Solutions For Microeconomics, 16th Canadian Edition McConnell (All Chapters included)
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Course
Microeconomics
Institution
Microeconomics
Complete Solutions Manual for Microeconomics, 16th Canadian Edition by Campbell McConnell, Stanley Brue, Sean Flynn, Tom Barbiero ; ISBN13: 9781260881349. Full Chapters included Chapter 1 to 19.
CHAPTER 1: Limits, Alternatives, and Choices.
CHAPTER 2: The Market System and the Circular Flow.
CHA...
1. What is an opportunity cost? How does the idea relate to the definition of economics? Which
of the following decisions would entail the greater opportunity cost: Allocating a square
block in the heart of Toronto for a surface parking lot or allocating a square block at the edge
of a typical suburb for such a lot? Explain. LO1.2
Answer: An opportunity cost is what was sacrificed to do or acquire something else. The
condition of scarcity creates opportunity cost. If there was no scarcity, there would be no
need to sacrifice one thing to acquire another.
The opportunity cost would be much higher in Toronto as the alternative uses for that
square block are much more valuable than for a typical suburban city block.
2. Cite three examples of recent decisions that you made in which you, at least implicitly,
weighed marginal cost and marginal benefit. LO1.2
Answer: Student answers will vary, but may include the decision to come to class, to skip
breakfast to get a few extra minutes of sleep, to attend college, or to make a purchase.
Marginal benefits of attending class may include the acquisition of knowledge,
participation in discussion, and better preparation for an upcoming examination. Marginal
costs may include lost opportunities for sleep, meals, or studying for other classes. In
evaluating the discussion of marginal benefits and marginal costs, be careful to watch for
sunk costs offered as a rationale for marginal decisions.
3. What is “utility” and how does the idea relate to purposeful behaviour? LO1.2
Answer: “Utility” refers to the pleasure, happiness, or satisfaction gained from engaging
in an activity (eating a meal, attending a ball game, etc.). It is an important component of
purposeful behaviour because people will allocate their scarce time, energy, and money in
an attempt to gain the most utility possible.
, Chapter 01 - Limits, Alternatives, and Choices
4. What are the key elements of the scientific method and how does this method relate to
economic principles and laws? LO1.3
Answer: The key elements include the gathering of data (observation), the formulation of
possible explanations (hypothesis), testing the hypothesis, determining the validity of the
hypothesis, and repeated testing of hypotheses that have appeared to be valid in prior tests.
The scientific method is the technique used by economists to determine economic laws or
principles. These laws or principles are formulated to explain and/or predict behavior of
individuals or institutions.
5. Make (a) a positive economic statement of your choice, and then (b) a normative economic
statement relating to your first statement. LO1.4
Answer: Student answers will vary. Example: (a) The unemployment rate is 6.8 percent;
(b) the unemployment rate is too high. In general, we treat “what is” statements as positive,
“what should be” as normative, but keep an eye out for statements like “at full employment
an increase in the production of pizzas should come at the cost of less robots.” Some
students may incorrectly identify the statement as normative because of the term “should.”
6. How does the slope of a budget line illustrate opportunity cost and trade-offs? How does a
budget line illustrate scarcity and the effect of limited incomes? LO1.5
Answer: Budget lines are always sloped downward. This downward slope shows an
inverse relationship between the two goods, meaning that as you increase one, the other
must decrease. This decrease is what you are giving up, or opportunity cost, of the good
you are getting more of.
Budget lines illustrate scarcity in that they show you are limited by your income. Since
they slope downward, they show you cannot keep getting more and more of both goods.
There is always a trade-off. The area beyond the budget line represents combinations of
the goods that are beyond your income.
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