... cutting back on the luxury of meat
and buying more of the staple food of potatoes. Thus, it is argued that a higher
price of potatoes actually raised the quantity of potatoes demanded.
Whether ... of consumer choice does allow demand curves to slope
upward. Yet such occurrences are so unusual that the law of demand is as reliable
a law as any in economics.
Quantity
of Meat
A...
... the health of our children, the
quality of their education, or the joy of their play. It does not include the beauty
of our poetry or the strength of our marriages, the intelligence of our public
debate ... producer.
506 PART EIGHT THE DATA OF MACROECONOMICS
CASE STUDY
INTERNATIONAL DIFFERENCES IN GDP AND THE
QUALITY OF LIFE
One way to gauge the usefulness of GDP as a measur...
... honey.
P
RICE
Q
UANTITY
P
RICEOF
Q
UANTITY
Y
EAR OF
M
ILK OF
M
ILK
H
ONEY OF
H
ONEY
2001 $1 100 qts. $2 50 qts.
2002 $1 200 $2 100
2003 $2 200 $4 100
510 PART EIGHT THE DATA OF MACROECONOMICS
a. Compute ... Bureau of Labor Statistics did revise the basket of goods
B
EHIND EVERY MACROECONOMIC STATISTIC
are thousands of individual pieces of
data on the economy. This article fol-...
... affect
people’s behavior
Learn the meaning of
opportunity cost
Learn that
economics is about
the allocation of
scarce resources
Examine some of the
tradeoffs that people
face
See how to use
marginal ... ideas. In the rest of this chapter, we look at Ten Principles of Economics.
These principles recur throughout this book and are introduced here to give you
an overview of what...
... three examples of important tradeoffs that you face
in your life.
2. What is the opportunity cost of seeing a movie?
3. Water is necessary for life. Is the marginal benefit of a
glass of water large ... methods
of science
Consider how
assumptions and
models can shed
light on the world
Distinguish between
microeconomics and
macroeconomics
Every field of study has its own language a...
... judgments.
As you study economics, keep in mind the distinction between positive and
normative statements. Much of economics just tries to explain how the economy
works. Yet often the goal of economics is ... source of the inefficiency were eliminated, the economy
could move from point B to point A, increasing production of both cars (to 700)
and computers (to 2,000).
One of th...
... overall level of prices. The consumer price index compares the
price of a fixed basket of goods and services to the price of the basket in the base
year. Only occasionally does the Bureau of Labor ... correction of a dollar
amount for the effects of inflation
by law or contract
“F
RANKLY
,
MY DEAR
, I
DON
’
T CARE MUCH
FOR THE EFFECTS OF INFLATION
.”
522 PART EIGHT THE DATA...