INSTRUCTOR’S SOLUTIONS #Z
MANUAL #Z
for
Microeconomics
Seventeenth Canadian Edition #z #z
Christopher T.S. Ragan #z #z
McGill University #z
ISBN # z 978-0-13-766398-9
Copyright #z© #z2023 #zPearson #zCanada #zInc., #zToronto, #zOntario. #zAll #zrights #zreserved. #zThis #zwork #zis #zprotected #zby
#zCanadian #zcopyright #zlaws #zand #zis #zprovided #zsolely #zfor #zthe #zuse #zof #zinstructors #zin #zteaching #ztheir #zcourses #zand
#zassessing #zstudent #zlearning. #zDissemination #zor #zsale #zof #zany #zpart #zof #zthis #zwork #z(including #zon #zthe #zinternet) #zwill
#zdestroy #zthe #zintegrity #zof #zthe #zwork #zand #zis #znot #zpermitted. #zThe #zcopyright #zholder #zgrants #zpermission #zto #zinstructors
#zwho #zhave #zadopted #zMicroeconomics, #zby #zChristopher #zT. #zS. #zRagan, #zto #zpost #zthis #zmaterial #zonline #zonly #zif #zthe #zuse #zof
#zthe #zwebsite #zis #zrestricted #zby #zaccess #zcodes #zto #zstudents #zin #zthe #zinstructor‘s #zclass #zthat #zis #zusing #zthe #ztextbook #zand
#zprovided #zthe #zreproduced #zmaterial #zbears #zthis #zcopyright #znotice.
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
,ii Instructor‘s #zSolutions #zManual #zfor #zRagan, #zMicroeconomics, #zSeventeenth #zCanadian
#zEdition
Contents
Part #zOne: # z What #zIs #zEconomics? 1
Chapter #z1: #zEconomic #zIssues #zand #zConcepts 3
Chapter #z2: #zEconomic #zTheories, #zData, #zand #zGraphs 13
Part #zTwo: # z An #zIntroduction #zto #zDemand #zand #zSupply 26
Chapter #z3: #zDemand, #zSupply, #zand #zPrice 27
Chapter #z4: #zElasticity 40
Chapter #z5: #zPrice #zControls #zand #zMarket #zEfficiency 54
Part #zThree: # z Consumers #zand #zProducers 65
Chapter #z6: #zConsumer #zBehaviour 66
Chapter #z7: #zProducers #zin #zthe #zShort #zRun 81
Chapter #z8: #zProducers #zin #zthe #zLong #zRun 95
Part #zFour: # z Market #zStructure #zand #zEfficiency 104
Chapter #z9: #zCompetitive #zMarkets 105
Chapter #z10: #zMonopoly, #zCartels, #zand #zPrice #zDiscrimination 116
Chapter #z11: #zImperfect #zCompetition #zand #zStrategic #zBehaviour 131
Chapter #z12: #zEconomic #zEfficiency #zand #zPublic #zPolicy 140
Part #zFive: # z Factor #zMarkets 150
Chapter #z13: #zHow #zFactor #zMarkets #zWork 152
Chapter #z14: #zLabour #zMarkets #zand #zIncome #zInequality 163
Chapter #z15: #zInterest #zRates #zand #zthe #zCapital #zMarket 175
Part #zSix: # z Government #zin #zthe #zMarket #zEconomy 183
Chapter #z16: #zMarket #zFailures #zand #zGovernment #zIntervention 185
Chapter #z17: #zThe #zEconomics #zof #zEnvironmental #zProtection 198
Chapter #z18: #zTaxation #zand #zPublic #zExpenditure 210
Part #zSeven: # z Canada #zin #zthe #zGlobal #zEconomy 219
Chapter #z19: #zThe #zGains #zfrom #zInternational #zTrade 220
Chapter #z20: #zTrade #zPolicy 229
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
, Chapter #z1: #zEconomic #zIssues #zand #zConcepts
iii
List of Boxes
#z #z
Applying #zEconomic #zConcepts
1-1 #zThe #zHigh #zOpportunity #zCost #zof #zYour #zUniversity #zDegree 7
1-2 #zEconomics #zNeeds #zthe #zOther #zSocial #zSciences 21
2-1 #zWhere #zEconomists #zWork 30
2-2 #zCan #zEconomists #zDesign #zControlled #zExperiments #zto #zTest #zTheir #zTheories? 34
3-1 #zDemand #zand #zSupply #zShocks #zCreated #zby #zthe #zCOVID-19 #zPandemic 64
3-2 #zWhy #zApples #zbut #zNot #ziPhones? 72
4-1 #zWho #zReally #z―Pays‖ #zfor #zPayroll #zTaxes? 93
5-1 #zMinimum #zWages #zand #zUnemployment 105
5-2 #zThe #zDebate #zOver #z―Price #zGouging‖: #zEfficiency #zVersus #zPublic #zVirtue 118
6-1 #zRationality #zand #zFraming #zin #zConsumer #zBehaviour 130
7-1 #zIs #zIt #zSocially #zResponsible #zto #zMaximize #zProfits? 160
7-2 #zThree #zExamples #zof #zDiminishing #zReturns 168
7-3 #zThe #zDigital #zWorld: #zWhen #zDiminishing #zReturns #zDisappear #zAltogether 174
8-1 #zThe #zSignificance #zof #zProductivity #zGrowth 191
9-1 #zWhy #zSmall #zFirms #zAre #zPrice #zTakers 207
9-2 #zThe #zParable #zof #zthe #zSeaside #zInn 217
10-1 #zNetwork #zEffects #zas #zEntry #zBarriers 239
12-1 #zPotential #zMergers #zin #zthe #zCanadian #zAirline #zIndustry 302
14-1 #zThe #zRise #zof #zthe #z―Gig‖ #zEconomy 356
15-1 #zInflation #zand #zInterest #zRates 380
16-1 #zThe #zWorld‘s #zEndangered #zFish 398
16-2 #zUsed #zCars #zand #zthe #zMarket #zfor #z―Lemons‖ 404
18-1 #zUsing #za #zUBI #zto #zEliminate #zPoverty 466
19-1 #zTwo #zExamples #zof #zAbsolute #zand #zComparative #zAdvantage 484
19-2 #zComparative #zAdvantage #zand #zGlobal #zSupply #zChains 492
20-1 #zCanadian #zWine: #zA #zFree-Trade #zSuccess #zStory 520
Lessons #zfrom #zHistory
4-1 #zEconomic #zDevelopment #zand #zIncome #zElasticities 95
8-1 #zJacob #zViner #zand #zthe #zClever #zDraftsman 189
9-1 #zWhat #zDo #zWhaling #zShips #zand #zOil #zWells #zHave #zin #zCommon? 224
10-1 #zDisruptive #zTechnologies #zand #zCreative #zDestruction 241
12-1 #zAre #zAmazon #zand #zFacebook #zthe #zStandard #zOil #zof #zthe #zTwenty-First 300
#zCentury?
13-1 #zDavid #zRicardo #zand #z―Economic #zRent‖ 327
20-1 #zTariff #zWars #zand #zthe #zStark #zLessons #zfrom #zthe #zGreat #zDepression 508
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
, iv Instructor‘s #zSolutions #zManual #zfor #zRagan, #zMicroeconomics, #zSeventeenth #zCanadian
#zEdition
Extensions #zin #zTheory
3-1 #zThe #zDistinction #zBetween #zStocks #zand #zFlows 53
11-1 #zThe #zPrisoners‘ #zDilemma 270
16-1 #zArthur #zOkun‘s #z―Leaky #zBucket‖ 406
18-1 #zWho #zReally #zPays #zthe #zCorporate #zIncome #zTax? 450
19-1 #zThe #zGains #zfrom #zTrade #zMore #zGenerally 482
Part One #z
#z What Is #z
Economics?
#z
This opening Part of the book provides an introduction to economics. The central themes of
Chapter 1 are scarcity, choice, opportunity cost, and the self-organizing role of markets. The
chapter also examines the gains from specialization and trade, the role of money, the effects of
globalization, and ends with a discussion of the various types of economic systems. Chapter 2
examines how economists build their models and test their theories. It also addresses central
methodological issues, the most important being the idea that the progress of economics (like all
scientific disciplines) depends on relating our theories to what we observe in the world around us.
Finally, the chapter has an extensive section on graphing.
***
Chapter 1 opens with a brief tour of some key economic issues in Canada and other countries—
from rising protectionism and the dangers of climate change to accelerating technological change
and growing income inequality. The purpose is to whet the reader‘s appetite for the kinds of issues
economists are thinking about today. This offers a natural segue to the discussion of scarcity,
without which few of these issues would be very interesting. The chapter addresses the
fundamental concepts of scarcity, choice, and opportunity cost, illustrating these ideas with a
production possibilities boundary. (It is worth noting that these concepts are relevant to all
economies, whether they are organized by central planning or by free markets.) We then examine
the complexity of modern market economies, examining the decision makers, production, trade,
money, and globalization. Finally, we examine different types of economic systems, including
traditional, command, and free-market systems. We emphasize that all actual economies are
mixtures, containing elements of all three pure systems.
Chapter 2 provides a longer introduction to the methodological issues of economics than is
usually included in introductory texts. We do this because most students believe that the scientific method
is limited to the natural sciences. But to fully appreciate economics, they must understand that its theories
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
MANUAL #Z
for
Microeconomics
Seventeenth Canadian Edition #z #z
Christopher T.S. Ragan #z #z
McGill University #z
ISBN # z 978-0-13-766398-9
Copyright #z© #z2023 #zPearson #zCanada #zInc., #zToronto, #zOntario. #zAll #zrights #zreserved. #zThis #zwork #zis #zprotected #zby
#zCanadian #zcopyright #zlaws #zand #zis #zprovided #zsolely #zfor #zthe #zuse #zof #zinstructors #zin #zteaching #ztheir #zcourses #zand
#zassessing #zstudent #zlearning. #zDissemination #zor #zsale #zof #zany #zpart #zof #zthis #zwork #z(including #zon #zthe #zinternet) #zwill
#zdestroy #zthe #zintegrity #zof #zthe #zwork #zand #zis #znot #zpermitted. #zThe #zcopyright #zholder #zgrants #zpermission #zto #zinstructors
#zwho #zhave #zadopted #zMicroeconomics, #zby #zChristopher #zT. #zS. #zRagan, #zto #zpost #zthis #zmaterial #zonline #zonly #zif #zthe #zuse #zof
#zthe #zwebsite #zis #zrestricted #zby #zaccess #zcodes #zto #zstudents #zin #zthe #zinstructor‘s #zclass #zthat #zis #zusing #zthe #ztextbook #zand
#zprovided #zthe #zreproduced #zmaterial #zbears #zthis #zcopyright #znotice.
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
,ii Instructor‘s #zSolutions #zManual #zfor #zRagan, #zMicroeconomics, #zSeventeenth #zCanadian
#zEdition
Contents
Part #zOne: # z What #zIs #zEconomics? 1
Chapter #z1: #zEconomic #zIssues #zand #zConcepts 3
Chapter #z2: #zEconomic #zTheories, #zData, #zand #zGraphs 13
Part #zTwo: # z An #zIntroduction #zto #zDemand #zand #zSupply 26
Chapter #z3: #zDemand, #zSupply, #zand #zPrice 27
Chapter #z4: #zElasticity 40
Chapter #z5: #zPrice #zControls #zand #zMarket #zEfficiency 54
Part #zThree: # z Consumers #zand #zProducers 65
Chapter #z6: #zConsumer #zBehaviour 66
Chapter #z7: #zProducers #zin #zthe #zShort #zRun 81
Chapter #z8: #zProducers #zin #zthe #zLong #zRun 95
Part #zFour: # z Market #zStructure #zand #zEfficiency 104
Chapter #z9: #zCompetitive #zMarkets 105
Chapter #z10: #zMonopoly, #zCartels, #zand #zPrice #zDiscrimination 116
Chapter #z11: #zImperfect #zCompetition #zand #zStrategic #zBehaviour 131
Chapter #z12: #zEconomic #zEfficiency #zand #zPublic #zPolicy 140
Part #zFive: # z Factor #zMarkets 150
Chapter #z13: #zHow #zFactor #zMarkets #zWork 152
Chapter #z14: #zLabour #zMarkets #zand #zIncome #zInequality 163
Chapter #z15: #zInterest #zRates #zand #zthe #zCapital #zMarket 175
Part #zSix: # z Government #zin #zthe #zMarket #zEconomy 183
Chapter #z16: #zMarket #zFailures #zand #zGovernment #zIntervention 185
Chapter #z17: #zThe #zEconomics #zof #zEnvironmental #zProtection 198
Chapter #z18: #zTaxation #zand #zPublic #zExpenditure 210
Part #zSeven: # z Canada #zin #zthe #zGlobal #zEconomy 219
Chapter #z19: #zThe #zGains #zfrom #zInternational #zTrade 220
Chapter #z20: #zTrade #zPolicy 229
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
, Chapter #z1: #zEconomic #zIssues #zand #zConcepts
iii
List of Boxes
#z #z
Applying #zEconomic #zConcepts
1-1 #zThe #zHigh #zOpportunity #zCost #zof #zYour #zUniversity #zDegree 7
1-2 #zEconomics #zNeeds #zthe #zOther #zSocial #zSciences 21
2-1 #zWhere #zEconomists #zWork 30
2-2 #zCan #zEconomists #zDesign #zControlled #zExperiments #zto #zTest #zTheir #zTheories? 34
3-1 #zDemand #zand #zSupply #zShocks #zCreated #zby #zthe #zCOVID-19 #zPandemic 64
3-2 #zWhy #zApples #zbut #zNot #ziPhones? 72
4-1 #zWho #zReally #z―Pays‖ #zfor #zPayroll #zTaxes? 93
5-1 #zMinimum #zWages #zand #zUnemployment 105
5-2 #zThe #zDebate #zOver #z―Price #zGouging‖: #zEfficiency #zVersus #zPublic #zVirtue 118
6-1 #zRationality #zand #zFraming #zin #zConsumer #zBehaviour 130
7-1 #zIs #zIt #zSocially #zResponsible #zto #zMaximize #zProfits? 160
7-2 #zThree #zExamples #zof #zDiminishing #zReturns 168
7-3 #zThe #zDigital #zWorld: #zWhen #zDiminishing #zReturns #zDisappear #zAltogether 174
8-1 #zThe #zSignificance #zof #zProductivity #zGrowth 191
9-1 #zWhy #zSmall #zFirms #zAre #zPrice #zTakers 207
9-2 #zThe #zParable #zof #zthe #zSeaside #zInn 217
10-1 #zNetwork #zEffects #zas #zEntry #zBarriers 239
12-1 #zPotential #zMergers #zin #zthe #zCanadian #zAirline #zIndustry 302
14-1 #zThe #zRise #zof #zthe #z―Gig‖ #zEconomy 356
15-1 #zInflation #zand #zInterest #zRates 380
16-1 #zThe #zWorld‘s #zEndangered #zFish 398
16-2 #zUsed #zCars #zand #zthe #zMarket #zfor #z―Lemons‖ 404
18-1 #zUsing #za #zUBI #zto #zEliminate #zPoverty 466
19-1 #zTwo #zExamples #zof #zAbsolute #zand #zComparative #zAdvantage 484
19-2 #zComparative #zAdvantage #zand #zGlobal #zSupply #zChains 492
20-1 #zCanadian #zWine: #zA #zFree-Trade #zSuccess #zStory 520
Lessons #zfrom #zHistory
4-1 #zEconomic #zDevelopment #zand #zIncome #zElasticities 95
8-1 #zJacob #zViner #zand #zthe #zClever #zDraftsman 189
9-1 #zWhat #zDo #zWhaling #zShips #zand #zOil #zWells #zHave #zin #zCommon? 224
10-1 #zDisruptive #zTechnologies #zand #zCreative #zDestruction 241
12-1 #zAre #zAmazon #zand #zFacebook #zthe #zStandard #zOil #zof #zthe #zTwenty-First 300
#zCentury?
13-1 #zDavid #zRicardo #zand #z―Economic #zRent‖ 327
20-1 #zTariff #zWars #zand #zthe #zStark #zLessons #zfrom #zthe #zGreat #zDepression 508
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
, iv Instructor‘s #zSolutions #zManual #zfor #zRagan, #zMicroeconomics, #zSeventeenth #zCanadian
#zEdition
Extensions #zin #zTheory
3-1 #zThe #zDistinction #zBetween #zStocks #zand #zFlows 53
11-1 #zThe #zPrisoners‘ #zDilemma 270
16-1 #zArthur #zOkun‘s #z―Leaky #zBucket‖ 406
18-1 #zWho #zReally #zPays #zthe #zCorporate #zIncome #zTax? 450
19-1 #zThe #zGains #zfrom #zTrade #zMore #zGenerally 482
Part One #z
#z What Is #z
Economics?
#z
This opening Part of the book provides an introduction to economics. The central themes of
Chapter 1 are scarcity, choice, opportunity cost, and the self-organizing role of markets. The
chapter also examines the gains from specialization and trade, the role of money, the effects of
globalization, and ends with a discussion of the various types of economic systems. Chapter 2
examines how economists build their models and test their theories. It also addresses central
methodological issues, the most important being the idea that the progress of economics (like all
scientific disciplines) depends on relating our theories to what we observe in the world around us.
Finally, the chapter has an extensive section on graphing.
***
Chapter 1 opens with a brief tour of some key economic issues in Canada and other countries—
from rising protectionism and the dangers of climate change to accelerating technological change
and growing income inequality. The purpose is to whet the reader‘s appetite for the kinds of issues
economists are thinking about today. This offers a natural segue to the discussion of scarcity,
without which few of these issues would be very interesting. The chapter addresses the
fundamental concepts of scarcity, choice, and opportunity cost, illustrating these ideas with a
production possibilities boundary. (It is worth noting that these concepts are relevant to all
economies, whether they are organized by central planning or by free markets.) We then examine
the complexity of modern market economies, examining the decision makers, production, trade,
money, and globalization. Finally, we examine different types of economic systems, including
traditional, command, and free-market systems. We emphasize that all actual economies are
mixtures, containing elements of all three pure systems.
Chapter 2 provides a longer introduction to the methodological issues of economics than is
usually included in introductory texts. We do this because most students believe that the scientific method
is limited to the natural sciences. But to fully appreciate economics, they must understand that its theories
Copyright #z© #z2023 #zPearson #zCanada
#zInc.
