Economics – 13th Edition
ST
SOLUTIONS
UV
MANUAL
IA
_A
PP
Michael Parkin
RO
Comprehensive Solutions Manual for Instructors
VE
and Students
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© Michael Parkin
All rights reserved. Reproduction or distribution without permission is prohibited.
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©STUDYSTREAM
, Table of Contents
ST
UV
Preface iii
Part 1 Introduction
Chapter 1 What is Economics? 1
Appendix Graphs in Economics 9
Chapter 2 The Economic Problem 21
IA
Part 2 How Markets Work
Chapter 3 Demand and Supply 39
Chapter 4 Elasticity 53
Chapter 5 Efficiency and Equity 65
_A
Chapter 6 Government Actions in Markets 79
Chapter 7 Global Markets in Action 93
Part 3 Households’ Choices
Chapter 8 Utility and Demand 107
PP
Chapter 9 Possibilities, Preferences, and Choices 121
Part 4 Firms and Markets
Chapter 10 Organizing Production 137
Chapter 11 Output and Costs 151
Chapter 12 Perfect Competition 165
RO
Chapter 13 Monopoly 179
Chapter 14 Monopolistic Competition 197
Chapter 15 Oligopoly 209
Part 5 Market Failure and Government
Chapter 16 Public Choices, Public Goods, and Healthcare 223
VE
Chapter 17 Externalities 237
Part 6 Factor Markets, Inequality, and Uncertainty
Chapter 18 Markets for Factors of Production 249
Chapter 19 Economic Inequality 261
D?
Chapter 20 Uncertainty and Information 275
Part 7 Monitoring Macroeconomic Performance
Chapter 21 Measuring GDP and Economic Growth 285
Chapter 22 Monitoring Jobs and Inflation 299
??
© 2018 Pearson Education, Inc.
, Part 8 Macroeconomic Trends
Chapter 23 Economic Growth 313
Chapter 24 Finance, Saving, and Investment 325
ST
Chapter 25 Money, the Price Level, and Inflation 337
Chapter 26 The Exchange Rate and the Balance of Payments 351
Part 9 Macroeconomic Fluctuations
Chapter 27 Aggregate Supply and Aggregate Demand 365
UV
Chapter 28 Expenditure Multipliers 381
Chapter 29 The Business Cycle, Inflation, and Deflation 397
Part 10 Macroeconomic Policy
Chapter 30 Fiscal Policy 413
Chapter 31 Monetary Policy 427
IA
_A
PP
RO
VE
D?
??
© 2018 Pearson Education, Inc.
, C h a p t e r
1 WHAT IS
ECONOMICS?
ST
Answers to the Review Quiz
UV
Page 2
1. List some examples of the scarcity that you face.
Examples of scarcity common to students include not enough income to afford both tuition and a nice
car, not enough learning capacity to study for both an economics exam and a chemistry exam in one night,
and not enough time to allow extensive studying and extensive socializing.
IA
2. Find examples of scarcity in today’s headlines.
A headline in The Baltimore Sun on June 20, 2017 was “Davis Says Special Deployment Helped Stall
Violence.” The story presented Police Commissioner Kevin Davis stating that a week-long deployment of
uniformed police officers on the streets of Baltimore helped reduce shootings in the city. But the story
_A
pointed out the role of scarcity when Commissioner Davis said that “the deployment was not sustainable
over the long term” due to its cost.
3. Find an example of the distinction between microeconomics and macroeconomics in today’s
headlines.
Microeconomics: On June 20, 2017 a headline in East Bay Times was “Reality vs Fantasy: FTC to Block
FanDuel-DraftKings Merger.” This story covers a microeconomic topic because it discusses how two on-
PP
line fantasy sports sites, which were trying to merge, now faced opposition by the Federal Trade
Commission (FTC) which announced it would challenge the merger. Macroeconomics: On June 20, 2017,
a headline in The Wall Street Journal was “Ryan Talks Up Likelihood of Tax Overhaul.” This story covers
a macroeconomic topic because it concerns taxes that affect every business and individual in the entire
economy.
RO
Page 7
1. Describe the broad facts about what, how, and for whom goods and services are produced.
What gets produced is significantly different today than in the past. Today the U.S. economy produces
more services, such as medical operations, teaching, and hair styling, than goods, such as pizza,
automobiles, and computers. How goods and services are produced is by businesses determining how the
factors of production, land, labor, capital and entrepreneurship, are combined to make the goods and
VE
services we consume. Land includes all natural resources, both renewable natural resources such as wood,
and nonrenewable natural resources such as natural gas. Labor’s quality depends on people’s human
capital. In the U.S. economy, human capital obtained through schooling has increased over the years with
far more people completing high school and attending college than in past years. Finally, for whom are
goods and services to be produced depends on the way income is distributed to U.S. citizens. This
D?
distribution is not equal; the 20 percent of people with the lowest income earn about 5 percent of the
nation’s total income while the 20 percent of people with the highest incomes earn about 50 percent of
total income. On the average, men earn more than women, whites more than non-whites, and college
graduates more than high school graduates.
??
© 2018 Pearson Education, Inc.
ST
SOLUTIONS
UV
MANUAL
IA
_A
PP
Michael Parkin
RO
Comprehensive Solutions Manual for Instructors
VE
and Students
D?
© Michael Parkin
All rights reserved. Reproduction or distribution without permission is prohibited.
??
©STUDYSTREAM
, Table of Contents
ST
UV
Preface iii
Part 1 Introduction
Chapter 1 What is Economics? 1
Appendix Graphs in Economics 9
Chapter 2 The Economic Problem 21
IA
Part 2 How Markets Work
Chapter 3 Demand and Supply 39
Chapter 4 Elasticity 53
Chapter 5 Efficiency and Equity 65
_A
Chapter 6 Government Actions in Markets 79
Chapter 7 Global Markets in Action 93
Part 3 Households’ Choices
Chapter 8 Utility and Demand 107
PP
Chapter 9 Possibilities, Preferences, and Choices 121
Part 4 Firms and Markets
Chapter 10 Organizing Production 137
Chapter 11 Output and Costs 151
Chapter 12 Perfect Competition 165
RO
Chapter 13 Monopoly 179
Chapter 14 Monopolistic Competition 197
Chapter 15 Oligopoly 209
Part 5 Market Failure and Government
Chapter 16 Public Choices, Public Goods, and Healthcare 223
VE
Chapter 17 Externalities 237
Part 6 Factor Markets, Inequality, and Uncertainty
Chapter 18 Markets for Factors of Production 249
Chapter 19 Economic Inequality 261
D?
Chapter 20 Uncertainty and Information 275
Part 7 Monitoring Macroeconomic Performance
Chapter 21 Measuring GDP and Economic Growth 285
Chapter 22 Monitoring Jobs and Inflation 299
??
© 2018 Pearson Education, Inc.
, Part 8 Macroeconomic Trends
Chapter 23 Economic Growth 313
Chapter 24 Finance, Saving, and Investment 325
ST
Chapter 25 Money, the Price Level, and Inflation 337
Chapter 26 The Exchange Rate and the Balance of Payments 351
Part 9 Macroeconomic Fluctuations
Chapter 27 Aggregate Supply and Aggregate Demand 365
UV
Chapter 28 Expenditure Multipliers 381
Chapter 29 The Business Cycle, Inflation, and Deflation 397
Part 10 Macroeconomic Policy
Chapter 30 Fiscal Policy 413
Chapter 31 Monetary Policy 427
IA
_A
PP
RO
VE
D?
??
© 2018 Pearson Education, Inc.
, C h a p t e r
1 WHAT IS
ECONOMICS?
ST
Answers to the Review Quiz
UV
Page 2
1. List some examples of the scarcity that you face.
Examples of scarcity common to students include not enough income to afford both tuition and a nice
car, not enough learning capacity to study for both an economics exam and a chemistry exam in one night,
and not enough time to allow extensive studying and extensive socializing.
IA
2. Find examples of scarcity in today’s headlines.
A headline in The Baltimore Sun on June 20, 2017 was “Davis Says Special Deployment Helped Stall
Violence.” The story presented Police Commissioner Kevin Davis stating that a week-long deployment of
uniformed police officers on the streets of Baltimore helped reduce shootings in the city. But the story
_A
pointed out the role of scarcity when Commissioner Davis said that “the deployment was not sustainable
over the long term” due to its cost.
3. Find an example of the distinction between microeconomics and macroeconomics in today’s
headlines.
Microeconomics: On June 20, 2017 a headline in East Bay Times was “Reality vs Fantasy: FTC to Block
FanDuel-DraftKings Merger.” This story covers a microeconomic topic because it discusses how two on-
PP
line fantasy sports sites, which were trying to merge, now faced opposition by the Federal Trade
Commission (FTC) which announced it would challenge the merger. Macroeconomics: On June 20, 2017,
a headline in The Wall Street Journal was “Ryan Talks Up Likelihood of Tax Overhaul.” This story covers
a macroeconomic topic because it concerns taxes that affect every business and individual in the entire
economy.
RO
Page 7
1. Describe the broad facts about what, how, and for whom goods and services are produced.
What gets produced is significantly different today than in the past. Today the U.S. economy produces
more services, such as medical operations, teaching, and hair styling, than goods, such as pizza,
automobiles, and computers. How goods and services are produced is by businesses determining how the
factors of production, land, labor, capital and entrepreneurship, are combined to make the goods and
VE
services we consume. Land includes all natural resources, both renewable natural resources such as wood,
and nonrenewable natural resources such as natural gas. Labor’s quality depends on people’s human
capital. In the U.S. economy, human capital obtained through schooling has increased over the years with
far more people completing high school and attending college than in past years. Finally, for whom are
goods and services to be produced depends on the way income is distributed to U.S. citizens. This
D?
distribution is not equal; the 20 percent of people with the lowest income earn about 5 percent of the
nation’s total income while the 20 percent of people with the highest incomes earn about 50 percent of
total income. On the average, men earn more than women, whites more than non-whites, and college
graduates more than high school graduates.
??
© 2018 Pearson Education, Inc.
