Macroeconomics Private And Public Choice 17th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson - Solutions

What is being held constant when a demand curve for a specific product (shoes or apples, for example) is constructed? Explain why the demand curve for a product slopes downward to the right.
What is the law of supply? How many of the following “goods” do you think conform to the general law of supply? Explain your answer in each case.a. Gasoline b. Cheating on exams c. Political favors from legislators d. The services of heart specialists e. Children f. Legal divorces,
Are prices an accurate measure of a good’s total value? Are prices an accurate measure of a good’s marginal value? What’s the difference? Can you think of a good that has high total value but low marginal value? Use this concept to explain why professional wrestlers earn more than nurses,
What is being held constant when the supply curve is constructed for a specific good like pizza or automobiles?Explain why the supply curve for a good slopes upward to the right.
Define consumer surplus and producer surplus. What is meant by economic efficiency, and how does it relate to the gains of consumers and producers?
How is the market price of a good determined? When the market for a product is in equilibrium, how will consumers value an additional unit compared to the opportunity cost of producing that unit? Why is this important?
The future of our industrial strength cannot be left to chance. Somebody has to develop notions about which industries are winners and which are losers.” Is this statement by a newspaper columnist true? Who is the “somebody”?
What factors determine the cost of producing a good or service? Will producers continue to supply a good or service if consumers are unwilling to pay a price sufficient to cover the cost?
Production should be for people and not for profit.” Answer the following questions concerning this statement: a. If production is profitable, are people helped or harmed? Explain. b. Are people helped more if production results in a loss than if it leads to profit? Is there a conflict between
What must an entrepreneur do to earn a profit? How do the actions of firms earning profits influence the value of resources? What happens to the value of resources when losses are present? If a firm making losses goes out of business, is this bad? Why or why not?
What’s wrong with this way of thinking? “Economists claim that when the price of something goes up, producers increase the quantity supplied to the market. But last year, the price of oranges was really high and the supply of them was really low. Economists are wrong!
What is the invisible hand principle? Does it indicate that self-interested behavior within markets will result in actions that are beneficial to others? What conditions are necessary for the invisible hand to work well? Why are these conditions important?
In a market economy, will there be a tendency for both resources and products to be supplied by low-cost producers? Why or why not? Does this matter? Explain.
What is the difference between substitutes and complements? Indicate two goods that are substitutes for each other. Indicate two goods that are complements.
Do business firms operating in competitive markets have a strong incentive to serve the interest of consumers? Are they motivated by a strong desire to help consumers? Are “good intentions” necessary if individuals are going to engage in actions that are helpful to others? Discuss.
What must an entrepreneur do in order to be successful? If an entrepreneur is successful, how will the lives of others be affected? Explain.
How has entrepreneurial activity altered the goods and services available to consumers in recent years? Provide examples.
What determines whether a new product will be a success or failure? Why is the profit and loss system important to guide entrepreneurial efforts in a competitive market economy?

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