoveranother,orstudyingatallcomparedtoengaginginsocialactivities）andspendingtradeoffs（suchaswhethertouseyourlasttendollarsonpizzaoronastudyguideforthattougheconomicscourse）.

2.Theopportunitycostofseeingamovieincludesthemonetarycostofadmissionplusthetimecostofgoingtothetheaterandattendingtheshow. Thetimecostdependsonwhatelseyoumightdowiththattime;ifit'sstayinghomeandwatchingTV,thetimecostmaybesmall,butifit'sworkinganextrathreehoursatyourjob,thetimecostisthemoneyyoucouldhaveearned.

3.Themarginalbenefitofaglassofwaterdependsonyourcircumstances.Ifyou'vejustrunamarathon,oryou'vebeenwalkinginthedesertsunforthreehours,themarginalbenefitisveryhigh.Butifyou'vebeendrinkingalotofliquidsrecently,themarginalbenefitisquitelow.Thepointisthateventhenecessitiesoflife,likewater,don'talwayshavelargemarginalbenefits.

4.Policymakersneedtothinkaboutincentivessotheycanunderstandhowpeoplewillrespondtothepoliciestheyputinplace. Thetext'sexampleofseatbeltsshowsthatpolicyactionscanhavequiteunintendedconsequences. Ifincentivesmatteralot,theymayleadtoaverydifferenttypeofpolicy;forexample,someeconomistshavesuggestedputtingknivesinsteeringcolumnssothatpeoplewilldrivemuchmore

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carefully!

Whilethissuggestionissilly,ithighlightstheimportanceofincentives.

5.Tradeamongcountriesisn'tagamewithsomelosersandsomewinnersbecausetradecanmakeeveryonebetteroff. Byallowingspecialization,tradebetweenpeopleandtradebetweencountriescanimproveeveryone'swelfare.

6.The"invisiblehand"ofthemarketplacerepresentstheideathateventhoughindividualsandfirmsareallactingintheirownself-interest,pricesandthemarketplaceguidethemtodowhatisgoodforsocietyasawhole.

7.Thetwomaincausesofmarketfailureareexternalitiesandmarketpower. Anexternalityistheimpactofoneperson’sactionsonthewell-beingofabystander,suchasfrompollutionorthecreationofknowledge.Marketpowerreferstotheabilityofasingleperson（orsmallgroupofpeople）toundulyinfluencemarketprices,suchasinatownwithonlyonewelloronlyonecabletelevisioncompany. Inaddition,amarketeconomyalsoleadstoanunequaldistributionofincome.

8.Productivityisimportantbecauseacountry'sstandardoflivingdependsonitsabilitytoproducegoodsandservices. Thegreateracountry'sproductivity（theamountofgoodsandservicesproducedfromeachhourofaworker'stime）,thegreaterwillbeitsstandardofliving.

9.Inflationisanincreaseintheoveralllevelofpricesintheeconomy. Inflationiscausedbyincreasesinthequantityofanation'smoney.

10.Inflationandunemploymentarenegativelyrelatedintheshortrun. Reducinginflationentailscoststosocietyintheformofhigherunemploymentintheshortrun.

ProblemsandApplications

1.a. Afamilydecidingwhethertobuyanewcarfacesatradeoffbetweenthecostofthecarandotherthingstheymightwanttobuy. Forexample,buyingthecarmightmeantheymustgiveupgoingonvacationforthenexttwoyears. Sotherealcostofthecaristhefamily'sopportunitycostintermsofwhattheymustgiveup.

b.ForamemberofCongressdecidingwhethertoincreasespendingonnationalparks,thetradeoffisbetweenparksandotherspendingitemsortaxcuts. Ifmoremoneygoesintotheparksystem,thatmaymeanlessspendingonnationaldefenseoronthepoliceforce. Or,insteadofspendingmoremoneyontheparksystem,taxescouldbereduced.

c.Whenacompanypresidentdecideswhethertoopenanewfactory,thedecisionisbasedonwhetherthenewfactorywillincreasethefirm'sprofitscomparedtootheralternatives. Forexample,thecompanycouldupgradeexistingequipmentorexpandexistingfactories. Thebottomlineis:

Whichmethodofexpandingproductionwillincreaseprofitthemost?

d.Indecidinghowmuchtoprepareforclass,aprofessorfacesatradeoffbetweenthevalueofimprovingthequalityofthelecturecomparedtootherthingsshecoulddowithhertime,suchasworkingonadditionalresearch.

2.Whenthebenefitsofsomethingarepsychological,suchasgoingonavacation,itisn'teasytocomparebenefitstocoststodetermineifit'sworthdoing. Buttherearetwowaystothinkaboutthebenefits. Oneistocomparethevacationwithwhatyouwoulddoinitsplace. Ifyoudidn'tgoonvacation,wouldyoubuysomethinglikeanewsetofgolfclubs?

Thenyoucandecideifyou'dratherhavethenewclubsorthevacation. Asecondwayistothinkabouthowmuchworkyouhadtodotoearnthemoneytopayforthe

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vacation;thenyoucandecideifthepsychologicalbenefitsofthevacationwereworththepsychologicalcostofworking.

3.Ifyouarethinkingofgoingskiinginsteadofworkingatyourpart-timejob,thecostofskiingincludesitsmonetaryandtimecosts,whichincludestheopportunitycostofthewagesyouaregivingupbynotworking. Ifthechoiceisbetweenskiingandgoingtothelibrarytostudy,thenthecostofskiingisitsmonetaryandtimecostsincludingthecosttoyouofgettingalowergradeinyourcourse.

4.Ifyouspend$100nowinsteadofsavingitforayearandearning5percentinterest,youaregivinguptheopportunitytospend$105ayearfromnow. Theideathatmoneyhasatimevalueisthebasisforthefieldoffinance,thesubfieldofeconomicsthathastodowithpricesoffinancialinstrumentslikestocksandbonds.

5.Thefactthatyou'vealreadysunk$5millionisn'trelevanttoyourdecisionanymore,sincethatmoneyisgone. Whatmattersnowisthechancetoearnprofitsatthemargin. Ifyouspendanother$1millionandcangeneratesalesof$3million,you'llearn$2millioninmarginalprofit,soyoushoulddoso. Youarerighttothinkthattheprojecthaslostatotalof$3million（$6millionincostsandonly$3millioninrevenue）andyoushouldn'thavestartedit. That'strue,butifyoudon'tspendtheadditional$1million,youwon'thaveanysalesandyourlosseswillbe$5million. Sowhatmattersisnotthetotalprofit,buttheprofityoucanearnatthemargin. Infact,you'dpayupto$3milliontocompletedevelopment;anymorethanthat,andyouwon'tbeincreasingprofitatthemargin.

6.Harrysuggestslookingatwhetherproductivitywouldriseorfall. Productivityiscertainlyimportant,sincethemoreproductiveworkersare,thelowerthecostpergallonofpotion. Ronwantstolookataveragecost. ButbothHarryandRonaremissingtheothersideoftheequation¾revenue. Afirmwantstomaximizeitsprofits,soitneedstoexaminebothcostsandrevenues. Thus,Hermioneisright¾it’sbesttoexaminewhethertheextrarevenuewouldexceedtheextracosts. Hermioneistheonlyonewhoisthinkingatthemargin.

7.a. TheprovisionofSocialSecuritybenefitslowersanindividual’sincentivetosaveforretirement. Thebenefitsprovidesomelevelofincometotheindividualwhenheorsheretires. Thismeansthattheindividualisnotentirelydependentonsavingstosupportconsumptionthroughtheyearsinretirement.

b.Sinceapersongetsfewerafter-taxSocialSecuritybenefitsthegreaterishisorherear