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What are diminishing, constant, and increasing returns to scale? When might you expect each to occur?
explain why a ceiling on rents would reduce the total surplus. 6. If you do not know whether you would be able to get a rent-controlled apartment.
Which program is more likely to have a Pareto-efficient outcome? Describe why the other programs are not likely to be Pareto efficient.
If not, explain how total output of both goods can be increased by shifting machines and labor between industries.
Why is it necessary to impose price controls or otherwise change prices in the competitive marketplace to make it more equal?
What is the difference between partial and general equilibrium analysis? When is each one especially appropriate?
What is required for the economy to be Pareto efficient? If the conditions of the basic competitive model are satisfied, is the economy Pareto efficient?
What is produced, and in what quantities? How are these goods produced? For whom are they produced? Who makes the economic decisions?
Consider an individual who is borrowing. What happens to the real interest rate? Why do you expect the individual to borrow more?
Why is the present discounted value of the prize much less than $10 million? Calculate the present discounted value if r = 5 percent.
What is the likely effect on the equilibrium rate of interest? Will the equilibrium amount of borrowing rise or will it fall?
Using supply and demand diagrams of the loanable funds market, show what the likely effect on the equilibrium rate of interest would be.
Use the ideas of substitution and income effects to explain why economists are confident of the conclusion in the first case but not in the second.
What is the income effect of an increase in interest rates? Will an increase in the interest rates that she has to pay induce her to borrow more or borrow less?
For savers how will income effect of a higher interest rate affect current saving? How will substitution effect of a higher interest rate affect current saving?
How does a choice to consume in the present determine the amount of consumption in the future?
Using supply and demand diagrams, illustrate how this change would affect the gap between the wages of workers with and those without college educations.
Use your supply and demand diagrams to illustrate what happens to the wage gap between the two types of workers.
What happens to total revenue as the price increases? What if the demand for a product is very inelastic? What if it is very elastic?
What is meant by the elasticity of demand and the elasticity of supply? Why do economists find these concepts useful?
If the supply of apartments is fixed at 1,200 units, what is the equilibrium price before the subsidy? What is the equilibrium price after the subsidy?
The higher cost of grain led many ranchers to slaughter their cattle earlier. What do you think happened to the price of beef in the short run?
Many advanced industrialized countries subsidize farmers. Why might less-developed countries be unhappy with such policies?
In 2001, Europeans became very concerned about what is called mad cow disease. What does this do to the supply curve of beef? to the equilibrium price of beef?
edict how this increase in the number of workers is likely to affect the equilibrium wage and quantity of employment.