Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter D, Problem 21CTQ
Exercise D21
What are some reasons that the economy might be in a recession, and what is the appropriate government action to alleviate the recession?
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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3
apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added
5 units to Sadid's utility, while the last bread added 7 units.
Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's
consumption bundle? Why or why not? Give reasons in support of your answer.
State the condition for a consumer's utility maximizing choice and illustrate graphically.
2. Consider the following table of long-run total costs for three different firms:
Quantity
Total Cost ($)
Firm A
Firm B
Firm C
1
60
11
21
2
70
24
34
3
80
39
49
4
90
56
66
5
100
75
85
6
110
96
106
7
120
119
129
Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer
with necessary calculations.
Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.
Chapter D Solutions
Principles of Economics 2e
Ch. D - Exercise D6 What is on the axes of an...Ch. D - Exercise D7 What does the 45-degree line show?Ch. D - Exercise D8 What determines the slope of a...Ch. D - Exercise D9 What is the marginal propensity to...Ch. D - Exercise D10 Why are the investment function, the...Ch. D - Exercise D11 Why does the import function slope...Ch. D - Exercise D12 What are the components on which the...Ch. D - Exercise D13 Is the equilibrium in a Keynesian...Ch. D - Exercise D14 What is an inflationary gap? A...Ch. D - Exercise D15 What is the multiplier effect?
Ch. D - Exercise D16 Why are savings, taxes, and imports...Ch. D - Exercise D17 Will an economy with a high...Ch. D - Exercise D18 How do economists use the multiplier?Ch. D - Exercise D19 What does it mean when the aggregate...Ch. D - Exercise D20 Which model, the AD/AS or the AE...Ch. D - Exercise D21 What are some reasons that the...Ch. D - Exercise D22 What should the government do to...Ch. D - Exercise D23 Two counties are in a recession....Ch. D - Exercise D24 Compare two policies: a tax cut on...Ch. D - Exercise D25 What role does government play in...Ch. D - Exercise D26 If there is a recessionary gap of 100...Ch. D - Exercise D27 What other changes in the economy can...
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