Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
Instructor Manual
Mankiw, Principles of Economics, 11e, 2027, 9798214050348;
Chapter 1: Ten Principles of Economics
Prepared by David R. Hakes, University of Northern Iowa
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Chapter Objectives........................................................................................................2
Complete List of Chapter Activities and Assessments.................................................3
Key Terms.....................................................................................................................3
What’s New in This Chapter........................................................................................4
Chapter Outline.............................................................................................................4
Solutions to Text Problems........................................................................................11
Questions for Review...............................................................................................................................11
Problems and Applications...................................................................................................................... 12
Additional Activities and Assignments.......................................................................15
Additional Resources..................................................................................................16
Cengage Video Resources.......................................................................................................................16
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
,Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
PURPOSE AND PERSPECTIVE OF THE CHAPTER
Chapter 1 is the first chapter in a three-chapter section that serves as the introduction to the text. Chapter 1
introduces ten fundamental principles on which the study of economics is based. In a broad sense, the rest
of the text is an elaboration on these ten principles. Chapter 2 will develop how economists approach
problems, while Chapter 3 will explain how individuals and countries gain from trade.
The purpose of Chapter 1 is to lay out ten economic principles that will serve as building blocks for the
rest of the text. The ten principles can be grouped into three categories: how people make decisions, how
people interact, and how the economy works as a whole. Throughout the text, references will be made
repeatedly to these ten principles.
Key points addressed in this chapter:
The basic lessons about individual decision making are that people face trade-offs among
alternative goals, that the cost of any action is measured in terms of forgone opportunities, that
rational people make decisions by comparing marginal costs and marginal benefits, and that
people change their behavior in response to the incentives they face.
The basic lessons about economic interactions among people are that trade and interdependence
can be mutually beneficial, that markets are usually a good way of coordinating economic
activity, and that the government can potentially improve market outcomes by remedying a
market failure or by promoting greater economic equality.
The basic lessons about the economy as a whole are that living standards are primarily
determined by productivity, that high or persistent inflation is primarily determined by growth in
the quantity of money, and that society faces a short-run trade-off between inflation and
unemployment.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
Explain how scarcity influences decisions.
Explain how individuals evaluate opportunity costs to make decisions.
Explain how marginal analysis influences decision making.
Apply basic economic principles of individual decision making that determine how an economy
generally works.
Explain how the terms of trade can lead to gains.
Given a scenario, identify the distribution system being used.
[return to top]
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
,Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
COMPLETE LIST OF CHAPTER ACTIVITIES AND
ASSESSMENTS
The following table organizes activities and assessments so you can make decisions about which content
you would like to emphasize in your class. For additional guidance, refer to the Teaching Online Guide.
Activity/Assessment Source (i.e., PPT slide, Duration
Workbook)
Active Learning 1 PPT Slide 12 5 mins.
Active Learning 2 PPT Slide 17 5 mins.
Active Learning 3 PPT Slide 27 20–25 mins.
Think-Pair-Share Activity PPT Slide 34 5–10 mins.
Section 01-1 QuickQuiz MindTap eBook 5 mins.
Section 01-2 QuickQuiz MindTap eBook 5 mins.
Section 01-3 QuickQuiz MindTap eBook 5 mins.
ConceptClip: Efficiency MindTap Learn It Folder 5 mins.
ConceptClip: Opportunity Cost MindTap Learn It Folder 5 mins.
ConceptClip: Externality MindTap Learn It Folder 5 mins.
Chapter 01 Problems & Applications MindTap Study It Folder 45–60 mins.
Chapter 01 A+ Test Prep MindTap Study It Folder N/A
Chapter 01 Homework MindTap Apply It Folder 30–45 mins.
Chapter 01 Data Exploration Activity: The MindTap Apply It Folder 20 mins.
Meaning of Scarcity in Economics
Chapter 01 Quiz: Ten Principles of Economics MindTap Apply It Folder 20–30 mins.
[return to top]
KEY TERMS
Business Cycle: fluctuations in economic activity, such as employment and production
Economics: the study of how society manages its scarce resources
Efficiency: the property of society getting the most it can from its scarce resources
Equality: the property of distributing economic prosperity uniformly among the members of society
Externality: the impact of one person’s actions on the well-being of a bystander
Incentive: something that induces a person to act
Inflation: an increase in the overall level of prices in the economy
Marginal Change: an incremental adjustment to a plan of action
Market Economy: an economy that allocates resources through the decentralized decisions of many
firms and households as they interact in markets for goods and services
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
Market Failure: a situation in which a market left on its own does not allocate resources efficiently
Market Power: ability of a single economic actor (or small group of actors) to have a substantial
influence on market prices
Opportunity Cost: whatever must be given up to obtain some item
Productivity: the quantity of goods and services produced from each unit of labor input
Property Rights: the ability of an individual to own and exercise control over scarce resources
Rational People: people who systematically and purposefully do the best they can to achieve their
objectives
Scarcity: the limited nature of society’s resources
[return to top]
WHAT’S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
There is a new In the News box “An Economics Lesson from a Science Teacher.”
[return to top]
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions in PowerPoints or
other supplements) and assessments by chapter (and therefore by topic), so you can see how all the
content relates to the topics covered in the text.
I. Introduction
A. The word “economy” comes from the Greek word oikonomos meaning “one who
manages a household.”
1. Instruction Idea: Begin by pointing out that economics is a subject that
students must confront in their daily lives. Point out that they already spend a
great deal of their time thinking about economic issues: changes in prices,
buying decisions, use of their time, concerns about employment, etc.
B. Both households and societies face many decisions about how to allocate resources.
C. Resources are scarce so they must be managed carefully.
1. Instruction Idea: You will want to start the semester by explaining to
students that part of learning economics is understanding a new vocabulary.
Economists generally use very precise (and sometimes different) definitions for
words that are commonly used outside of the economics discipline. Therefore,
it will be helpful to students if you follow the definitions provided in the text as
much as possible.
D. Definition of scarcity: the limited nature of society’s resources.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
Hakes, University of Northern Iowa
Instructor Manual
Mankiw, Principles of Economics, 11e, 2027, 9798214050348;
Chapter 1: Ten Principles of Economics
Prepared by David R. Hakes, University of Northern Iowa
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Chapter Objectives........................................................................................................2
Complete List of Chapter Activities and Assessments.................................................3
Key Terms.....................................................................................................................3
What’s New in This Chapter........................................................................................4
Chapter Outline.............................................................................................................4
Solutions to Text Problems........................................................................................11
Questions for Review...............................................................................................................................11
Problems and Applications...................................................................................................................... 12
Additional Activities and Assignments.......................................................................15
Additional Resources..................................................................................................16
Cengage Video Resources.......................................................................................................................16
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
,Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
PURPOSE AND PERSPECTIVE OF THE CHAPTER
Chapter 1 is the first chapter in a three-chapter section that serves as the introduction to the text. Chapter 1
introduces ten fundamental principles on which the study of economics is based. In a broad sense, the rest
of the text is an elaboration on these ten principles. Chapter 2 will develop how economists approach
problems, while Chapter 3 will explain how individuals and countries gain from trade.
The purpose of Chapter 1 is to lay out ten economic principles that will serve as building blocks for the
rest of the text. The ten principles can be grouped into three categories: how people make decisions, how
people interact, and how the economy works as a whole. Throughout the text, references will be made
repeatedly to these ten principles.
Key points addressed in this chapter:
The basic lessons about individual decision making are that people face trade-offs among
alternative goals, that the cost of any action is measured in terms of forgone opportunities, that
rational people make decisions by comparing marginal costs and marginal benefits, and that
people change their behavior in response to the incentives they face.
The basic lessons about economic interactions among people are that trade and interdependence
can be mutually beneficial, that markets are usually a good way of coordinating economic
activity, and that the government can potentially improve market outcomes by remedying a
market failure or by promoting greater economic equality.
The basic lessons about the economy as a whole are that living standards are primarily
determined by productivity, that high or persistent inflation is primarily determined by growth in
the quantity of money, and that society faces a short-run trade-off between inflation and
unemployment.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
Explain how scarcity influences decisions.
Explain how individuals evaluate opportunity costs to make decisions.
Explain how marginal analysis influences decision making.
Apply basic economic principles of individual decision making that determine how an economy
generally works.
Explain how the terms of trade can lead to gains.
Given a scenario, identify the distribution system being used.
[return to top]
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
,Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
COMPLETE LIST OF CHAPTER ACTIVITIES AND
ASSESSMENTS
The following table organizes activities and assessments so you can make decisions about which content
you would like to emphasize in your class. For additional guidance, refer to the Teaching Online Guide.
Activity/Assessment Source (i.e., PPT slide, Duration
Workbook)
Active Learning 1 PPT Slide 12 5 mins.
Active Learning 2 PPT Slide 17 5 mins.
Active Learning 3 PPT Slide 27 20–25 mins.
Think-Pair-Share Activity PPT Slide 34 5–10 mins.
Section 01-1 QuickQuiz MindTap eBook 5 mins.
Section 01-2 QuickQuiz MindTap eBook 5 mins.
Section 01-3 QuickQuiz MindTap eBook 5 mins.
ConceptClip: Efficiency MindTap Learn It Folder 5 mins.
ConceptClip: Opportunity Cost MindTap Learn It Folder 5 mins.
ConceptClip: Externality MindTap Learn It Folder 5 mins.
Chapter 01 Problems & Applications MindTap Study It Folder 45–60 mins.
Chapter 01 A+ Test Prep MindTap Study It Folder N/A
Chapter 01 Homework MindTap Apply It Folder 30–45 mins.
Chapter 01 Data Exploration Activity: The MindTap Apply It Folder 20 mins.
Meaning of Scarcity in Economics
Chapter 01 Quiz: Ten Principles of Economics MindTap Apply It Folder 20–30 mins.
[return to top]
KEY TERMS
Business Cycle: fluctuations in economic activity, such as employment and production
Economics: the study of how society manages its scarce resources
Efficiency: the property of society getting the most it can from its scarce resources
Equality: the property of distributing economic prosperity uniformly among the members of society
Externality: the impact of one person’s actions on the well-being of a bystander
Incentive: something that induces a person to act
Inflation: an increase in the overall level of prices in the economy
Marginal Change: an incremental adjustment to a plan of action
Market Economy: an economy that allocates resources through the decentralized decisions of many
firms and households as they interact in markets for goods and services
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Mankiw, Principles of Economics, 11e, 2027, 9798214050348; Chapter 1: Ten Principles of Economics Prepared by David R.
Hakes, University of Northern Iowa
Market Failure: a situation in which a market left on its own does not allocate resources efficiently
Market Power: ability of a single economic actor (or small group of actors) to have a substantial
influence on market prices
Opportunity Cost: whatever must be given up to obtain some item
Productivity: the quantity of goods and services produced from each unit of labor input
Property Rights: the ability of an individual to own and exercise control over scarce resources
Rational People: people who systematically and purposefully do the best they can to achieve their
objectives
Scarcity: the limited nature of society’s resources
[return to top]
WHAT’S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
There is a new In the News box “An Economics Lesson from a Science Teacher.”
[return to top]
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions in PowerPoints or
other supplements) and assessments by chapter (and therefore by topic), so you can see how all the
content relates to the topics covered in the text.
I. Introduction
A. The word “economy” comes from the Greek word oikonomos meaning “one who
manages a household.”
1. Instruction Idea: Begin by pointing out that economics is a subject that
students must confront in their daily lives. Point out that they already spend a
great deal of their time thinking about economic issues: changes in prices,
buying decisions, use of their time, concerns about employment, etc.
B. Both households and societies face many decisions about how to allocate resources.
C. Resources are scarce so they must be managed carefully.
1. Instruction Idea: You will want to start the semester by explaining to
students that part of learning economics is understanding a new vocabulary.
Economists generally use very precise (and sometimes different) definitions for
words that are commonly used outside of the economics discipline. Therefore,
it will be helpful to students if you follow the definitions provided in the text as
much as possible.
D. Definition of scarcity: the limited nature of society’s resources.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
