Intermediate Microeconomics: A Modern Approach, Eighth Edition Solution Manual

Preview (16 of 575 Pages)

100%

Purchase to unlock

Intermediate Microeconomics: A Modern Approach, Eighth Edition Solution Manual - Page 1 preview image

Loading page ...

Chapter 11Chapter 1The MarketThis chapter was written so I would have something to talk about on the firstday of class. I wanted to give students an idea of what economics was all about,and what my lectures would be like, and yet not have anything that was reallycritical for the course. (At Michigan, students are still shopping around on thefirst day, and a good number of them won’t necessarily be at the lecture.)I chose to discuss a housing market since it gives a way to describe a numberof economic ideas in very simple language and gives a good guide to what liesahead. In this chapter I was deliberately looking forsurprising results—analyticinsights that wouldn’t arise from “just thinking” about a problem.The twomost surprising results that I presented are the condominium example and thetax example in Section 1.6. It is worth emphasizing in class just why these resultsare true, and how they illustrate the power of economic modeling.It also makes sense to describe their limitations.Suppose that every con-dominium conversion involved knocking out the walls and creating two apart-ments. Then what would happen to the price of apartments? Suppose that thecondominiums attracted suburbanites who wouldn’t otherwise consider rentingan apartment. In each of these cases, the price of remaining apartments wouldrise when condominium conversion took place.The point of a simple economic model of the sort considered here is to focusour thoughts on what the relevant effects are, not to come to a once-and-for-allconclusion about the urban housing market. The real insight that is offered bythese examples is that you have to consider both the supplyandthe demandside of the apartment market when you analyze the impact of this particularpolicy.The only concept that the students seem to have trouble with in this chapteris the idea of Pareto efficiency. I usually talk about the idea a little more thanis in the book and rephrase it a few times.But then I tell them not to worryabout it too much, since we’ll look at it in great detail later in the course.The workbook problems here are pretty straightforward. The biggest problemis getting the students to draw the true (discontinuous) demand curve, as inFigure 1.1, rather than just to sketch in a downward-sloping curve as in Figure1.2. This is a good time to emphasize to the students that when they are givennumbers describing a curve, they have to use the numbers—they can’t just sketchin any old shape.

Preview Mode

This document has 575 pages. Sign in to access the full document!

Report

Study Now!

Document Details

Related Documents

Analysis of McDonald

The Effect of Exercise on Clothespin Squeezing

Analyzing Coca-Cola's Demand, Supply and Market St

Principles of Managerial Economics

United States Fiscal Policy

Economic Policy Recommendation

Emerging Economies and Globalization

Assignment 2: Market Forms

Emerging Economies and Globalization

ECON 101: Final Exam � Key Concepts in Macroeconomics

Company

Explore

Study Tools