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business
macroeconomics

Questions and Answers of Macroeconomics

Why does an increase in a good’s price increase the producer surplus from production of that good?
Why do the earlier units produced at a given price add more producer surplus than the later units produced?
What is producer surplus?
Why might the consumer surplus from purchases of diamond rings be less than the consumer surplus from purchases of far less expensive stones?
Why does a decrease in a good’s price increase the consumer surplus from consumption of that good?
Why do the earlier units consumed at a given price add more consumer surplus than the later units consumed?
What is consumer surplus?
How do we measure the total gains from trade?
What is producer surplus?
What is consumer surplus?
How do the relative elasticities of supply and demand determine who bears the greater burden of a tax?
Why does supply tend to be more elastic in the long run than in the short run?
What does it mean to say the elasticity of supply for one good is greater than that for another?
If people spent three times as much on restaurant meals and four times as much on DVDs as their incomes doubled, would restaurant meals or DVDs have a greater income elasticity of demand?
As people’s incomes rise, why will they spend an increasing portion of their incomes on goods with income elasticities greater than 1 (DVDs) and a decreasing portion of their incomes on goods with
If the cross-price elasticity of demand between potato chips and popcorn was positive and large, would popcorn makers benefit from a tax imposed on potato chips?
How does the income elasticity of demand tell you whether a good is normal? Inferior?
How does the cross-price elasticity of demand tell you whether two goods are substitutes? Complements?
How does the relative elasticity of supply and demand determine the tax burden?
How does time affect the supply elasticity?
What is the price elasticity of supply?
What is the income elasticity of demand?
What is the cross-price elasticity of demand?
Why do economists emphasize elasticity at the current price?
Why is the price elasticity of demand for turkeys likely to be lower, but the price elasticity of demand for turkeys at a particular store likely to be greater, at Thanksgiving than at other times of
Why is the price elasticity of demand for products at a 24-hour convenience store likely to be lower at 2 A.M.than at 2 P.M.?
Why would a tax on a particular brand of cigarettes be less effective at reducing smoking than a tax on all brands of cigarettes?
What factors tend to make demand curves more price elastic?
What is the relationship between the price elasticity of demand and the slope at a given point on a demand curve?
What is the difference between a relatively price elastic demand curve and a relatively price inelastic demand curve?
How is the price elasticity of demand calculated?
What question is the price elasticity of demand designed to answer?
Does the price elasticity of demand vary along a linear demand curve?
What is the relationship between total revenue and the price elasticity of demand?
What is total revenue?
Assume that both you and Art, your partner in a picture-framing business, want to increase your firm’s total revenue. You argue that in order to achieve this goal, you should lower your prices;
If demand for some good was perfectly price inelastic, how would total revenue from its sales change as its price changed?
Why is a linear demand curve more price elastic at higher price ranges and more price inelastic at lower price ranges?
Why does total revenue vary directly with price if demand is relatively price inelastic?
Why does total revenue vary inversely with price if demand is relatively price elastic?
Why is the law of unintended consequences so important in making public policy?
What is the law of unintended consequences?
Why does rent control often lead to condominium conversions?
What may happen to the amount of discrimination against groups such as families with children, pet owners, smokers, or students when rent control is imposed?
What predictable effects result from price floors such as the minimum wage?
How is the minimum wage law an example of a price floor?
What predictable effects result from price ceilings such as rent control?
How is rent control an example of a price ceiling?
What is a surplus?
What is a shortage?
What is the equilibrium quantity?
What is the equilibrium price?
If tea prices were above their equilibrium level, what force would tend to push tea prices down? If tea prices were below their equilibrium level, what force would tend to push tea prices up?
Why do market forces tend to eliminate both shortages and surpluses?
What must be true about the price charged for a surplus to occur?
What must be true about the price charged for a shortage to occur?
What can cause a change in the supply and demand equilibrium?
How does the intersection of supply and demand indicate the equilibrium price and quantity in a market?
What is an indeterminate solution?
What happens when both supply and demand shift in the same time period?
What happens to equilibrium price and quantity when the supply curve shifts?
What happens to equilibrium price and quantity when the demand curve shifts?
If demand for peanut butter increases and supply decreases, what will happen to equilibrium price and quantity?
If both buyers and sellers of grapes expect grape prices to rise in the near future, what will happen to grape prices and sales today?
When both supply and demand shift, what added information do we need to know in order to determine in which direction the indeterminate variable changes?
What would have to be true for both supply and demand to shift in the same time period?
Why are evening and weekend long-distance calls cheaper than weekday long-distance calls?
Why do heating oil prices tend to be higher in the winter?
Assuming the market is already at equilibrium, what happens to the equilibrium price and quantity as a result of a supply increase?
Does an increase in supply create a shortage or surplus at the original price?
What happens to the equilibrium price and quantity as a result of a demand increase?
Does an increase in demand create a shortage or surplus at the original price?
What is the law of unintended consequences?
What are price floors?
What are price ceilings?
What are price controls?
What happens to the supply of baby-sitting services in an area when many teenagers get their driver’s licenses at about the same time?
If a guitar manufacturer increased its wages in order to keep its workers, what would happen to the supply of guitars as a result?
Would a change in the price of wheat change the supply of wheat? Would it change the supply of corn, if wheat and corn can be grown on the same type of land?
If a seller expects the price of a good to rise in the near future, how will that expectation affect the current supply curve?
What is the difference between a change in supply and a change in quantity supplied?
How do taxes affect the supply curve?
How does technology affect the supply curve?
How does the number of suppliers affect the supply curve?
What are the determinants of supply?
What is the difference between a change in supply and a change in quantity supplied?
What is the difference between an individual supply curve and a market supply curve?
What are the two reasons why a supply curve is positively sloped?
What is a market supply curve?
What is an individual supply curve?
What is the law of supply?
If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if people’s incomes increase?
Would a change in the price of ice cream likely cause a change in the demand for frozen yogurt, a substitute?
Would a change in the price of ice cream cause a change in the demand for ice cream? Why or why not?
How do expectations about the future influence the demand curve?
If incomes rise and, as a result, demand for jet skis increases, how do we describe that good?
If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash?
What is the difference between a change in demand and a change in quantity demanded?
How do changing expectations affect the demand curve?
How do changes in taste affect the demand curve?

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