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Exam (elaborations) TEST BANK FOR Microeconomics 7th Edition By Robert S. Pindyck and Daniel L. Rubinfeld (Instructor Solution Manual) $15.49
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Exam (elaborations) TEST BANK FOR Microeconomics 7th Edition By Robert S. Pindyck and Daniel L. Rubinfeld (Instructor Solution Manual)
INSTRUCTOR’S
MANUAL
Nora Underwood
University of Central Florida
CONTENTS
P A R T 1: Introduction: Markets and Prices
Chapter 1 Preliminaries 1
Chapt...
INSTRUCTOR’S MANUAL Nora Underwood University of Central Florida http://ingesolucionarios.blogspot.com
http://ingesolucionarios.blogspot.com CONTENTS P A R T 1: Introduction: Markets and Prices Chapter 1 Preliminaries 1 Chapter 2 The Basics Of Supply And Demand 5 P A R T 2: Producers, Consumers, and Competitive Markets Chapter 3 Consumer Behavior 23 Chapter 4 Individual And Market Demand 41 Chapter 4 Appendix 58 Chapter 5 Uncertainty and Consumer Behavior 64 Chapter 6 Production 74 Chapter 7 The Cost Of Production 84 Chapter 7 Appendix 98 Chapter 8 Profit Maximization And Competitive Supply 102 Chapter 9 The Analysis Of Competitive Markets 117 P A R T 3: Market Structure and Competitive Strategy Chapter 10 Market Power: Monopoly and Monopsony 138 Chapter 11 Pricing With Market Power 160 Chapter 11 Appendix 185 Chapter 12 Monopolistic Competition And Oligopoly 191 Chapter 13 Game Theory And Competitive Strategy 217 Chapter 14 Markets For Factor Inputs 232 Chapter 15 Investment, Time, And Capital Markets 242 P A R T 4: Information, Market Failure, and the Role of Government Chapter 16 General Equilibrium And Economic Efficiency 255 Chapter 17 Markets With Asymmetric Information 267 Chapter 18 Externalities And Public Goods 278 http://ingesolucionarios.blogspot.com
http://ingesolucionarios.blogspot.com Chapter 1: Preliminaries 1 PART I INTRODUCTION: MARKETS AND PRICES CHAPTER 1 PRELIMINARIES TEACHING NOTES The first two chapters reacquaint students with the microeconomics that they learned in their introductory course: Chapter 1 focuses on the general subject of economics, while Chapter 2 develops supply and demand analysis. The use of examples in Chapter 1 facilitates students’ complete understanding of abstract economic concepts. Examples in this chapter discuss markets for prescription drugs (Section 1.2), introduction of a new automobile (Section 1.4), design of automobile emission standards (Section 1.4), the minimum wage (Section 1.3), the market for sweeteners (Section 1.3), and real and nominal prices of eggs and education (Section 1.3). Discussing some of these, or another, example is a useful way to review some important economic concepts such as scarcity, making tradeoffs, building economic models to explain how consumers and firms make decisions, and the distinction between competitive and non-competitive markets. Parts I and II of the text assume competitive markets, market power is discussed in Part III, and some consequences of market power are discussed in Part IV of the text. Review Question (2) illustrates the difference between positive and normative economics and provides for a productive class discussion. Other examples for discussion are available in Kearl, Pope, Whiting, and Wimmer, “A Confusion of Economists,” American Economic Review (May 1979). The chapter concludes with a discussion of real and nominal prices. Given our reliance on dollar prices in the chapters that follow, students should understand that we are concerned with prices relative to a standard, which in this case is dollars for a particular year. QUESTIONS FOR REVIEW 1. It is often said that a good theory is one that can be refuted by an empirical, data-
oriented study. Explain why a theory that cannot be evaluated empirically is not a good theory. There are two steps to consider when evaluating a theory: first, you should examine the reasonability of the theory’s assumptions; second, you should test the theory’s predictions by comparing them with facts. If a theory cannot be tested, it cannot be accepted or rejected. Therefore, it contributes little to our understanding of reality. 2. Which of the following two statements involves positive economic analysis and which normative? How do the two kinds of analysis differ? a. Gasoline rationing (allocating to each individual a maximum amount of gasoline that can be purchased each year) is a poor social policy because it interferes with the workings of the competitive market system. Positive economic analysis describes what is. Normative economic analysis describes what ought to be . Statement (a) merges both types of analysis. First, statement (a) makes a positive statement that gasoline rationing “interferes with the workings of the competitive market system.” We know from economic analysis that a constraint placed on supply will change the market equilibrium. Second, statement (a) makes the normative statement (i.e., a value judgment) that gasoline rationing is a “poor social policy.” Thus, statement (a) makes a normative comment based on a conclusion derived from positive economic analysis of the policy. http://ingesolucionarios.blogspot.com
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