文档介绍：Suggested Answers for Mankiw Questions for Review & Problems
The answers here will not have graphs, I encourage to refer to the text for graphs. There is a
bit of math, however I don’t expect you to replicate these in your exam, but you should understand
the intuition.
Chapter 1
Questions for Review
1 Microeconomics is the study of how individual firms and households make decisions, and how
they interact with one another. Microeconomic models of firms and households are based
on principles of optimizationfirms and households do the best they can given the constraints
they face. For example, households choose which goods to purchase in order to maximize
their utility, whereas firms decide how much to produce in order to maximize profits. In
contrast, macroeconomics is the study of the economy as a whole; it focuses on issues such
as how total output, total employment, and the overall price level are determined. These
economy-wide variables are based on the interaction of many households and many firms;
therefore, microeconomics forms the basis for macroeconomics.
3 A market-clearing model is one in which prices adjust to equilibrate supply and demand. Market-
clearing models are useful in situations where prices are flexible. Yet in many situations,
flexible prices may not be a realistic assumption. For example, labor contracts often set
wages for up to thr