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Solutions for Chapter 2: Supply and Demand

Krugman's Macroeconomics for AP* | 1st Edition | ISBN: 9781429257305 | Authors: Margaret Ray, David A. Anderson

Full solutions for Krugman's Macroeconomics for AP* | 1st Edition

ISBN: 9781429257305

Krugman's Macroeconomics for AP* | 1st Edition | ISBN: 9781429257305 | Authors: Margaret Ray, David A. Anderson

Solutions for Chapter 2: Supply and Demand

Solutions for Chapter 2
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Textbook: Krugman's Macroeconomics for AP*
Edition: 1
Author: Margaret Ray, David A. Anderson
ISBN: 9781429257305

This expansive textbook survival guide covers the following chapters and their solutions. Chapter 2: Supply and Demand includes 19 full step-by-step solutions. This textbook survival guide was created for the textbook: Krugman's Macroeconomics for AP*, edition: 1. Krugman's Macroeconomics for AP* was written by and is associated to the ISBN: 9781429257305. Since 19 problems in chapter 2: Supply and Demand have been answered, more than 2519 students have viewed full step-by-step solutions from this chapter.

Key Business Terms and definitions covered in this textbook
  • budget constraint

    the limit on the consumption bundles that a consumer can afford

  • cartel

    a group of firms acting in unison

  • catch-up effect

    the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich

  • closed economy

    an economy that does not interact with other economies in the world

  • efficient markets hypothesis

    the theory that asset prices reflect all publicly available information about the value of an asset

  • exports

    goods produced domestically and sold abroad

  • externality

    the uncompensated impact of one person’s actions on the well-being of a bystander

  • inferior good

    a good for which, other things being equal, an increase in income leads to a decrease in demand

  • labor-force participation rate

    the percentage of the adult population that is in the labor force

  • liberalism

    the political philosophy according to which the government should choose policies deemed just, as evaluated by an impartial observer behind a “veil of ignorance”

  • maximin criterion

    the claim that the government should aim to maximize the well-being of the worst-off person in society

  • model of aggregate demand and aggregate supply

    the model that most economists use to explain shortrun fluctuations in economic activity around its long-run trend

  • moral hazard

    the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior

  • nominal variables

    variables measured in monetary units

  • price elasticity of demand

    a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

  • public goods

    goods that are neither excludable nor rival in consumption

  • reserves

    deposits that banks have received but have not loaned out

  • screening

    an action taken by an uninformed party to induce an informed party to reveal information

  • signaling

    an action taken by an informed party to reveal private information to an uninformed party

  • Tragedy of the Commons

    a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

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