Professional Documents
Culture Documents
to Accompany
Principles of Economics
Second Edition
by
N. Gregory Mankiw
Prepared by Mark P. Karscig, Department of Economics &
Finance, Central Missouri State University.
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Ten Principles of
Economics
Chapter 1
Copyright 2001 by Harcourt, Inc.
All rights reserved. Requests for permission to make copies of any part of the
work should be mailed to:
Permissions Department, Harcourt College Publishers,
6277 Sea Harbor Drive, Orlando, Florida 32887-6777.
Economists study. . .
X How
X How
X The
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Guns v. butter
Food v. clothing
Leisure time v. work
Efficiency v. equity
Making decisions requires trading
off one goal against another.
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7. Governments can
sometimes improve market
outcomes.
When the market fails (breaks
down) government can intervene to
promote efficiency and equity.
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7. Governments can
sometimes improve market
outcomes.
Market failure occurs when
the market fails to allocate
resources efficiently.
Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.
7. Governments can
sometimes improve market
outcomes.
Market failure may be caused by an
externality, which is the impact of
one person or firms actions on the
well-being of a bystander.
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7. Governments can
sometimes improve market
outcomes.
Market failure may also be caused
by market power, which is the ability
of a single person or firm to unduly
influence market prices.
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Inflation Unemployment
Its a short-run tradeoff!
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Summary
X When
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Summary
X People
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Summary
XA
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