宏观经济学答案final.pdfVIP

Chapter 4 Consumer and Firm Behavior: The Work-Leisure Decision and Profit ization Teaching Goals The microeconomic approach to macroeconomics stresses the notion that economywide events are the result of decisions by individuals. People work so that they may afford to buy market goods. On the other hand, people generally prefer to work less rather than working more. Although discussions in the popular press often refer to the idea that spending is what drives the economy, an economy cannot produce unless people are willing to work. Therefore, the most basic macroeconomic decision is the decision to choose whether, and how much, to work. Production and willingness to work are intrinsically interconnected. s often believe that how much a works is largely determined by the necessities of their circumstances. s will report that they have to work to survive and pay tuition. Some might point out that some s need not work much or at all because their parents provide more support. However, circumstances need not dictate exactly how much they may choose to work. They may work less if they go to a less costly school. They may sometimes decide to switch to part-time status and full-time work status if they find a high paying job. A key message of this chapter is that choice is important and that choice is influenced by changes in circumstances. This chapter demands the mastery of a large body of structure and yet provides little in the way of immediate insights. s may need frequent assurances that the mastery of this material eventually pays big dividends in providing hope of understanding the phenomenon of business cycles. Two key points of this chapter are the concepts of income and substitution effects. Often, s are perplexed at the amount of time spent on this material because nothing in practice is purely an income effe