EBK ECON: MACRO4
4th Edition
ISBN: 9781305562097
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 1, Problem 4.7PA
To determine
The pitfalls in economic thinking & identifying fallacy
Introduction:
In order to understand the logical reason behind the causes and the effects of related case along with it relating it with an underlying assumption
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Students have asked these similar questions
1) Suppose the U.S. government wants to stop importing foreign cars. They believe by not importing cars from other
countries they will have absolute advantage in manufacturing cars, and this will help the U.S. economy. Explain what
is wrong with this idea. Use a graph to illustrate your point.
(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total
If the price of oranges is
benefits of oranges to consumers exceed consumers' total expenditures on oranges is called
B, this quantity is depicted by the area
Price
(per bushel)
0
producer surplus; BCD
consumer surplus; OCDE
consumer surplus; BCD
net benefit; OBDE
Market
Demand
Quantity
(per period)
(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. A
factor that may have shifted the supply from S₁ to S₂ is:
Price
(per pound)
$50
40
40
30
25
20
15
10
0
100
200
S₁
$2
D
500
600
300 400
Quantity of sugar (per month)
better technology in the production of sugar.
increased demand.
lower labor productivity in sugar production.
increased prices of substitutes in the production of sugar.
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