Solutions for Microeconomics 17th edition by Christopher( All chapters inclded).pdf

INSTRUCTOR’SSOLUTIONS N




MANUAL
for


Microeconomics
Seventeenth Canadian Edition
n n




Christopher T.S. Ragan
n n

,Contents
Part nOne:n What nIsnEconomics? 1
Chapter n1:nEconomicnIssuesnandnConcepts 3
Chapter n2:nEconomicnTheories,nData,nandnGraphs 13

Part nTwo:n AnnIntroductionntonDemandnandnSupply 26
Chapter n3:nDemand,nSupply,nandnPrice 27
Chapter n4:nElasticity 40
Chapter n5:nPricenControlsnandnMarketnEfficiency 54

Part nThree:n ConsumersnandnProducers 65
Chapter n6:nConsumer nBehaviour 66
Chapter n7:nProducersninnthenShortnRun 81
Chapter n8:nProducersninnthenLong nRun 95

Part nFour:n Market nStructurenandnEfficiency 104
Chapter n9:nCompetitivenMarkets 105
Chapter n10:nMonopoly,nCartels,nandnPricenDiscrimination 116
Chapter n11:nImperfectnCompetitionnandnStrategicnBehaviour 131
Chapter n12:nEconomicnEfficiencynandnPublicnPolicy 140

Part nFive:n FactornMarkets 150
Chapter n13:nHownFactor nMarketsnWork 152
Chapter n14:nLabour nMarketsnandnIncomenInequality 163
Chapter n15:nInterestnRatesnandnthenCapitalnMarket 175

Part nSix:n GovernmentninnthenMarket nEconomy 183
Chapter n16:nMarketnFailuresnandnGovernmentnIntervention 185
Chapter n17:nThenEconomicsnofnEnvironmentalnProtection 198
Chapter n18:nTaxationnandnPublicnExpenditure 210

Part nSeven:n CanadaninnthenGlobalnEconomy 219
Chapter n19:nThenGainsnfromnInternational nTrade 220
Chapter n20:nTradenPolicy 229

, Chaptern 1:n Economic n Issuesnand nConcepts iii



List of Boxes
n n




Applying nEconomicnConcepts
1-1nThenHighnOpportunitynCostnofnYournUniversitynDegree 7
1-2nEconomicsnNeedsnthenOther nSocialnSciences 21
2-1nWherenEconomistsnWork 30
2-2nCannEconomistsnDesignnControllednExperimentsntonTestnTheir nTheories? 34
3-1nDemandnandnSupplynShocksnCreatednbynthenCOVID-19nPandemic 64
3-2nWhynApplesnbutnNotniPhones? 72
4-1nWhonReallyn―Pays‖nfor nPayrollnTaxes? 93
5-1nMinimumnWagesnandnUnemployment 105
5-2nThenDebatenOver n―PricenGouging‖:nEfficiencynVersusnPublicnVirtue 118
6-1nRationalitynandnFraming ninnConsumer nBehaviour 130
7-1nIsnItnSociallynResponsiblentonMaximizenProfits? 160
7-2nThreenExamplesnofnDiminishing nReturns 168
7-3nThenDigital nWorld:nWhennDiminishing nReturnsnDisappear nAltogether 174
8-1nThenSignificancenofnProductivitynGrowth 191
9-1nWhynSmallnFirmsnArenPricenTakers 207
9-2nThenParablenofnthenSeasidenInn 217
10-1nNetworknEffectsnasnEntrynBarriers 239
12-1nPotentialnMergersninnthenCanadiannAirlinenIndustry 302
14-1nThenRisenofnthen―Gig‖nEconomy 356
15-1nInflationnandnInterestnRates 380
16-1nThenWorld‘snEndangerednFish 398
16-2nUsednCarsnandnthenMarketnfor n―Lemons‖ 404
18-1nUsing nanUBIntonEliminatenPoverty 466
19-1nTwonExamplesnofnAbsolutenandnComparativenAdvantage 484
19-2nComparativenAdvantagenandnGlobalnSupplynChains 492
20-1nCanadiannWine:nAnFree-TradenSuccessnStory 520

LessonsnfromnHistory
4-1nEconomicnDevelopmentnandnIncomenElasticities 95
8-1nJacobnViner nandnthenClever nDraftsman 189
9-1nWhatnDonWhaling nShipsnandnOilnWellsnHaveninnCommon? 224
10-1nDisruptivenTechnologiesnandnCreativenDestruction 241
12-1nArenAmazonnandnFacebooknthenStandardnOilnofnthenTwenty-FirstnCentury? 300
13-1nDavidnRicardonandn―EconomicnRent‖ 327
20-1nTariffnWarsnandnthenStarknLessonsnfromnthenGreatnDepression 508

, iv Instructor‘sn SolutionsnManualn forn Ragan,n Microeconomics,n Seventeenth n Canadian n Edition



ExtensionsninnTheory
3-1nThenDistinctionnBetweennStocksnandn Flows 53
11-1nThenPrisoners‘nDilemma 270
16-1nArthurnOkun‘sn―LeakynBucket‖ 406
18-1nWhonReallynPaysnthenCorporatenIncomenTax? 450
19-1nThenGainsnfromnTradenMorenGenerally 482




Part One What
n n n




Is Economics?
n




Thisnopening nPartnofnthenbooknprovidesnannintroductionntoneconomics.nThencentralnthemesnofnCha
pter n1narenscarcity,nchoice,nopportunityncost,nandnthenself-
organizing nrolenofnmarkets.nThenchapter nalsonexaminesnthengainsnfromnspecializationnandntrade,nt
henrolenofnmoney,ntheneffectsnofnglobalization,nandnendsnwithnandiscussionnofnthenvariousntypesnofn
economicnsystems.nChapter n2nexaminesnhowneconomistsnbuildntheir nmodelsnandntestntheir ntheori
es.nItnalsonaddressesncentralnmethodological nissues,nthenmostnimportantnbeing nthenideanthatnthenp
rogressnofneconomicsn(likenallnscientificndisciplines)ndependsnonnrelating nourntheoriesntonwhatnweno
bserveninnthenworldnaroundnus.nFinally,nthenchapter nhasnannextensivensectionnonngraphing.
***
Chapter n1nopensnwithnanbriefntournofnsomenkeyneconomicnissuesninnCanadanandnother ncountries—
n from nrising n protectionism n andn then dangersn ofn climatenchangen ton accelerating n technological n chan

genandngrowing nincomeninequality.nThenpurposenisntonwhetnthenreader‘snappetitenfornthenkindsnofnis
suesneconomistsnarenthinking naboutntoday.nThisnoffersnannaturalnseguentonthendiscussionnofnscarcit
y,nwithoutnwhichnfewnofnthesenissuesnwouldnbenveryninteresting.nThenchapter naddressesnthenfunda
mentalnconceptsnofnscarcity,nchoice,nandnopportunityncost,nillustrating nthesenideasnwithnanproduct
ionnpossibilitiesnboundary.n(Itnisnworthnnoting nthatnthesenconceptsnarenrelevantntonallneconomies,n
whether ntheynarenorganizednbyncentralnplanning nornbynfreenmarkets.)nWenthennexaminenthencompl
exitynofnmodernnmarketneconomies,nexamining nthendecisionnmakers,nproduction,ntrade,nmoney,na
ndnglobalization.nFinally,nwenexaminendifferentntypesnofneconomicnsystems,nincluding ntraditional,n
command,nandnfree-
marketnsystems.nWenemphasizenthatnallnactualneconomiesnarenmixtures,ncontaining nelementsnofna
llnthreenpurensystems.
Chaptern2nprovidesnanlongernintroductionntonthenmethodologicalnissuesnofneconomicsnthannisnusu
allynincludedninnintroductoryntexts.nWe ndonthisnbecause nmostnstudentsnbelieve nthatnthenscientificnmethodni
snlimitedntonthe nnaturalnsciences.nButntonfullynappreciate neconomics,ntheynmustnunderstandnthatnitsntheori
esnare nalsonopenntonempiricalntestingnandnthatnthesentheoriesncontinuallynchangenasnanresultnofnwhatnthe