Solution Manual for Principles of Economics 10th Edition by N. Gregory Mankiw | Chapters 1–38 Complete Guide

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InstructorManual n




Mankiw, Principles of Economics, 10e, 9780357722718; Chapter1: Ten Principlesof
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Economics
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Prepared byDavid R. Hakes,UniversityofNorthernIowa
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TABLE OF CONTENTS N N




Purposeand Perspective of the Chapter ........................................................................................................... 2
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ChapterObjectives ................................................................................................................................................. 2
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CompleteListof ChapterActivities andAssessments ................................................................................... 3
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Key Terms ................................................................................................................................................................. 3
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What'sNewin This Chapter .................................................................................................................................. 4
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ChapterOutline ....................................................................................................................................................... 4
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SolutionstoText Problems................................................................................................................................... 9
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Questions for Review ........................................................................................................................................................... 9
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Problems andApplications ............................................................................................................................................. 10
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AdditionalActivitiesandAssignments ...........................................................................................................13
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AdditionalResources ..........................................................................................................................................14
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Cengage Video Resources ................................................................................................................................................ 14
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accessible website, in whole or in part.
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, InstructorManual:Mankiw,PrinciplesofEconomics,10e,9780357722718; n n n n n n n




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PURPOSEANDPERSPECTIVE OF THE CHAPTER N N N N N




Chapter1 is the firstchapter in a three-chapter section thatserves as the introduction to the text. Chapter
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1 introduces ten fundamental principles on which the study of economics is based. In a broad sense, the
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rest of the text is an elaboration on these ten principles. Chapter 2 will develop how economists
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approach problems while Chapter 3 will explain how individuals and countries gain from trade.
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The purpose ofChapter 1 is to lay out ten economicprinciples that will serveas building blocks for the rest
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of the text. The ten principles can be grouped into three categories: how people make decisions, how
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people interact, and how the economy works as a whole. Throughout the text, references will be made
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repeatedly to these ten principles.
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Keypoints addressed inthis chapter:
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• The fundamental lessons about individual decision making are that people face trade-offs
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among alternative goals, that the cost of any action is measured in terms of forgone
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opportunities, that rational people make decisions by comparing marginal costs and marginal
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benefits, andthatpeople change theirbehaviorin response tothe incentives they face.
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• The fundamental lessons about economic interactions among people are that trade and
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interdependence can be mutually beneficial, that markets are usually a good way of
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coordinatingeconomic activity,andthatthe governmentcanpotentiallyimprovemarket
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outcomes by remedying a market failure or by promoting greater economic equality.
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• The fundamental lessonsabout the economyas a whole are that productivityis the ultimate
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source of improving living standards, that growth in the quantity of money is the ultimate source
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of inflation, and that society faces a short-run trade-off between inflation and unemployment.
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CHAPTER OBJECTIVES N




Thefollowingobjectives areaddressedinthischapter:
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• Explainhowscarcityinfluences decisions. n n n n




• Explainhowindividuals evaluateopportunitycoststo makedecisions. n n n n n n n n




• Explainhowmarginalanalysisinfluencesdecisionmaking. n n n n n n




• Applybasic, economic principles ofindividual decisionmaking thatdetermine how an
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economy generally works.
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• Explainhow the terms of trade can lead to gains. n n n n n n n n n




• Givenascenario, identifythedistributionsystem beingused.n n n n n n n n




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Chapter1:TenPrinciplesofEconomics n n n n n




COMPLETELISTOF CHAPTER ACTIVITIES AND ASSESSMENTS N N N N N N




The followingtableorganizes activities andassessmentsso that you can makedecisionsabout which
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content you would like to emphasize in your class. For additional guidance, refer to the Teaching Online
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Guide.
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Activity/Assessment Source(i.e.,PPTslide, n n n Duration
Workbook)
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IcebreakerActivity n PPT Slide 2 n n 5–10 mins. n




ActiveLearning1 n n PPT Slide 14 n n 5 mins.
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ActiveLearning2 n n PPT Slide 17 n n 5 mins.
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ActiveLearning3 n n PPT Slide 28 n n 20–25mins. n




Think-Pair-ShareActivity n PPT Slide 39 n n 5–10 mins. n




Self-Assessment PPT Slide 40 n n 5–10 mins. n




Section 01-1 QuickQuiz
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Section 01-2 QuickQuiz
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Section 01-3 QuickQuiz
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ConceptClip:Efficiency n MindTapLearnIt Folder n n n 5 mins.
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ConceptClip:OpportunityCost n n MindTapLearnIt Folder n n n 5 mins.
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ConceptClip:Externality n MindTapLearnIt Folder n n n 5 mins.
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Chapter01 Problems & Applications
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Chapter01 A+ Test Prep n n n n MindTapStudy It Folder n n n N/A

Chapter01 Homework n n MindTapApply It Folder n n n 30–45mins. n




Chapter01Quiz:TenPrinciplesof
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Economics
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KEY TERMS N




BusinessCycle: fluctuationsineconomicactivity,suchasemploymentandproduction
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Economics:the studyofhowsocietymanages its scarce resources n n n n n n n n n




Efficiency:the propertyof society getting themostit can fromitsscarce resources
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Equality: the propertyofdistributingeconomic prosperityuniformlyamongthe members of society
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Externality:theuncompensatedimpactof oneperson’s actionsonthe well-beingofa bystander
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Incentive:somethingthat induces apersonto act n n n n n n n




Inflation:anincreaseintheoveralllevelof pricesinthe economy
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MarginalChange: anincrementaladjustmentto aplanof action
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MarketEconomy: aneconomythatallocates resources throughthedecentralizeddecisions of many
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firms and households as they interact in markets for goods and services
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MarketFailure:asituationinwhichamarketleftonits owndoes notallocate resources efficiently
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Market Power: the ability of asingle economic actor (or small group of actors)to havea substantial
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influence on market prices
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OpportunityCost: whatevermustbegivenup to obtainsomeitem n n n n n n n n n n




Productivity:thequantity ofgoodsandservices produced fromeachunitof labor n n n n n n n n n n n n




PropertyRights:the abilityof anindividual to ownandexercisecontrol overscarce resources
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RationalPeople: peoplewho systematically and purposefully do the best they can to achieve their
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objectives
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Scarcity:thelimitednatureofsociety’s resources
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WHAT'S NEW INTHIS CHAPTER N N N N




Thefollowingelements are improvementsinthis chapterfrom the previous edition:
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• Anexpanded discussionof inflationintheUnitedStates followingthe coronavirus recession of
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2020.
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CHAPTER OUTLINE N




The following outline organizes activities (including any existing discussion questions in PowerPoints
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or othersupplements)and assessments bychapter(andtherefore bytopic),so that you can see how all
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the content relates to the topics covered in the text.
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I. Introduction
A. The word “economy” comes from the Greekwordoikonomosmeaning“one who n n n n n n n n n n n




manages a household.” n n n




1. Instruction Idea: Begin by pointing out that economics is a subject that n n n n n n n n n n n




students must confront in their daily lives. Point out that they already spend a n n n n n n n n n n n n n n




great deal of theirtime thinkingabouteconomicissues: changes in prices, n n n n n n n n n n n n




buying decisions, use of their time, concerns about employment, etc. n n n n n n n n n n




B. Both households andeconomies facemanydecisions abouthowto allocate n n n n n n n n n n




resources. n




C. Resources are scarce so theymustbe managed carefully. n n n n n n n n




© 2022Cengage.AllRightsReserved. May not be scanned,copiedor duplicated,or postedto apublicly
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accessible website, in whole or in part.
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