Name two types of market failure. Explain why each may cause market outcomes to be inefficient.
What happens to consumer and producer surplus when the sale of a good is taxed? How does the change in consumer and producer surplus compare to the tax revenue?
How do the elasticities of supply and demand and demand affect the deadweight loss of a tax? Why does this effect occur?
What does the domestic price that prevails without international trade tell us about a nation's comparative advantage?
What is the difference between the unilateral and multilateral approaches to achieving free trade? Give an example of each.
Why do economists use real GDP rather than nominal GDP to gauge economic well-being? Define the GDP deflator.
What is the CPI? Which do you think has a greater effect on the consumer price index: a 10 percent increase in the price of a chicken, or a 10 percent increase in the price of caviar? Why?
Describe the three factors that make the consumer price index an imperfect measure of the cost of living. Then explain how GDP deflator differs from the CPI.
List and describe the determinants of productivity.
Explain how a higher savings rate can lead to a higher standard of living. What might deter a policymaker from trying to raise the rate of saving?