SolutionManualfor Microeconomics,
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17th CanadianEdition, ByChristopher
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Ragan, All Chapters 1 – 20
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,Contents
Part One: What Is Economics?
fg fg f g fg fg 1
Chapter 1: Economic Issues and Concepts
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Chapter 2: Economic Theories, Data, and Graphs
fg fg fg fg fg fg 13
Part Two: An Introduction to Demand and Supply
fg fg f g fg fg fg fg fg 26
Chapter 3: Demand, Supply, and Price
fg fg fg fg fg 27
Chapter 4: Elasticity
fg fg 40
Chapter 5: Price Controls and Market Efficiency
fg fg fg fg fg fg 54
Part Three: Consumers and Producers
fg fg f g fg fg 65
Chapter 6: Consumer Behaviour
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Chapter 7: Producers in the Short Run
fg fg fg fg fg fg 81
Chapter 8: Producers in the Long Run
fg fg fg fg fg fg 95
Part Four: Market Structure and Efficiency
fg fg f g fg fg fg 104
Chapter 9: Competitive Markets
fg fg fg 105
Chapter 10: Monopoly, Cartels, and Price Discrimination
fg fg fg fg fg fg 116
Chapter 11: Imperfect Competition and Strategic Behaviour
fg fg fg fg fg fg 131
Chapter 12: Economic Efficiency and Public Policy
fg fg fg fg fg fg 140
Part Five: Factor Markets
fg fg f g fg 150
Chapter 13: How Factor Markets Work
fg fg fg fg fg 152
Chapter 14: Labour Markets and Income Inequality
fg fg fg fg fg fg 163
Chapter 15: Interest Rates and the Capital Market
fg fg fg fg fg fg fg 175
Part Six: Government in the Market Economy
fg fg f g fg fg fg fg 183
Chapter 16: Market Failures and Government Intervention
fg fg fg fg fg fg 185
Chapter 17: The Economics of Environmental Protection
fg fg fg fg fg fg 198
Chapter 18: Taxation and Public Expenditure
fg fg fg fg fg 210
Part Seven: Canada in the Global Economy
fg fg f g fg fg fg fg 219
Chapter 19: The Gains from International Trade
fg fg fg fg fg fg 220
Chapter 20: Trade Policy
fg fg fg 229
,List of Boxes fg fg
Applying Economic Concepts fg fg
1-1 The High Opportunity Cost of Your University Degree
fg fg fg fg fg fg fg fg 7
1-2 Economics Needs the Other Social Sciences
fg fg fg fg fg fg 21
2-1 Where Economists Work
fg fg fg 30
2-2 Can Economists Design Controlled Experiments to Test Their Theories?
fg fg fg fg fg fg fg fg fg 34
3-1 Demand and Supply Shocks Created by the COVID-19 Pandemic
fg fg fg fg fg fg fg fg fg 64
3-2 Why Apples but Not iPhones?
fg fg fg fg fg 72
4-1 Who Really―Pays‖ for Payroll Taxes?
fg fg fg fg fg fg 93
5-1 Minimum Wages and Unemployment
fg fg fg fg 105
5-2 The Debate Over ―Price Gouging‖: Efficiency Versus Public Virtue
fg fg fg fg fg fg fg fg fg 118
6-1 Rationality and Framing in Consumer Behaviour
fg fg fg fg fg fg 130
7-1 Is It Socially Responsible to Maximize Profits?
fg fg fg fg fg fg fg 160
7-2 Three Examples of Diminishing Returns
fg fg fg fg fg 168
7-3 The Digital World: When Diminishing Returns Disappear Altogether
fg fg fg fg fg fg fg fg 174
8-1 The Significance of Productivity Growth
fg fg fg fg fg 191
9-1 Why Small Firms Are Price Takers
fg fg fg fg fg fg 207
9-2 The Parable of the Seaside Inn
fg fg fg fg fg fg 217
10-1 Network Effects as Entry Barriers
fg fg fg fg fg 239
12-1 Potential Mergers in the Canadian Airline Industry
fg fg fg fg fg fg fg 302
14-1 The Rise of the ―Gig‖ Economy
fg fg fg fg fg fg 356
15-1 Inflation and Interest Rates
fg fg fg fg 380
16-1 The World‘s Endangered Fish
fg fg fg fg 398
16-2 Used Cars and the Market for ―Lemons‖
fg fg fg fg fg fg fg 404
18-1 Using a UBI to Eliminate Poverty
fg fg fg fg fg fg 466
19-1 Two Examples of Absolute and Comparative Advantage
fg fg fg fg fg fg fg 484
19-2 Comparative Advantage and Global Supply Chains
fg fg fg fg fg fg 492
20-1 Canadian Wine: A Free-Trade Success Story
fg fg fg fg fg fg 520
Lessons from History fg fg
4-1 Economic Development and Income Elasticities
fg fg fg fg fg 95
8-1 Jacob Viner and the Clever Draftsman
fg fg fg fg fg fg 189
9-1 What Do Whaling Ships and Oil Wells Have in Common?
fg fg fg fg fg fg fg fg fg fg 224
10-1 Disruptive Technologies and Creative Destruction
fg fg fg fg fg 241
12-1 Are Amazon and Facebook the Standard Oil of the Twenty-First Century?
fg fg fg fg fg fg fg fg fg fg fg 300
13-1 David Ricardo and ―Economic Rent‖
fg fg fg fg fg 327
20-1 Tariff Wars and the Stark Lessons from the Great Depression
fg fg fg fg fg fg fg fg fg fg 508
, Extensions in Theory fg fg
3-1 The Distinction Between Stocks and Flows
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11-1 The Prisoners‘ Dilemma
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16-1 Arthur Okun‘s ―Leaky Bucket‖
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18-1 Who Really Pays the Corporate Income Tax?
fg fg fg fg fg fg fg 450
19-1 The Gains from Trade More Generally
fg fg fg fg fg fg 482
Part One fg
fg What Is fg
fg Economics?
This opening Part of the book provides an introduction to economics. The central themes
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of Chapter 1 are scarcity, choice, opportunity cost, and the self-organizing role of
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markets. The chapter also examines the gains from specialization and trade, the role of
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money, the effects of globalization, and ends with a discussion of the
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various types of economic systems. Chapter 2 examines how economists
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build their models and test their theories. It also
f g f g f gaddresses central f g f g f g f g f g f g f g fg
methodological issues, the most important being the idea that the progress of
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economics (like all scientific disciplines) depends on relating our theories to
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what we observe in the world around us. Finally, the chapter has an extensive
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section on graphing.
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***
Chapter 1 opens with a brief tour of some key economic issues in Canada and other
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f gcountries— from rising protectionism and the dangers of climate change to
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accelerating technological change and growing income inequality. The purpose is
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to whet the reader‘s appetite for the kinds of issues economists are thinking
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about today. This offers a natural segue to the discussion of scarcity, without
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which few of these issues would be very interesting. The chapter addresses the
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fundamental concepts of scarcity, choice, and opportunity cost, illustrating these
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ideas with a production possibilities boundary. (It is
f g f g f g worth noting that these
f g f g f g f g f g f g fg fg fg
concepts are relevant to all economies, whether they are organized
fg fg fg by central fg fg fg fg fg fg fg f g fg
planning or by free markets.) We then examine the complexity of modern market
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f geconomies, examining the decision makers, production, trade, money, and
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globalization. Finally, we examine different types of economic systems, including
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traditional, command,
fg and free-market systems. We emphasize that all actual
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economies are mixtures, containing elements of all three pure systems.
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17th CanadianEdition, ByChristopher
fg f g fg fg fg fg fg
Ragan, All Chapters 1 – 20
fg f g fg fg fg fg
,Contents
Part One: What Is Economics?
fg fg f g fg fg 1
Chapter 1: Economic Issues and Concepts
fg fg fg fg fg 3
Chapter 2: Economic Theories, Data, and Graphs
fg fg fg fg fg fg 13
Part Two: An Introduction to Demand and Supply
fg fg f g fg fg fg fg fg 26
Chapter 3: Demand, Supply, and Price
fg fg fg fg fg 27
Chapter 4: Elasticity
fg fg 40
Chapter 5: Price Controls and Market Efficiency
fg fg fg fg fg fg 54
Part Three: Consumers and Producers
fg fg f g fg fg 65
Chapter 6: Consumer Behaviour
fg fg fg 66
Chapter 7: Producers in the Short Run
fg fg fg fg fg fg 81
Chapter 8: Producers in the Long Run
fg fg fg fg fg fg 95
Part Four: Market Structure and Efficiency
fg fg f g fg fg fg 104
Chapter 9: Competitive Markets
fg fg fg 105
Chapter 10: Monopoly, Cartels, and Price Discrimination
fg fg fg fg fg fg 116
Chapter 11: Imperfect Competition and Strategic Behaviour
fg fg fg fg fg fg 131
Chapter 12: Economic Efficiency and Public Policy
fg fg fg fg fg fg 140
Part Five: Factor Markets
fg fg f g fg 150
Chapter 13: How Factor Markets Work
fg fg fg fg fg 152
Chapter 14: Labour Markets and Income Inequality
fg fg fg fg fg fg 163
Chapter 15: Interest Rates and the Capital Market
fg fg fg fg fg fg fg 175
Part Six: Government in the Market Economy
fg fg f g fg fg fg fg 183
Chapter 16: Market Failures and Government Intervention
fg fg fg fg fg fg 185
Chapter 17: The Economics of Environmental Protection
fg fg fg fg fg fg 198
Chapter 18: Taxation and Public Expenditure
fg fg fg fg fg 210
Part Seven: Canada in the Global Economy
fg fg f g fg fg fg fg 219
Chapter 19: The Gains from International Trade
fg fg fg fg fg fg 220
Chapter 20: Trade Policy
fg fg fg 229
,List of Boxes fg fg
Applying Economic Concepts fg fg
1-1 The High Opportunity Cost of Your University Degree
fg fg fg fg fg fg fg fg 7
1-2 Economics Needs the Other Social Sciences
fg fg fg fg fg fg 21
2-1 Where Economists Work
fg fg fg 30
2-2 Can Economists Design Controlled Experiments to Test Their Theories?
fg fg fg fg fg fg fg fg fg 34
3-1 Demand and Supply Shocks Created by the COVID-19 Pandemic
fg fg fg fg fg fg fg fg fg 64
3-2 Why Apples but Not iPhones?
fg fg fg fg fg 72
4-1 Who Really―Pays‖ for Payroll Taxes?
fg fg fg fg fg fg 93
5-1 Minimum Wages and Unemployment
fg fg fg fg 105
5-2 The Debate Over ―Price Gouging‖: Efficiency Versus Public Virtue
fg fg fg fg fg fg fg fg fg 118
6-1 Rationality and Framing in Consumer Behaviour
fg fg fg fg fg fg 130
7-1 Is It Socially Responsible to Maximize Profits?
fg fg fg fg fg fg fg 160
7-2 Three Examples of Diminishing Returns
fg fg fg fg fg 168
7-3 The Digital World: When Diminishing Returns Disappear Altogether
fg fg fg fg fg fg fg fg 174
8-1 The Significance of Productivity Growth
fg fg fg fg fg 191
9-1 Why Small Firms Are Price Takers
fg fg fg fg fg fg 207
9-2 The Parable of the Seaside Inn
fg fg fg fg fg fg 217
10-1 Network Effects as Entry Barriers
fg fg fg fg fg 239
12-1 Potential Mergers in the Canadian Airline Industry
fg fg fg fg fg fg fg 302
14-1 The Rise of the ―Gig‖ Economy
fg fg fg fg fg fg 356
15-1 Inflation and Interest Rates
fg fg fg fg 380
16-1 The World‘s Endangered Fish
fg fg fg fg 398
16-2 Used Cars and the Market for ―Lemons‖
fg fg fg fg fg fg fg 404
18-1 Using a UBI to Eliminate Poverty
fg fg fg fg fg fg 466
19-1 Two Examples of Absolute and Comparative Advantage
fg fg fg fg fg fg fg 484
19-2 Comparative Advantage and Global Supply Chains
fg fg fg fg fg fg 492
20-1 Canadian Wine: A Free-Trade Success Story
fg fg fg fg fg fg 520
Lessons from History fg fg
4-1 Economic Development and Income Elasticities
fg fg fg fg fg 95
8-1 Jacob Viner and the Clever Draftsman
fg fg fg fg fg fg 189
9-1 What Do Whaling Ships and Oil Wells Have in Common?
fg fg fg fg fg fg fg fg fg fg 224
10-1 Disruptive Technologies and Creative Destruction
fg fg fg fg fg 241
12-1 Are Amazon and Facebook the Standard Oil of the Twenty-First Century?
fg fg fg fg fg fg fg fg fg fg fg 300
13-1 David Ricardo and ―Economic Rent‖
fg fg fg fg fg 327
20-1 Tariff Wars and the Stark Lessons from the Great Depression
fg fg fg fg fg fg fg fg fg fg 508
, Extensions in Theory fg fg
3-1 The Distinction Between Stocks and Flows
fg fg fg fg fg fg 53
11-1 The Prisoners‘ Dilemma
fg fg fg 270
16-1 Arthur Okun‘s ―Leaky Bucket‖
fg fg fg fg 406
18-1 Who Really Pays the Corporate Income Tax?
fg fg fg fg fg fg fg 450
19-1 The Gains from Trade More Generally
fg fg fg fg fg fg 482
Part One fg
fg What Is fg
fg Economics?
This opening Part of the book provides an introduction to economics. The central themes
fg fg fg fg fg fg fg fg fg fg fg fg fg
of Chapter 1 are scarcity, choice, opportunity cost, and the self-organizing role of
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markets. The chapter also examines the gains from specialization and trade, the role of
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money, the effects of globalization, and ends with a discussion of the
fg fg fg f g f g f g f g f g f g f g f g f g
various types of economic systems. Chapter 2 examines how economists
f g f g f g f g f g f g f g f g f g f g
build their models and test their theories. It also
f g f g f gaddresses central f g f g f g f g f g f g f g fg
methodological issues, the most important being the idea that the progress of
fg fg fg fg fg fg fg fg fg fg f g fg
economics (like all scientific disciplines) depends on relating our theories to
fg fg fg f g fg fg fg fg fg fg fg
what we observe in the world around us. Finally, the chapter has an extensive
f g fg fg fg fg fg fg fg fg fg fg fg fg fg
section on graphing.
fg fg f g
***
Chapter 1 opens with a brief tour of some key economic issues in Canada and other
fg fg fg fg fg fg fg fg fg fg fg fg fg f g fg fg fg
f gcountries— from rising protectionism and the dangers of climate change to
fg f g fg f g f g fg fg f g f g fg
accelerating technological change and growing income inequality. The purpose is
f g f g fg fg fg fg fg fg fg fg
to whet the reader‘s appetite for the kinds of issues economists are thinking
fg fg fg fg f g fg fg fg fg fg fg fg fg
about today. This offers a natural segue to the discussion of scarcity, without
fg fg fg fg fg fg f g fg fg fg fg fg fg fg
which few of these issues would be very interesting. The chapter addresses the
f g fg fg fg fg fg fg fg f g fg fg fg fg
fundamental concepts of scarcity, choice, and opportunity cost, illustrating these
fg fg fg fg fg fg f g f g f g f g
ideas with a production possibilities boundary. (It is
f g f g f g worth noting that these
f g f g f g f g f g f g fg fg fg
concepts are relevant to all economies, whether they are organized
fg fg fg by central fg fg fg fg fg fg fg f g fg
planning or by free markets.) We then examine the complexity of modern market
fg fg fg fg fg fg fg fg fg fg fg fg fg
f geconomies, examining the decision makers, production, trade, money, and
f g f g f g f g f g f g f g f g
globalization. Finally, we examine different types of economic systems, including
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traditional, command,
fg and free-market systems. We emphasize that all actual
fg f g fg fg fg fg fg fg fg
economies are mixtures, containing elements of all three pure systems.
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