Solutions For Macroeconomics, 12th Edition Colander (All Chapters included)
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Course
Macroeconomics
Institution
Macroeconomics
Complete Solutions Manual for Macroeconomics, 12th Edition by David C. Colander ; ISBN13: 9781266394973. Full Chapters included Chapter 1 to 22. Web Notes, ABA Teaching Notes, Answers to Problems included.
Chapter 1: Economics and Economic Reasoning.
Chapter 2: The Production Possibility Model, T...
Complete Chapter Solutions Manual
are included (Ch 1 to 22)
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** All Chapters included
** ABA Teaching Notes
** Web Notes
** Answers to Problems Set
,CHAPTER 1: ECONOMICS AND ECONOMIC
REASONING
Questions and Exercises
1. Coordination refers to how the three central problems facing any economy are
solved. Those three problems are what and how much to produce, how to
produce, and for whom to produce. Inevitably, individuals desire more than is
available regardless of how much they’re willing to work for what they desire,
causing a problem of scarcity.
The concept of scarcity has two elements: our wants and our means of fulfilling
those wants. These two elements are interrelated since wants are changeable and
are partially determined by society. In addition, the degree of scarcity is
constantly changing, depending upon the available means of production and the
development of new wants.
Therefore, the author focused on coordination rather than on scarcity to
emphasize the subsidiary nature of scarcity to the overall concept of coordination.
Economics is not merely about our wants or the means of fulfilling those wants; it
is also about reconciling our wants with reality, where reality consists of decision-
making mechanisms, social customs, and political realities.
2. a. Macroeconomic
b. Microeconomic
c. Macroeconomic
d. Microeconomic
e. Microeconomic
f. Microeconomic
Microeconomics studies how economic forces influence individual choices such
as the pricing policies of firms, households’ decisions on what to buy, and how
markets allocate resources among alternative ends. Macroeconomics studies
aggregate relationships such as how household consumption is related to income
and how government policies can affect growth.
3. Answers will differ. Two microeconomic problems are the pricing policies of
firms (price-fixing in particular) and the way wages are determined in labor
markets. (Why do athletes and celebrities make so much money, anyway?) Two
macroeconomic problems are unemployment and inflation (business cycles and
growth are also macroeconomic problems).
1
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, 4. a. The opportunity cost of attending college is the sacrifice one must make
by attending college. It can be estimated by figuring out the benefit of the next-
best alternative. If that alternative is working, one would guess the likely wage
that could be earned at a job that does not require a college degree and then
multiply by 40 hours for each week in college. The opportunity cost is also what
could be done with the money used for tuition and other costs related to attending
college.
b. The opportunity cost of taking a course could also be estimated using the same
technique as in part a if you otherwise would be working during these hours. If
you had taken another course instead, the opportunity cost would be the benefit
you would have received from taking that other course.
c. The opportunity cost of attending yesterday’s lecture would depend on what you
otherwise could have done with that time (sleep, eat lunch with an interesting
person, etc.). Although this is no longer a choice to you, past activities do have
opportunity costs.
5. Answers will vary. A correct answer will indicate that the student compared the
marginal costs and benefits and chose the activity because the marginal benefit
exceeded the marginal cost.
6. The marginal costs are the additional costs of the additional activity. In this case,
the additional activity is driving (200 – 100) miles. The marginal cost is the 10
cents per mile for all miles over 100 plus the additional cost of gas. Therefore, the
marginal cost is $10.00 = [0.10 × (200 – 100)] plus the cost of gas. The initial
payment can be forgotten because it is a sunk cost; it is not part of the marginal
costs.
7. No, since the marginal cost of drug control exceeds the marginal benefit; the
government should not spend $4,170 to deter one person from using drugs.
8. The opportunity cost of buying a $20,000 car is the benefit you would have
gained by using that $20,000 for the next-best alternative, which could be
spending it on other goods and services or saving it.
9. Only the marginal costs and benefits of taking the job are relevant. That means
that the sunk cost of the bachelor’s degree is irrelevant. Therefore, the relevant
costs are the opportunity cost of taking the job (forgone earnings from your
current job) and other things you could have done with the money you need to
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