Download e-book for kindle: Economic Issues and Policy (5th Edition) by Jacqueline Murray Brux

By Jacqueline Murray Brux

ISBN-10: 0538750871

ISBN-13: 9780538750875

Considerably revised in gentle of sweeping adjustments within the financial system and govt, this ebook presents scholars with a take hold of of uncomplicated financial instruments during the research of vital financial matters and their comparable coverage views. financial concept is gifted in an easy, market-oriented framework at a degree of technicality that's intentionally acceptable for a easy first direction in economics directed at non-majors. advanced themes extra acceptable for a rules of Economics direction are skipped over or contained in appendices. In reading monetary occasions and the results of guidelines, liberal and conservative viewpoints are successfully balanced. The textual content additionally encourages scholars to get entangled within the matters mentioned.

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Additional resources for Economic Issues and Policy (5th Edition)

Sample text

This simple commonsense idea that people will be willing and able to buy more of a good or service at low prices than at high prices is a fundamental economic principle, the law of demand, which is usually stated as follows: price and quantity demanded are negatively related, all other things equal. This means that when price goes up, quantity demanded goes down, and vice versa. We can place the information from Table 1-2 into a graph of demand, illustrated in Figure 1-3. A graph of demand is referred to as a demand curve (even though demand curves are often drawn as straight lines).

We can easily imagine infinite combinations of all the goods and services that an economy can potentially produce. We cannot graph these infinite combinations, however, because our graphs have only two axes. So, bread and roses simply represent one of an infinite set of choices. We can make our graph a bit more realistic by redefining the axes. We might redefine the horizontal axis as staple goods and the vertical axis as luxury goods. Or we could divide our economy’s output into agricultural goods and manufactured goods, or consumer goods (goods that are purchased by consumers) and capital goods (goods such as factory buildings and machinery that are used to produce other goods).

The marketplace sifts out those with lesser preferences or lesser ability to afford the product, and the market thus serves as an allocating mechanism. High prices also encourage producers to offer more for sale. In many ways, this function of market prices is desirable. Prices encourage thrift and careful choices among competing goods. Goods and services are allocated to those most willing to pay. Thus, the market is an effective allocative device. Without prices, products might go to people who do not strongly desire them and thus be wasted.

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Economic Issues and Policy (5th Edition) by Jacqueline Murray Brux

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