Solutions for Principles of Macroeconomics, 10th Edition Mankiw (All Chapters included)

Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718;
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Chapter 1: Ten Principles of Economics vv vv vv vv vv




Instructor Manual vv




Mankiw, Principles of Economics, 10e, 9780357722718; Chapter 1: Ten Principles of
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Economics
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Prepared by David R. Hakes, University of Northern Iowa
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TABLE OF CONTENTS VV VV




Purpose and Perspective of the Chapter .................................................................................................... 2
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Chapter Objectives ................................................................................................................................................ 2
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Complete List of Chapter Activities and Assessments............................................................................ 3
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Key Terms ................................................................................................................................................................ 3
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What's New in This Chapter............................................................................................................................. 4
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Chapter Outline ...................................................................................................................................................... 4
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Solutions to Text Problems ............................................................................................................................... 9
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Questions for Review ........................................................................................................................................................ 9
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Problems and Applications .......................................................................................................................................... 10
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Additional Activities and Assignments........................................................................................................13
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Additional Resources .........................................................................................................................................14
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Cengage Video Resources ............................................................................................................................................. 14
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© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
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, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718; vv vv vv vv vv vv vv




Chapter 1: Ten Principles of Economics vv vv vv vv vv




PURPOSE AND PERSPECTIVE OF THE CHAPTER VV VV VV VV VV




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




The following objectives are addressed in this chapter:
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 Explain how scarcity influences decisions. vv vv vv vv




 Explain how individuals evaluate opportunity costs to make decisions.
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 Explain how marginal analysis influences decision making.
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 Apply basic, economic principles of individual decision making that determine how
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an economy generally works.
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 Explain how the terms of trade can lead to gains.
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 Given a scenario, identify the distribution system being used.
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© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
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a publicly
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, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718; vv vv vv vv vv vv vv




Chapter 1: Ten Principles of Economics vv vv vv vv vv




COMPLETE LIST OF CHAPTER ACTIVITIES AND ASSESSMENTS VV VV VV VV VV VV




The following table organizes activities and assessments so that you can make decisions about
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which content you would like to emphasize in your class. For additional guidance, refer to
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the Teaching Online Guide.
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Activity/Assessment Source (i.e., PPT slide, vv vv vv Duration
Workbook)
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Icebreaker Activity vv PPT Slide 2 vv vv 5–10 mins. vv



Active Learning 1
vv vv PPT Slide 14 vv vv 5 mins.
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Active Learning 2
vv vv PPT Slide 17 vv vv 5 mins.
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Active Learning 3
vv vv PPT Slide 28 vv vv 20–25 mins. vv



Think-Pair-Share Activity vv PPT Slide 39 vv vv 5–10 mins. vv



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



Section 01-1 QuickQuiz
vv vv MindTap eBook vv 5 mins.
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Section 01-2 QuickQuiz
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Section 01-3 QuickQuiz
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ConceptClip: Efficiency vv MindTap Learn It Folder vv vv vv 5 mins.
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ConceptClip: Opportunity Cost vv vv MindTap Learn It Folder vv vv vv 5 mins.
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ConceptClip: Externality vv MindTap Learn It Folder vv vv vv 5 mins.
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Chapter 01 Problems & Applications
vv vv vv vv MindTap Study It Folder vv vv vv 45–60 mins. vv



Chapter 01 A+ Test Prep vv vv vv vv MindTap Study It Folder vv vv vv N/A

Chapter 01 Homework vv vv MindTap Apply It Folder vv vv vv 30–45 mins. vv



Chapter 01 Quiz: Ten Principles of
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Economics
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KEY TERMS VV




Business Cycle: fluctuations in economic activity, such as employment and production
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Economics: the study of how society manages its scarce resources
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Efficiency: the property of society getting the most it can from its scarce resources
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Equality: the property of distributing economic prosperity uniformly among the members of
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society
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Externality: the uncompensated impact of one person’s actions on the well-being of a bystander
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Incentive: something that induces a person to act
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Inflation: an increase in the overall level of prices in the economy
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Marginal Change: an incremental adjustment to a plan of action
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© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
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a publicly
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, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718; vv vv vv vv vv vv vv




Chapter 1: Ten Principles of Economics vv vv vv vv vv




Market Economy: an economy that allocates resources through the decentralized decisions of
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many firms and households as they interact in markets for goods and services
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Market Failure: a situation in which a market left on its own does not allocate resources efficiently
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Market Power: the ability of a single economic actor (or small group of actors) to have a
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substantial influence on market prices
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Opportunity Cost: whatever must be given up to obtain some item vv vv vv vv vv vv vv vv vv vv




Productivity: the quantity of goods and services produced from each unit of labor
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Property Rights: the ability of an individual to own and exercise control over scarce resources
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Rational People: people who systematically and purposefully do the best they can to achieve
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their objectives
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Scarcity: the limited nature of society’s resources
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WHAT'S NEW IN THIS CHAPTER VV VV VV VV




The following elements are improvements in this chapter from the previous edition:
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 An expanded discussion of inflation in the United States following the coronavirus
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recession of 2020.
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CHAPTER OUTLINE VV




The following outline organizes activities (including any existing discussion questions in
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PowerPoints or other supplements) and assessments by chapter (and therefore by topic), so
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that you can see how all the content relates to the topics covered in the text.
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I. Introduction
A. The word “economy” comes from the Greek word oikonomos meaning “one
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who manages a household.” vv vv vv vv



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



that students must confront in their daily lives. Point out that they vv vv vv vv vv vv vv vv vv vv vv vv



already spend a great deal of their time thinking about economic vv vv vv vv vv vv vv vv vv vv vv



issues: changes in prices, buying decisions, use of their time, concerns vv vv vv vv vv vv vv vv vv vv vv



about employment, etc. vv vv v v



B. Both households and economies face many decisions about how to vv vv vv vv vv vv vv vv vv



allocate resources. vv vv



C. Resources are scarce so they must be managed carefully. vv vv vv vv vv vv vv vv




© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
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a publicly
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