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Solutions for Chapter 6: Consumer Choices

Principles of Economics | 2nd Edition | ISBN: 9781947172364 | Authors: Steven A. Greenlaw, David Shapiro, Timothy Taylor

Full solutions for Principles of Economics | 2nd Edition

ISBN: 9781947172364

Principles of Economics | 2nd Edition | ISBN: 9781947172364 | Authors: Steven A. Greenlaw, David Shapiro, Timothy Taylor

Solutions for Chapter 6: Consumer Choices

This expansive textbook survival guide covers the following chapters and their solutions. Since 17 problems in chapter 6: Consumer Choices have been answered, more than 45920 students have viewed full step-by-step solutions from this chapter. Principles of Economics was written by and is associated to the ISBN: 9781947172364. This textbook survival guide was created for the textbook: Principles of Economics, edition: 2. Chapter 6: Consumer Choices includes 17 full step-by-step solutions.

Key Business Terms and definitions covered in this textbook
  • comparative advantage

    the ability to produce a good at a lower opportunity cost than another producer

  • Condorcet paradox

    the failure of majority rule to produce transitive preferences for society

  • cost–benefit analysis

    a study that compares the costs and benefits to society of providing a public good

  • crowding-out effect

    the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending

  • economics

    the study of how society manages its scarce resources economies of scale the property whereby long-run average total cost falls as the quantity of output increases

  • externality

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

  • financial markets

    financial institutions through which savers can directly provide funds to borrowers

  • imports

    goods produced abroad and sold domestically

  • indifference curve

    a curve that shows consumption bundles that give the consumer the same level of satisfaction

  • life cycle

    the regular pattern of income variation over a person’s life

  • 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

  • multiplier effect

    the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending

  • perfect substitutes

    two goods with straight-line indifference curves

  • principal

    a person for whom another person, called the agent, is performing some act

  • production possibilities frontier

    a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

  • proportional tax

    a tax for which highincome and low-income taxpayers pay the same fraction of income

  • signaling

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

  • surplus

    a situation in which quantity supplied is greater than quantity demanded

  • 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

  • transaction costs

    the costs that parties incur in the process of agreeing to and following through on a bargain