Errors and Corrections (for the 1st Edition)

The following are the errors to be found in the book, including typographic errors. Thank you for correcting them in your own copies, in particular the substantive errors or omissions on pages 15, 22, 52, 144 and 153-154. I would like to thank Blair Lockhart and Steven Schwimmer for their help in spotting some of them.

Page 15 – Last paragraph should read “…Qd = 12 – 2P would imply a demand curve twice as shallow as Qd = 12 – P.”

Page 19 – ‘c’ and ‘d’ in question 4 should be labelled ‘a’ and ‘b’.

Page 22 – The third last paragraph should read “… As well, we can see that the slope is +1, as every time price goes up by one, the quantity supplied goes up by one. So, that yields a supply function of…”

The second last paragraph should read “Observe that if the ‘c’ term changes, a shift in the supply curve is implied. Alternatively, a change in the ‘d’ term implied a change in the slope of the supply curve.”

The last paragraph should read “…Alternatively, a supply function of Qs = -1 +2P would imply a supply curve twice as shallow as Qs = -1 + P.”

Page 38 – The exercise should be labelled “EMI12”

Page 52 – The lesson does not distinguish between externalities of consumption and externalities of production, as specified in the syllabus. To correct any misunderstandings, please refer to the following note: Representing Externalities

Page 78 – Point 2 (b) should read “Time (of day, or year, or time booked in advance). Prices may be different based upon time.”

Page 83 – On the Prisoner’s Dilemma matrix the lower left quadrant should read “A-$50, B-$90.”

Page 89 – Questions 6 and 7 should be labelled 5 and 6.

Page 109 – Questions 6, 7 and 8 should be labelled 5, 6 and 7.

Page 112 – The first line in the third paragraph should talk about “people’s expectations”, not “peoples’ expectations.”

Page 138 – Question 1 should be a-e, not a, b, b, c, and d.

Page 143 – “official” should be changed to “officials” in the first line.

Page 144 – The lesson does not explain the balance of payments with reference to the financial account, as specified in the syllabus. The following lesson should replace the lesson contained in the book. IE6 – The Balance of Payments

Page 148 – The new demand function in the last paragraph should read “Qd = 160- 25P” as it does in the working out that follows.

Pages 153-154 – The numerical example should be changed to reflect a 25% rise in oil prices in terms of CFA francs, not a 20% rise as stated. The changed text should read:

“Looking at imports next: The devaluation will lead to a 25% rise in the oil price in terms of CFA francs (as one CFA franc now only buys $0.80, a dollar’s worth of oil will now cost 1.25 CFA francs). This will affect import volumes by, according to a PED of 0.8, 20%.

So, import volumes will fall by 20% to (0.8 * 120 =) 96 barrels of oil, each of which costs 25% more CFA francs (38 * 1.25 =) 47.5 CFA francs, giving an import bill of (47.5 * 96) = 4560 CFA francs.

Bringing imports and exports together, we see that the balance of payments is now (4104 – 4560 =) -456. As this is an improvement (remember that initially the deficit was 760 francs), we can see that the Marshall-Lerner condition holds, as the sum of the PED of imports and the PED of exports is in this case is (0.4 + 0.8 =) 1.2, which is greater than one.”

Leave a Reply

Your email address will not be published. Required fields are marked *