Economics Problem Solver

Each Problem Solver is an insightful and essential study and solution guide chock-full of clear, concise problem-solving gems. All your questions can be found in one convenient source from one of the most trusted names in reference solution guides. More useful, more practical, and more informative, these study aids are the best review books and textbook companions available. Nothing remotely as comprehensive or as helpful exists in their subject anywhere. Perfect for undergraduate and graduate studies.

Here in this highly useful reference is the finest overview of economics currently available, with hundreds of economics problems that cover everything from fundamental economic concepts to the capitalist economy and business cycles. Each problem is clearly solved with step-by-step detailed solutions.

DETAILS
- The PROBLEM SOLVERS are unique - the ultimate in study guides.
- They are ideal for helping students cope with the toughest subjects.
- They greatly simplify study and learning tasks.
- They enable students to come to grips with difficult problems by showing them the way, step-by-step, toward solving problems. As a result, they save hours of frustration and time spent on groping for answers and understanding.
- They cover material ranging from the elementary to the advanced in each subject.
- They work exceptionally well with any text in its field.
- PROBLEM SOLVERS are available in 41 subjects.
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- Most are over 1000 pages.
- PROBLEM SOLVERS are not meant to be read cover to cover. They offer whatever may be needed at a given time. An excellent index helps to locate specific problems rapidly.

TABLE OF CONTENTS
Introduction
Chapter 1: Fundamental Economic Concepts
The Method of Economics
Scarcity
Resources
The Production-Possibilities Curve
Resources and Production
Short Answer Questions for Review
Chapter 2: The Capitalist Economy
Essential Characteristics
Specialization
Use of Money
Use of Capital Goods
The Circular Flow Model
Short Answer Questions for Review
Chapter 3: Business Organization
The Sole Proprietorship
The Partnership
The Corporation
Short Answer Questions for Review
Chapter 4: National Income and Price Indices
Purpose
Defining Gross National Product
Other Accounts
Calculating National Product and Income
Real vs. Monetary Measurement
Limitations
Short Answer Questions for Review
Chapter 5: Consumption, Savings, and Investment
The Consumption and Savings Functions
The Marginal Propensity to Consume
The Average Propensity to Consume
The Investment Function
Short Answer Questions for Review
Chapter 6: Income Determination: The Simple Multiplier Theory
Equilibrium Income Determination
Leakage-Injections Approach to Equilibrium
Multiplier Analysis
Disequilibrium NNP Analysis
Short Answer Questions for Review
Chapter 7: Fiscal Policy and Thriftiness
Budgetary Expenditure Patterns
Balancing the Budget
The Public Debt
Fiscal Policy and Taxation
The Paradox of Thrift
The Deflationary Gap
Stabilizing and Destabilizing Factors
Short Answer Questions for Review
Chapter 8: Taxation
Basic Concepts
Rate Structure
Incidence
Corporate Taxation
Tax Subsidies
Externalities
Short Answer Questions for Review
Chapter 9: Business Cycles
Definition
Measurement
Role of Investment
The Accelerator
Alternative Theories
Short Answer Questions for Review
Chapter 10: Inflation and Unemployment
Inflation, Deflation, and Stagflation
Unemployment
Inflation vs. Unemployment: The Phillips Curve
The Government, Firm and Individual: Fighting Inflation
Inflation and Interest Rates
The Federal Reserve and the Money Supply
Milton Friedman and Monetarism
Short Answer Questions for Review
Chapter 11: Money
Nature and Function
Types of Money
The Supply of Money
The Demand for Money
The Value of Money
IS-LM Analysis
Short Answer Questions for Review
Chapter 12: The Banking System
Institutions
The Balance Sheet
Fractional Reserve Banking
Multiple Deposit Creation
Short Answer Questions for Review
Chapter 13: Federal Reserve Banks and Monetary Policy
Explanation
Function of the Fed
The Reserve Requirement
Operations by the Fed
Short Answer Questions for Review
Chapter 14: Supply and Demand
Definition
The Demand Curve
The Law of Demand
Demand vs. Quantity Demanded
The Supply Curve
The Law of Supply
Supply vs. Quantity Supplied
Market Equilibrium
Surplus and Shortage
Short Answer Questions for Review
Chapter 15: Demand and Utility Theory
Utility
Utility Maximization
Indifference
The Budget Line
The Demand Curve
Consumer's Surplus
Short Answer Questions for Review
Chapter 16: Elasticity of Supply and Demand
The Elasticity Concept
Cross Elasticities
Determinants of Elasticity
Measures of Elasticity
Demand Elasticity and Revenue
Elasticity and Market Equilibrium
Short Answer Questions for Review
Chapter 17: Analysis of Costs
Implicit, Explicit, and Opportunity Costs
Total, Average, and Marginal Costs
Fixed and Variable Costs
Law of Diminishing Returns
Short Run vs. Long Run
Short Answer Questions for Review
Chapter 18: Perfect Competition
Characteristics of Perfect Competition
Individual and Market Supply
Short Run Profit Maximization
Long Run Industry Equilibrium
Short Answer Questions for Review
Chapter 19: Monopoly
Basic Concepts
Demand and Marginal Revenue
Profit Maximization
Effect of a Tax
Price Discrimination
Sources of Money
Short Answer Questions for Review
Chapter 20: Monopolistic Competition
Basic Concepts
Demand and Marginal Revenue
Profit Maximization
Industry Equilibrium
Efficiency and Welfare
Short Answer Questions for Review
Chapter 21: Oligopoly
Basic Concepts
Interdependence
Demand and Marginal Revenue
Collusion
Comparison with Other Market Forms
Short Answer Questions for Review
Chapter 22: Theory of Production
Factors of Production
Capital Goods
Marginal Products and Diminishing Returns
Demand for Factors and Production
Supply of Labor and Productivity
Economics vs. Diseconomics of Scale
Production Methods and Input Combination Decisions
Production Possibilities Curve
Short Answer Questions for Review
Chapter 23: Wage Determination
Wages and Labor Market Equilibrium
Wages and Labor Productivity
The Minimum Wage
Wage Differentials
Supply Curve of Labor
The Union
Short Answer Questions for Review
Chapter 24: Pricing of Factor Inputs: Land and Other Resources
Demand for Factors: A Derived Demand
Transfer Earnings, Rent and Costs
Factor Pricing and Efficiency
Profits and the Role of Taking Risks
Decisions
Liquidity of an Asset
Short Answer Questions for Review
Chapter 25: Theory of Comparative Advantage
Basic Concepts of International Trade
Comparative Advantage
Short Answer Questions for Review
Chapter 26: Protective Tariffs, Quotas, and Free Trade
Rationale for Protection
Tariffs and Quotas
Regional Economic Integration
Free Trade
Short Answer Questions for Review
Chapter 27: Balance of Payments
Definition and Basic Concepts
Depreciation vs. Devaluation
Exchange Rates and the Flow of Money
Short Answer Questions for Review
Chapter 28: Agricultural Economics
Concepts of Agricultural Economics
The Farming Problem
Elasticity of Farm Products
Government Subsidies
International Agricultural Economics
Short Answer Questions for Review
Chapter 29: Growth and Development
Definition and Significance
Population
Capital Accumulation
Technological Innovation
Efficiency and Resource Utilization
Other Factors
Harrod-Domar Growth Model
Controversy Over Growth
Short Answer Questions for Review
Chapter 30: Economics of Income Distribution
Poverty and Income Inequality
The Lorenz Curve
Income Distribution in the U.S.
Short Answer Questions for Review
Chapter 31: Labor and Industrial Relations
Basic Definitions
Unions and Activities
Short Answer Questions for Review
Chapter 32: Comparative Economic Systems
Function of an Economic System
Types of Systems
Pure Capitalism vs. Pure Socialism
The American vs. The Soviet Economy
Short Answer Questions for Review
Chapter 33: History of Economic Thought
Introduction
Wealth and Growth Theory
Distribution Theory
Value Theory
Competition and Efficiency Theory
International Trade Theory
Business Cycle Theory
Economic Policy
Short Answer Questions for Review
Index

WHAT THIS BOOK IS FOR

Students have generally found economics a difficult subject to understand and learn. Despite the publication of hundreds of textbooks in this field, each one intended to provide an improvement over previous textbooks, students of economics continue to remain perplexed as a result of numerous subject areas that must be remembered and correlated when solving problems. Various interpretations of economics terms also contribute to the difficulties of mastering the subject.

In a study of economics, REA found the following basic reasons underlying the inherent difficulties of economics:

No systematic rules of analysis were ever developed to follow in a step-by-step manner to solve typically encountered problems. This results from numerous different conditions and principles involved in a problem that leads to many possible different solution methods. To prescribe a set of rules for each of the possible variations would involve an enormous number of additional steps, making this task more burdensome than solving the problem directly due to the expectation of much trial and error.

Current textbooks normally explain a given principle in a few pages written by an economics professional who has insight into the subject matter not shared by others. These explanations are often written in an abstract manner that causes confusion as to the principle's use and application. Explanations then are often not sufficiently detailed or extensive enough to make the reader aware of the wide range of applications and different aspects of the principle being studied. The numerous possible variations of principles and their applications are usually not discussed, and it is left to the reader to discover this while doing exercises. Accordingly, the average student is expected to rediscover that which has long been established and practiced, but not always published or adequately explained.

The examples typically following the explanation of a topic are too few in number and too simple to enable the student to obtain a thorough grasp of the involved principles. The explanations do not provide sufficient basis to solve problems that may be assigned for homework or given on examinations.

Poorly solved examples such as these can be presented in abbreviated form which leaves out much explanatory material between steps, and as a result requires the reader to figure out the missing information. This leaves the reader with an impression that the problems and even the subject are hard to learn - completely the opposite of what an example is supposed to do.

Poor examples are often worded in a confusing or obscure way. They might not state the nature of the problem or they present a solution, which appears to have no direct relation to the problem. These problems usually offer an overly general discussion - never revealing how or what is to be solved.

Many examples do not include accompanying diagrams or graphs, denying the reader the exposure necessary for drawing good diagrams and graphs. Such practice only strengthens understanding by simplifying and organizing economics processes.

Students can learn the subject only by doing the exercises themselves and reviewing them in class, obtaining experience in applying the principles with their different ramifications.

In doing the exercises by themselves, students find that they are required to devote considerable more time to economics than to other subjects, because they are uncertain with regard to the selection and application of the theorems and principles involved. It is also often necessary for students to discover those "tricks" not revealed in their texts (or review books) that make it possible to solve problems easily. Students must usually resort to methods of trial and error to discover these "tricks," therefore finding out that they may sometimes spend several hours to solve a single problem.

When reviewing the exercises in classrooms, instructors usually request students to take turns in writing solutions on the boards and explaining them to the class. Students often find it difficult to explain in a manner that holds the interest of the class, and enables the remaining students to follow the material written on the boards. The remaining students in the class are thus too occupied with copying the material off the boards to follow the professor's explanations.

This book is intended to aid students in economics overcome the difficulties described by supplying detailed illustrations of the solution methods that are usually not apparent to students. Solution methods are illustrated by problems that have been selected from those most often assigned for class work and given on examinations. The problems are arranged in order of complexity to enable students to learn and understand a particular topic by reviewing the problems in sequence. The problems are illustrated with detailed, step-by-step explanations, to save the students large amounts of time that is often needed to fill in the gaps that are usually found between steps of illustrations in textbooks or review/outline books.

The staff of REA considers economics a subject that is best learned by allowing students to view the methods of analysis and solution techniques. This learning approach is similar to that practiced in various scientific laboratories, particularly in the medical fields.

In using this book, students may review and study the illustrated problems at their own pace; students are not limited to the time such problems receive in the classroom.

When students want to look up a particular type of problem and solution, they can readily locate it in the book by referring to the index that has been extensively prepared. It is also possible to locate a particular type of problem by glancing at just the material within the boxed portions. Each problem is numbered and surrounded by a heavy black border for speedy identification.