- 2.1: Draw a circular-flow diagram. Identify the parts of the model that ...
- 2.2: Imagine a society that produces military goods and consumer goods, ...
- 2.3: The first principle of economics discussed in Chapter 1 is that peo...
- 2.4: An economy consists of three workers: Larry, Moe, and Curly. Each w...
- 2.5: Classify the following topics as relating to microeco-nomics or mac...
- 2.6: Classify each of the following statements as positive or normative....
Solutions for Chapter 2: Thinking Like an Economist
Full solutions for Principles of Microeconomics | 7th Edition
Arrow’s impossibility theorem
a mathematical result showing that, under certain assumed conditions, there is no scheme for aggregating individual preferences into a valid set of social preferences
average tax rate
total taxes paid divided by total income
a certificate of indebtedness
the equipment and structures used to produce goods and services
an economy that does not interact with other economies in the world
the process by which unions and firms agree on the terms of employment
the fall in total surplus that results from a market distortion, such as a tax
the offering of different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics
total revenue minus total cost, including both explicit and implicit costs
the property of society getting the most it can from its scarce resources
above-equilibrium wages paid by firms to increase worker productivity
the price that balances quantity supplied and quantity demanded
marginal product of labor
the increase in the amount of output from an additional unit of labor
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
the path of a variable whose changes are impossible to predict
people who systematically and purposefully do the best they can to achieve their objectives
an action taken by an informed party to reveal private information to an uninformed party
tax on goods produced abroad and sold domestically
the manner in which the burden of a tax is shared among participants in a market
total revenue (for a firm)
the amount a firm receives for the sale of its output