Ten Principles of Economics - Part 2

... analysis is built using the ten principles introduced here. Table 1-1 T EN P RINCIPLES OF E CONOMICS H OW P EOPLE #1: People Face Tradeoffs M AKE D ECISIONS #2: The Cost of Something Is What You ... they 22 PART ONE INTRODUCTION give us insight into the economy of the past and, more important, because they al- low us to illustrate and evaluate economic theories of the present. THE ROLE OF ... studying the short-run and long-run effects of a change in the quantity of money. ECONOMIC MODELS High school biology teachers teach basic anatomy with plastic replicas of the hu- man body. These...

Ten Principles of Economics - Part 44

... amount of income— $100,000 in our example—were fixed. But, in fact, it is not. Utilitarians reject com- plete equalization of incomes because they accept one of the Ten Principles of Economics ... the form of goods and services rather than cash are called in-kind transfers. Standard measurements of the degree of inequality do not take account of these in-kind transfers. Because in-kind transfers ... by an impartial observer behind a “veil of ignorance” maximin criterion the claim that the government should aim to maximize the well-being of the worst-off person in society CHAPTER 20 INCOME...

Ten Principles of Economics - Part 47

... rate of substitution. Figure 2 1-1 0 shows graphically how to decompose the change in the consumer’s decision into the income effect and the substitution effect. When the price Table 2 1 -2 G OOD ... the law of demand and buy more of a good when the price rises. To see how this can happen, consider Fig- ure 2 1-1 2. In this example, the consumer buys two goods—meat and potatoes. Ini- tially, ... Optimum Quantity of Pepsi 0 Price of Pepsi $2 1 (b) The Demand Curve for Pepsi Quantity of Pepsi 150 B A B A I 1 I 2 New budget constraint Initial budget constraint Figure 2 1-1 1 D ERIVING THE...

Ten Principles of Economics - Part 49

... UANTITY OF H AMBURGERS 20 01 $1 100 $2 50 20 02 2 150 3 100 20 03 3 20 0 4 150 Y EAR C ALCULATING N OMINAL GDP 20 01 ($1 per hot dog ϫ 100 hot dogs) ϩ ( $2 per hamburger ϫ 50 hamburgers) ϭ $20 0 20 02 ( $2 ... quantities of the two goods produced and their prices in the years 20 01, 20 02, and 20 03. Table 2 2- 2 P RICES AND Q UANTITIES Y EAR P RICEOF H OT D OGS Q UANTITY OF H OT D OGS P RICEOF H AMBURGERS ... the prices of hot dogs and hamburgers in 20 01 to compute the value of goods and services produced in 20 01, 20 02, and 20 03. Table 2 2- 2 shows these calculations. To compute real GDP for 20 01, we...

Ten Principles of Economics - Part 50

... RICE Q UANTITY P RICEOF Q UANTITY Y EAR OF M ILK OF M ILK H ONEY OF H ONEY 20 01 $1 100 qts. $2 50 qts. 20 02 $1 20 0 $2 100 20 03 $2 200 $4 100 510 PART EIGHT THE DATA OF MACROECONOMICS a. Compute ... F IXED B ASKET OF G OODS 4 hot dogs, 2 hamburgers S TEP 2: F IND THE P RICE OF E ACH G OOD IN E ACH Y EAR Y EAR P RICE OF H OT D OGS P RICE OF H AMBURGERS 20 01 $1 $2 20 02 2 3 20 03 3 4 S TEP 3: ... THE C OST OF THE B ASKET OF G OODS IN E ACH Y EAR 20 01 ($1 per hot dog ϫ 4 hot dogs) ϩ ( $2 per hamburger ϫ 2 hamburgers) ϭ $8 20 02 ( $2 per hot dog ϫ 4 hot dogs) ϩ ($3 per hamburger ϫ 2 hamburgers)...

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Ten Principles of Economics - Part 1

... her part- time job for some extra spending money. scarcity the limited nature of society’s resources economics the study of how society manages its scarce resources CHAPTER 1 TEN PRINCIPLES OF ECONOMICS ... 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 economics is all ... and Causes of the Wealth of Na- tions, was published in 1776, the exact year American revolu- tionaries signed the Declara- tion of Independence. But the two documents do share a point of view that...

Ten Principles of Economics - Part 3

... is not always straight- forward. This tendency is rooted in one of the Ten Principles of Economics in Chap- ter 1: People face tradeoffs. Economists are aware that tradeoffs are involved in most ... less of the other. When the economy moves from point A to point C, for instance, society produces more computers but at the ex- pense of producing fewer cars. Another of the Ten Principles of Economics ... or the effects of compulsory school attendance on workers’ earnings. A 2, 100 2, 000 A E Quantity of Cars Produced 700 750 0 4,000 3,000 1,000 Quantity of Computers Produced Figure 2- 3 AS HIFT IN...

Ten Principles of Economics - Part 51

... ALLS R ACQUETS G ATORADE 20 01 price $2 $40 $1 20 01 quantity 100 10 20 0 20 02 price $2 $60 $2 20 02 quantity 100 10 20 0 a. What is the percentage change in the price of each of the three goods? What ... RICE University of Iowa tuition $130 $2, 470 Gallon of gasoline $0 .23 $1 .22 Three-minute phone call from New York to L.A. $2. 50 $0.45 One-day hospital stay in intensive care unit $35 $2, 300 McDonald’s ... nominal and real interest rates often do not move together. S OURCE : U.S. Department of Labor; U.S. Department of Treasury. 524 PART EIGHT THE DATA OF MACROECONOMICS changes in interest rates,...

Ten Principles of Economics - Part 52

... B EGINNING OF P ERIOD a AT E ND OF P ERIOD a PER YEAR Japan 1890–1997 $1,196 $23 ,400 2. 82% Brazil 1900–1997 619 6 ,24 0 2. 41 Mexico 1900–1997 922 8, 120 2. 27 Germany 1870–1997 1,738 21 ,300 1.99 ... production of capital. One of the Ten Principles of Economics presented in Chapter 1 is that people face tradeoffs. This principle is especially important when considering the accumula- tion of capital. ... experienced more rapidly growing productivity. Indeed, one of the Ten Principles of Economics in Chapter 1 is that a country’s standard of living depends on its ability to produce goods and services....

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