bartleby
search
close search
Hit Return to see all results
close solutoin list

Chapter 1, Problem 1BCQ

BuyFindarrow_forward

Economics

5th Edition
Paul Krugman + 1 other
ISBN: 9781319066604

Solutions

Chapter
Section
BuyFindarrow_forward

Economics

5th Edition
Paul Krugman + 1 other
ISBN: 9781319066604
To determine

Determine:

How the 12 principles of economics work

Concept Introduction:

Twelve principles of economics are:

  • Resources are scarce, so people must make choices.
  • The true cost of anything is the next best alternative foregone, which is termed as opportunity cost.
  • Marginal decision and incentive are very important.
  • People respond to incentives by exploiting available opportunities to make themselves better off.
  • Trade benefits to everyone.
  • Market moves towards equilibrium.
  • Resources should be used efficiently to achieve social goals.
  • Market leads to efficiency.
  • When the market fails, government intervenes to maintain equilibrium.
  • Spending of one person becomes income of another.
  • Sometimes, spending varies with the economy’s productive capacity.
  • Government policies can change spending.
Explanation

There are generally twelve principles of economics. The explanation given below relates those principles to the given case.

  • First: P Company fulfills the needs of consumers who are willing to make a choice between quality and convenience to acquire lower prices.
  • Second: The real cost of vacant airline seat or vacant hotel room is the income that they would have received from its use in the next best alternative.
  • Third: The amount paid for tickets depends on how much inconvenience and time is saved by buying it for higher prices. Similarly, the amount paid for advance ticket depends on the variation in price and cancellation policy.
  • Fourth: P Company is popular as people exploit the opportunities of getting hotels, flights, and many other benefits at lower cost.
  • Fifth: In Europe, gains from P Company network are more because it involves trade of goods and services provided to the people.
  • Sixth: O Company and E Company provided many incentives to the travelers to use their services. Hence, market of online services will move towards equilibrium.
  • Seventh: P Company used the resources like hotel rooms and airline seats in a very efficient manner. It is not wise to keep vacant seats and room, if someone wants them at going price.
  • Eighth: Vacant seats and room lead to inefficiency. So, P Company made its product popular and familiar through online services.
  • Ninth: A brief slump in the airline industry was managed by the government, as government intervention helped the industry by avoiding loss of jobs of many supporting staffs and company failure.
  • Tenth: Due to the attack of September 2001, people stopped spending on airline tickets. As a result, the salary of airline workers reduced.
  • Eleventh: The whole economy was suffering from depression after the attack of 2001 because the production was greater than the spending in the economy.
  • Twelfth: Congress provided aid of $15 billion to stabilize the airline industry and prevented major recession in the industry.

Conclusion:

Thus, the explanation of the twelve principles of economics in relation to the case have been stated above.

Give your grades a boost

Find quality solutions to thousands of textbooks. All for just $2.99 for your first month and only $4.99/month.

Get A's ASAP

Additional Economics Solutions

Find more solutions based on key concepts

Show all solutions add

Principles of Microeconomics (MindTap Course List)

Chapter 1, Problem 1CQQ

Definition of economics.

Principles of Macroeconomics (MindTap Course List)

Chapter 1, Problem 1CQQ

Definition of economics.

Macroeconomics

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Microeconomics:

Chapter 1, Problem aWYWL

A set of principles for understanding the economics that makes the individuals to take decisions People face tr...

Principles of Economics (MindTap Course List)

Chapter 1, Problem 1CQQ

Definition of economics.

The Economics of Money, Banking and Financial Markets (11th Edition) (The Pearson Series in Economics)

Chapter 1, Problem 1Q

The relationship among the interest rates of three-month Treasury bills, long-term Treasury bonds, and Baa corp...

Macroeconomics (6th Edition)

Chapter 1, Problem 1TC

Economic incentive.

Economics (Irwin Economics)

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Microeconomics

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Modern Principles: Microeconomics

Chapter 1, Problem 1FT

The idea of opportunity cost in the enrollment of students in college.

Principles of Macroeconomics (MindTap Course List)

Chapter 1, Problem 1QR

Trade-off situations.

Economics of Public Issues (20th Edition) (The Pearson Series in Economics)

Chapter 1, Problem 1DQ

Opportunity cost: If one alternative is chosen over anotheralternative, then there is a cost involved inchoosin...

Microeconomics (6th Edition)

Chapter 1, Problem 1TC

Economic incentive.

Macroeconomics: Principles, Problems, & Policies

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Principles of Microeconomics (12th Edition)

Chapter 1, Problem 1.1P

The relevance of opportunity cost in allocation of time

Economics

Chapter 1, Problem 1BCQ

How the 12 principles of economics work Concept Introduction: Twelve principles of economics are: Resources are...

Modern Principles: Macroeconomics

Chapter 1, Problem 1FT

The idea of opportunity cost in the enrollment of students in college.

Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Principles of Macroeconomics (12th Edition)

Chapter 1, Problem 1.1P

Relevance of opportunity cost in allocation of time

Economics of Public Issues (19th Edition)

Chapter 1, Problem 1DQ

Opportunity cost: If one alternative is chosen over anotheralternative, then there is a cost involved inchoosin...

Economics of Money, Banking and Financial Markets, The, Business School Edition (4th Edition) (The Pearson Series in Economics)

Chapter 1, Problem 1LO

The importance of financial markets in the economy Concept Introduction: Financial Market - It is a market wher...

Economics Today: The Micro View (18th Edition)

Chapter 1, Problem 1.1LO

To determine: The concept of economics and to identify the differences between microeconomics & macroeconomics ...

Microeconomics

Chapter 1, Problem aWYWL

Principles which guide Individuals for making choices Concept Introduction: Micro-economics is the study of ind...

Economics Today: The Macro View (18th Edition)

Chapter 1, Problem 1.1LO

The definition of Economics and the difference between macroeconomics and microeconomics. Concept Introduction:...

Modern Principles: Macroeconomics

Chapter 1, Problem 1FT

The idea of opportunity cost in the enrollment of students in college.

Economics (6th Edition)

Chapter 1, Problem 1TC

Economic incentive.

Principles of Economics, 7th Edition (MindTap Course List)

Chapter 1, Problem 1QR

Trade-off situations.

Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)

Chapter 1, Problem 1.1LO

The definition of Economics and the difference between macroeconomics and microeconomics. Concept Introduction:...

Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book

Chapter 1, Problem 1DQ

The opportunity cost and its relevance to economics.

Modern Principles: Microeconomics

Chapter 1, Problem 1FT

The idea of opportunity cost in the enrollment of students in college.

Economics Today: The Micro View (19th Edition) (Pearson Series in Economics)

Chapter 1, Problem 1.1LO

To determine: The concept of economics and to identify the differences between microeconomics & macroeconomics ...

Microeconomics (7th Edition)

Chapter 1, Problem 1TC

Economic incentive.

Economics of Money, Banking and Financial Markets (12th Edition) (What's New in Economics)

Chapter 1, Problem 1Q

The relationship among the interest rates of three-month Treasury bills, long-term Treasury bonds, and Baa corp...

Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)

Chapter 1, Problem 1LO

The importance of financial markets in the economy Concept Introduction: Financial Market - It is a market wher...

Economics (7th Edition) (What's New in Economics)

Chapter 1, Problem 1TC

Economic incentive.

ECON: MACRO4

Chapter 1, Problem 1.1PA

the scarcity of resource is to understand if the price exceeds zero. The concept of scarcity is dependent on th...

Macroeconomics (7th Edition)

Chapter 1, Problem 1TC

Economic incentive.

ECON MACRO

Chapter 1, Problem 1.1P

the scarcity of resource is to understand if the price exceeds zero. The concept of scarcity is dependent on th...

Economics

Chapter 1, Problem 1BCQ

How the 12 principles of economics work Concept Introduction: Twelve principles of economics are: Resources are...

Sorry about that. What wasn’t helpful?

Find all the answers to your study problems with bartleby.
Textbook solutions, experts, done. Get me A's ASAP arrow_forward