Solutions for Chapter 7: Economic Growth and Productivity

total revenue divided by the quantity sold

the limit on the consumption bundles that a consumer can afford

a large and sudden reduction in the demand for assets located in a country

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

the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases

the property of society getting the most it can from its scarce resources

goods produced domestically and sold abroad

risk that affects only a single company

goods produced abroad and sold domestically

the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises

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

the quantity of money available in the economy

the claim that unemployment eventually returns to its normal, or natural, rate, regardless of the rate of inflation

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

goods that are both excludable and rival in consumption

the path of a variable whose changes are impossible to predict

the amount a firm receives for the sale of its output

a government policy that directly influences the quantity of goods and services that a country imports or exports

the marginal product of an input times the price of the output

the price of a good that prevails in the world market for that good