Besanko and braeutigam microeconomics 3
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Besanko and braeutigam microeconomics 3
Besanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 tudies the economic behavior of individual economic decision makers, such as a consumer, a worker, a firm, or a manager. Macroeconomics studies how an entire national economy performs, examining such topics as the aggregate levels of income and employment, the levels of interest rates and prices, th Besanko and braeutigam microeconomics 3 e rate of inflation, and the nature of business cycles.2.While our wants for goods and sendees are unlimited, the resources necessary to produce thoseBesanko and braeutigam microeconomics 3
goods and sen ices, such as labor, managerial talent, capital, and raw materials, are "scarce" because their supply is limited. This scarcity impliesBesanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 nstrained choice.3.Constrained optimization allows the decision maker to select the best (optimal) alternative while accounting for any possible limitations or restrictions on the choices. The objective function represents the relationship to be maximized or minimized. For example, a firm's profit m Besanko and braeutigam microeconomics 3 ight be the objective function and all choices will be evaluated in the profit function to determine which yields the highest profit. The constraintsBesanko and braeutigam microeconomics 3
place limitations on the choice the decision maker can select and defines the set of alternatives from which the best will be chosen.4.If the price inBesanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 xcess supply. As suppliers realize they are not selling the units they have made available, sellers will bid down the price to entice more consumers to purchase their goods or services. By definition, equilibrium is a state that will remain unchanged as long as exogenous factors remain unchanged. Si Besanko and braeutigam microeconomics 3 nce in this case suppliers will lower their price, this high price cannot be an equilibrium.When the price is below the equilibrium price, consumers wBesanko and braeutigam microeconomics 3
ill demand more units than suppliers have made available. This excess demand will entice consumers to bid up the prices to purchase the limited units Besanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 rmined by some process outside the model, while endogenous variables are determined within the economic model being studied.Copyright £ John Wiley & Sons. Inc.Chapter 1 -1Besanko & Braeutigain - Microeconomics. 3td editionSolutions ManualAt) economic model that contained no endogenous variables woul Besanko and braeutigam microeconomics 3 d not be very interesting. With no endogenous variables, nothing would be determined by the model so it would not serve much purpose.6.Comparative staBesanko and braeutigam microeconomics 3
tics analyses are performed to determine how the levels of endogenous variables change as some exogenous variable is changed. This type of analysis isBesanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 changes in these variables affect the levels of other. endogenous, variables. An example of comparative statics analysis would be asking the question: If extraordinarily low rainfall (an exogenous variable) causes a 30 percent reduction in com supply, by how much will the market price for com (an e Besanko and braeutigam microeconomics 3 ndogenous variable) increase?7.Positive analysis attempts to explain how an economic system works or to predict how it will change over time by askingBesanko and braeutigam microeconomics 3
explanatory or predictive questions. Normative analysis focuses on what should be done by asking prescriptive questions.a)Because this question asks Besanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 ple of positive analysis.b)On the other hand, tills question asks whether it is desirable to impose taxes on Internet sales, so it is normative analysis. Notably, this question does not ask what the effect of such taxes would be.Copyright £ John Wiley & Sons. Inc.Chapter 1 - 2Besanko & Braeutigam - Besanko and braeutigam microeconomics 3 Microeconomics. 3ri editionSolutions ManualSolutions to Problems1.1While the claim thill markets never reach an equilibrium is probably debatable, eveBesanko and braeutigam microeconomics 3
n if markets do not ever reach equilibrium, the concept is still of central importance. The concept of equilibrium is important because it provides a Besanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 ium price, say because a supply or demand schedule shifts as the market moves toward equilibrium, we can predict with relative ease, for example, whether prices will be rising or falling when exogenous market factors change as we move toward equilibrium. As exogenous variables continue to change we Besanko and braeutigam microeconomics 3 can continue predict the direction of change for the endogenous variables, and this is not "useless.**1.2a) Surprisingly high export sales mean that tBesanko and braeutigam microeconomics 3
he demand for com was higher thanexpected, at Dj rather than Di.Copyright •£ John Wiley & Sons. Inc.Chapter 1 - 3Besanko & Braeutigam - MicroeconomicsBesanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics st Besanko and braeutigam microeconomics 3 roduction outside the U.S. would not impact U.S. corn market supply. El Nino would, however, cause demand for U.S. com to shift out. the figure being the same as in part (a) above. Besanko and braeutigam microeconomics 3 Besanko & Braeutigam - Microeconomics, 3rd editionChapter 1Analyzing Economic ProblemsSolutions ManualSolutions to Review Questions1.Microeconomics stGọi ngay
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