Solution Manual for Microeconomics, 17th Canadian Edition, By Christopher Ragan, All Chapters 1 – 20

SolutionManualforMicroeconomics,
rb rb rb br br




17th CanadianEdition,ByChristopher
br b r rb rb rb br br




Ragan, All Chapters 1 – 20
br b r br br br br

,Contents
Part One: What Is Economics?
br br b r br br 1
Chapter 1: Economic Issues and Concepts
br br br br br 3
Chapter 2: Economic Theories, Data, and Graphs
br br br br br br 13

Part Two: An Introduction to Demand and Supply
br br b r br br br br br 26
Chapter 3: Demand, Supply, and Price
br br br br br 27
Chapter 4: Elasticity br br 40
Chapter 5: Price Controls and Market Efficiency
br br br br br br 54

Part Three: Consumers and Producers
br br b r br br 65
Chapter 6: Consumer Behaviour
br br br 66
Chapter 7: Producers in the Short Run
br br br br br br 81
Chapter 8: Producers in the Long Run
br br br br br br 95

Part Four: Market Structure and Efficiency
br br b r br br br 104
Chapter 9: Competitive Markets
br br br 105
Chapter 10: Monopoly, Cartels, and Price Discrimination
br br br br br br 116
Chapter 11: Imperfect Competition and Strategic Behaviour
br br br br br br 131
Chapter 12: Economic Efficiency and Public Policy
br br br br br br 140

Part Five: Factor Markets
br br b r br 150
Chapter 13: How Factor Markets Work
br br br br br 152
Chapter 14: Labour Markets and Income Inequality
br br br br br br 163
Chapter 15: Interest Rates and the Capital Market
br br br br br br br 175

Part Six: Government in the Market Economy
br br b r br br br br 183
Chapter 16: Market Failures and Government Intervention
br br br br br br 185
Chapter 17: The Economics of Environmental Protection
br br br br br br 198
Chapter 18: Taxation and Public Expenditure
br br br br br 210

Part Seven: Canada in the Global Economy
br br b r br br br br 219
Chapter 19: The Gains from International Trade
br br br br br br 220
Chapter 20: Trade Policy br br br 229

,List of Boxes br br




Applying Economic Concepts br br




1-1 The High Opportunity Cost of Your University Degree
br br br br br br br br 7
1-2 Economics Needs the Other Social Sciences
br br br br br br 21
2-1 Where Economists Work
br br br 30
2-2 Can Economists Design Controlled Experiments to Test Their Theories?
br br br br br br br br br 34
3-1 Demand and Supply Shocks Created by the COVID-19 Pandemic
br br br br br br br br br 64
3-2 Why Apples but Not iPhones?
br br br br br 72
4-1 Who Really―Pays‖ for Payroll Taxes?
br br br br br br 93
5-1 Minimum Wages and Unemployment
br br br br 105
5-2TheDebateOver―PriceGouging‖:EfficiencyVersusPublicVirtue
br br br br br br br br br 118
6-1 Rationality and Framing in Consumer Behaviour
br br br br br br 130
7-1 Is It Socially Responsible to Maximize Profits?
br br br br br br br 160
7-2 Three Examples of Diminishing Returns
br br br br br 168
7-3 The Digital World: When Diminishing Returns Disappear Altogether
br br br br br br br br 174
8-1 The Significance of ProductivityGrowth
br br br br br 191
9-1 Why Small Firms Are Price Takers
br br br br br br 207
9-2 The Parable of the Seaside Inn
br br br br br br 217
10-1 Network Effects as Entry Barriers
br br br br br 239
12-1 Potential Mergers in the Canadian Airline Industry
br br br br br br br 302
14-1The Riseofthe―Gig‖Economy
br br br br br rb 356
15-1 Inflation and Interest Rates
br br br br 380
16-1 The World‘s Endangered Fish
br br br br 398
16-2 Used Cars and the Market for ―Lemons‖
br br br br br br br 404
18-1 Using a UBI to Eliminate Poverty
br br br br br br 466
19-1 Two Examples of Absolute and Comparative Advantage
br br br br br br br 484
19-2 Comparative Advantage and Global Supply Chains
br br br br br br 492
20-1 Canadian Wine: A Free-Trade Success Story
br br br br br br 520

Lessons from History br br




4-1 Economic Development and Income Elasticities
br br br br br 95
8-1 Jacob Viner and the Clever Draftsman
br br br br br br 189
9-1 What Do Whaling Ships and Oil Wells Have in Common?
br br br br br br br br br br 224
10-1 Disruptive Technologies and Creative Destruction
br br br br br 241
12-1 Are Amazon and Facebook the Standard Oil of the Twenty-First Century?
br br br br br br br br br br br 300
13-1 David Ricardo and ―Economic Rent‖
br br br br br 327
20-1 Tariff Wars and the Stark Lessons from the Great Depression
br br br br br br br br br br 508

, Extensions in Theory br br




3-1 The Distinction Between Stocks and Flows
br br br br br br 53
11-1 The Prisoners‘ Dilemma
br br br 270
16-1 Arthur Okun‘s ―LeakyBucket‖
br br br br 406
18-1 Who Really Pays the Corporate Income Tax?
br br br br br br br 450
19-1 The Gains from Trade More Generally
br br br br br br 482




Part One br




b r WhatIs b
r




b r Economics?



This opening Part of the book provides an introduction to economics. The central themes of
br br br br br br br br br br br br br br




b Chapter 1 are scarcity, choice, opportunity cost, and the self-organizing role of markets. The
r br br br br br br br br br br br br br




b chapter also examines the gains from specialization and trade, the role of money, the effects
r br br br br br br br br br br br br br br




b of globalization, and ends with a discussion of the various types of
r b r b r b r b r b r b r b r b r b r b r b r




b economic systems. Chapter 2 examines how economists build their models
r b r b r b r b r b r b r b r b r b r




b and test their theories. It also addresses central methodological issues, the most
r b r b r b r b r b r b r b r b r br b r b r




important being the idea that the
b r progress of economics (like all scientific b r b r b r b r b r b r b r b r b r b r b r




disciplines) depends on relating our theories to what we observe in the world
b r b r b r b r b r b r b r b r br br br br br




around us. Finally, the chapter has an extensive section on graphing.
b r b r b r b r b r b r b r b r b r b r b r




***
Chapter 1 opens with a brief tour of some key economic issues in Canada and other
br br br br br br br br br br br br br b r br br br




b countries— from rising protectionism and the dangers of climate change to
r b r b r b r b r b r b r b r b r b r b r




accelerating technological change and growing income inequality. The purpose is to
b r b r b r b r b r br br br br br br




whet the reader‘s appetite for the kinds of issues economists are thinking about
b r b r br b r br br br br br br b r b r b r




today. This offers a natural segue to the discussion of scarcity, without which few of
b r b r br br br b r br br br br br br br b r br br




these issues would be very interesting. The chapter addresses the fundamental
br br br br br b r br br b r br br




concepts of scarcity, choice, and opportunity cost, illustrating these ideas with a
b r br b r b r br b r b r b r b r b r b r b r




production possibilities boundary. (It is
b r worth noting that these concepts are b r b r b r b r b r br br br br br




relevant to all economies, whether they are organized by central planning or by free
br br br br br br br br b r br br br br br




markets.) We then examine the complexity of modern market economies, examining the
br br br br br br br br br b r b r b r




decision makers, production, trade, money, and globalization. Finally, we examine
b r b r b r b r b r b r b r b r br br




different types of economic systems, including traditional, command,
br and free-
b r br b r b r b r b r br b r br




market systems. We emphasize that all actual economies are mixtures, containing
br br br br br br br br br br




b elements of all three pure systems.
r br br br br br