Economics 4th Edition Paul Krugman, Robin Wells - Solutions

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Suppose that the cross-price elasticity of demand for ski area lift tickets with respect to the price of ski lodging is −1. What should happen to the quantity of ski lift tickets demanded if the price of ski lodging increases by 20%? Explain your answer briefly and show your work.
Large Colorado ski areas discover that the price elasticity of demand, ed, is very elastic (ed = −1.9) for in-state skiers and very inelastic (ed = −0.6) for outof-state skiers. How can we explain the difference in price elasticities? What pricing policy should the ski areas pursue?
Suppose that the price elasticity of demand for gasoline is −0.2 and the equilibrium price of gasoline is $4 per gallon. Now suppose that OPEC reduces the supply of gasoline such that the equilibrium quantity falls by 20% from 100 million gallons per day to 80 million gallons per day. What will
The city council of San Francisco wants to lower the price of housing to increase their tax base and revitalize the city economy. The supply of apartments is very inelastic, and the demand for apartments is very elastic. The average price(monthly rent) of a typical apartment is $1600 per person,
Suppose that the government imposed a $3 per pack excise tax on cigarettes.Using the graph in Figure 10.19, show how the cigarette market is affected by the $3 per pack excise tax. Discuss how the cigarette excise tax will affect consumers and producers and how much revenue it will generate for the
The equilibrium price of eggs is $2 per unit (a dozen eggs is one unit) and the equilibrium quantity of eggs is 300 million units per day. The demand and supply of eggs are both inelastic (very, very steep). In order to help egg producers, the government is considering a $4 price floor or a $2 per
Using a graph, show how the supply and demand curves for U.S.-made SUVs will be affected by each of the events listed below. Also show what happens to equilibrium price and quantity. Assume that the equilibrium price of a U.S.-made SUV is $35,000 and the equilibrium quantity is 500,000 U.S.-made
Find an article in a major newspaper that describes a change in the price of some type of good or service. Use a graph of supply and demand to explain the forces that caused the price of the good or service to change.
Using a graph of the U.S. market for Uber rides, show how the supply and demand curves for Uber rides will be affected by specific events, and show what happens to equilibrium price and quantity. (Note: Make sure to identify whether or not the demand and supply curves shift or whether you are
Using the graph of the U.S. market for wheat in Figure 9.15 as your starting point, show how the supply and demand curves for wheat will be affectedby specific events and show what happens to equilibrium price and quantity.(Note: Make sure to identify whether or not the demand and supply curves
Which of the assumptions of the supply and demand model are most likely to cause the model to lead to inaccurate results. Explain carefully. Give specific examples to support your argument.
Suppose that the cost of engaging in internet transactions increases substantially due to cybercrime. What are the likely consequences? What markets would be affected, and what types of impacts would you expect to see?
Cuba has little history of using markets over the last half century. Suppose that the Cuban government wants to develop a robust market system while still preserving the equality and high level of human development they have achieved via a communist approach. What should they do? Explain in terms
Which of the institutions that make markets work do you think is most important?Why? Explain carefully.
Carefully explain what a market is and give specific examples of two different kinds of markets.
Would it be possible to implement a social market economy in the United States? Why or why not?
What role does culture seem to play in structuring economic systems? Explain using specific examples.
Write an essay in which you compare and contrast the U.S. economic system with the Nordic model. In your essay, take up the following issues: (a) What role does government play in each economy? (b) How does each economy reflect the ideas of Adam Smith, Karl Marx, Thorstein Veblen, John Maynard
Innovation is a key ingredient in economic success over time. What are the lessons regarding innovation that emerge from the experiences of the countries described in this chapter?
What are the key ingredients in China’s economic success? Why was China’s transition from a centrally planned system to a market-oriented system more successful than the transition in Russia?
The most successful countries in the last 50 years have used the government extensively in economic development efforts. However, many developing countries in sub-Saharan Africa, Latin America, and Southeast Asia have adopted similar approaches with little success. Why might a government-centered
What are the strengths and weaknesses of a market capitalist approach (United States), a guided market approach (Nordic model), and a central planning approach (U.S.S.R.) to economic development?
How do socialism and communism differ from capitalism?
What are the key elements of the Nordic SME? What factors do you think are essential contributors to its economic success? What problems do you see with the SME approach?
What are the key elements of the U.S. MDE? What factors do you think are essential contributors to U.S. economic success? What are the major problems with the U.S. MDE?
Explain the key differences between market-dominated economies, social market economies, and state-dominated economies. Use specific examples to support your answer.
Describe the evolution of the U.S. economic system from 1920 to the present.How has our approach to regulating the economy shifted over time?
Explain the concept of creative destruction and give examples from the world around us.
Compare and contrast Keynes’ ideas with those of Hayek.
Which of Hayek’s ideas do you find most compelling? Which are least compelling?Support your answer with examples and analysis.
Which of Keynes’ ideas do you find most compelling in capturing the realities of the modern world? Explain and give examples.
How do Keynes’ ideas relate to those of Smith and Marx?
How would you explain to someone with no economics background why deflation can be a major macroeconomic problem?
In what areas of the economy do we tend to see the market fail to work well?What government programs have been designed to address those market failures?
How do sticky wages and prices prevent the economy from adjusting in a recession?
Why do many economists see the volatility of investment along with the multiplier as the key to understanding the business cycle (the cycle of booms and busts that characterize our economic system)?
Describe the nature of the Keynesian “revolution” in economics. How did Keynes reshape the way economists thought about the economy? How did he address the major flaws in the neoclassical economics of his time?
Explain how the neoclassical concepts (a) marginal productivity theory of distribution,(b) markets always clear, and (c) Say’s law combine to result in a conclusion that no government intervention is necessary in a capitalist market system.
Veblen focused on institutions and how those institutions tend to persist over time, largely due to the forces of culture and the power of the vested interests to resist change. But these institutions also evolve. Using Veblen’s approach, analyze the persistence and evolution of one of the
How did the “Roaring Twenties” set the stage for the Great Depression? How did the Great Depression create the conditions for the Keynesian Revolution in economics?
Why does Veblen think that culture is important in understanding human behavior? Explain.
Why does Veblen distinguish between making money (via industrial sabotage)vs. making goods? Explain briefly.
Define what Veblen means by conspicuous consumption. Make a list of at least three items that people in your community or university seem to purchase more for the purposes of conspicuous consumption than for the usefulness of the item. Briefly explain why you chose these particular items. Do not
Describe the role of the leisure class, conspicuous consumption, and pecuniary emulation in the economy. Apply the concepts of conspicuous consumption and pecuniary emulation to the modern world, including examples from your community or university.
Describe how Veblen’s “evolutionary” approach to economics differs from the approaches of Smith, Marx, and neoclassical economics.
How did the Age of Imperialism restructure the global economic system?
How do race and gender interact with social class to affect opportunities?
How was the era of monopoly capitalism different from the competitive capitalism of Adam Smith’s era? Does Smith’s argument that unregulated capitalism will tend to benefit the workers hold up under monopoly capitalism?
Explain why Marx thought capitalism would eventually lead to a workers’revolt. Assess the strengths and weaknesses of Marx’s argument regarding the inevitable fall of laissez-faire capitalism.
Contrast Marx’s view of competition with Adam Smith’s. Analyze which aspects of their views of competition you think are most accurate and support your answer with specific examples.
Define Karl Polanyi’s concept of the double movement and apply this concept to the modern world. Do we see businesses pushing for fewer regulations and access to more markets today? Is there opposition to these business initiatives from people and communities? Give specific examples.
Why did Smith and Ricardo advocate unregulated trade? What problems might occur when a country moves to unregulated trade? Do we see any such problems in the modern world?
Find three examples of commodification that you see around you. Choose different examples than those given in this chapter.
Do you or most people you know find work to be alienating? Explain and give specific examples.
Would it be possible for an employer to pay and treat workers well and still increase the amount of surplus value it takes in? Why or why not?
Find three examples from a reputable news source that illustrate the drive by modern employers for greater surplus value.
List all of the factors that would increase the surplus value going to an employer.
Describe what you see as the major contradictions, technological changes, and class conflicts in our current society. What factors do you think are most likely to provoke a crisis? What type of economic system might evolve out of the crisis to resolve the existing contradictions?
What are the key components of Marx’s method, historical materialism?Explain briefly. Use historical materialism to explain the transition from one specific economic system to another.
Given the experiences of workers under laissez-faire capitalism, analyze Smith’s argument that laissez-faire capitalism would benefit workers. Which of Smith’s ideas hold up and which do not?
Explain in your own words the concept of an infant industry promotion strategy.Do you think such strategies could work in the modern world? Why or why not?
Apply Say’s law to the modern economy. Has the economy recently experienced a shortfall in demand, or has the economy operated smoothly without such a problem in recent decades?
Describe Say’s law and why it is important. Also explain the major criticism of Say’s law.
Why did Malthus (and others) oppose the Poor Laws such as the Speenhamland system? What parts of their arguments were valid and what parts would modern economists consider invalid?
Smith was an opponent of mercantilist governments. What role (if any) does Adam Smith envision for government in a capitalist economy?
Smith believed that laissez-faire capitalism would be almost completely selfregulating via the invisible hand, as long as moral sentiments and an effective legal system were in place. Evaluate his argument and use examples of current events to support your analysis.
Smith argued that unregulated (laissez-faire) capitalism would lead to substantial increases in income for all, and especially for workers. Carefully explain how Smith thought this would come about. Critically evaluate his analysis.
Why was Adam Smith critical of mercantilism? Why did he think capitalism was preferable to mercantilism?
Given the institutional factors that provided the foundation for capitalism in England, do you think capitalism would work as effectively in other countries with different institutions? Why or why not?
What were the major institutional factors that spurred the development of capitalism in England? Which of these factors do you think was most important?Why?
Construct an argument for which two factors were most important in eroding feudalism and paving the way for mercantilism. Use specific examples to support your argument.
List and analyze the major forces that eroded each economic system and paved the way for the next economic system.
How did attitudes toward greed change as economic systems evolved?
How has the role of private property changed as economic systems evolved?
Describe how social classes evolved from traditional economies through mercantilism.How did the determination of status (which people were held in highest esteem) change?
List the main social classes in each of the following economic systems: (a)traditional (hunter-gatherer), (b) the Roman Empire, (c) feudalism, and (d)mercantilism.
Construct an argument agreeing or disagreeing with the following statement:All human societies involve a large degree of cooperation, redistribution, and reciprocity.Use specific examples to support your argument.
How is the generation and utilization of the surplus product important to understanding economic development?
Why is the specialization of labor important to understanding historical economic development?
How did the role and status of women change as economic systems evolved from traditional economies to mercantilism?
Describe the role played by (a) tradition, (b) authority, and (c) markets in traditional, slave, feudal, and mercantilist economic systems.
Why do political economists think that human beings are inherently social beings with strong levels of group identity? Is there evidence from economic history to support this view? Why or why not?
What factors determined who did what job (how labor was allocated) in (a)traditional, hunter-gatherer societies, (b) slave-based empires such as Rome,(c) feudalism, and (d) mercantilism?
Scientists are convinced that the burning of fossil fuels is contributing to global climate change, which will harm future economic growth.a. Construct a PPC showing the trade-off between fossil fuels and renewable energy. Explain how different points on the PPC will affect future growth in the
Given the factors that mainstream economists believe contribute to economic growth, what would happen to economic growth and to the production possibilities curve for the United States if it halts all immigration into the country and the United States population actually declines?
The graph in Figure 2.9 displays a production possibilities curve for the United States in choosing between allocating resources to transportation or beer.a. What is the opportunity cost of 1 unit of beer between point A and point B?b. What is the opportunity cost of moving from point A to point
The graph in Figure 2.8 displays a production possibilities curve for the world in choosing between allocating resources to food or machinery.a. What is the opportunity cost of moving from point B to point D?b. What is the opportunity cost of 1 unit of machinery between point D and point C?c. Which
Use the concept of opportunity cost to analyze the decision of whether or not you should study economics tonight.
Explain how each of the following events would affect scarcity:a. Consumers’ desire for goods and services decreases.b. Resources become less plentiful.c. The government discovers a large amount of unused resources.
Which of the ten schools of economic thought listed in Figure 1.3 do you find most interesting? Which do you find least interesting? What does this indicate about your own background and approach to economics at this point?
One of the main economic problems in the modern world is climate change.Scientists have concluded that the world is likely to experience a major ecological crisis unless we reduce the amount of greenhouse gases (especially carbon) that we produce. Greenhouse gases are generated by economic
Briefly explain the main differences between the economic systems of unregulated market capitalism, mixed market capitalism, and democratic socialism.Using a recent issue of The Economist or another reputable publication that features significant international economic news, find examples that show
Consider the description of “economic man” above and the description of positive, scientific economics. Also consider how political economists (PPE and RPE) study human behavior. Then reflect carefully on your own shopping habits. Do you usually make rational, calculated, fully informed
What are the primary differences between mainstream economics and political economics (PPE and RPE)? Explain briefly in your own words.
Read about what is happening in the nation or around the globe in a reputable magazine or newspaper, such as The New York Times, Wall Street Journal, The Economist, The Financial Times, or The Guardian. Which events would be considered relevant to the study of economics, given the definitions of
What is austerity? Why do most economists think it is a bad economic policy to pursue in a recession?
1. Wastewater runoff from large poultry farms adversely affects their neighbors.Explain the following:a. The nature of the external cost imposedb. The outcome in the absence of government intervention or a private dealc. The socially optimal outcome
11. The accompanying table shows the Herfindahl–Hirschman Index (HHI) for the restaurant, cereal, movie, and laundry detergent industries as well as the advertising expenditures of the top 10 firms in each industry. Use the information in the table to answer the following questions.
2. You are thinking of setting up a coffee shop. The market structure for coffee shops is monopolistic competition. There are three Starbucks shops and two other coffee shops very much like Starbucks in your town already. In order for you to have some degree of market power, you may want to
10. Suppose you are an economist working for the Antitrust Division of the Department of Justice. In each of the following cases you are given the task of determining whether the behavior warrants an antitrust investigation for possible illegal acts or is just an example of undesirable, but not

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Economics 4th Edition Paul Krugman, Robin Wells - Solutions

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