Ask Economics Question

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You are welcome to ask questions on Economics.

I will post the answer on this blog, for everyone to benefit from.

I shall try to answer the economics question and / or point to other resources but please bear in mind.

  1. The replies will be guidance and not for duplication. Your essays should always be your own work.
  2. My speciality is economics for British A Level standard. My university economics is rusty in parts, because generally I don’t use it in teaching A level economics.
  3. I can’t guarantee to always give answers it also depends on my time schedule.
  4. The aim is not to do people’s homework for them, but, help in the understanding of economic concepts.
  5. The answers will not necessarily be complete. I know several of my essays on this site could be improved.
  6. Please Write the Questions clearly and with proper spelling. Some questions I have not answered because they were not clear what was meant.
  7. I will answer as a new post. Check home page of blog for new post. With question and answers

I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.

If you find the information useful, you are welcome to buy me a coffee 🙂

579 thoughts on “Ask Economics Question”

  1. Why does the real wage increase after an increase in government spending in a Keynesian module?
    Many thanks.

  2. assume the economy currently has a recessionary output gap and that the marginal propensity to consume is 0.8.

    Consider a three-sector Keynesian model in which the only form of taxation is exogenous taxes (that is, the tax rate, t, is zero). Note that a three sector model
    comprises households, firms and the government (there are no exports or imports). Suppose the government increases its expenditure by $1 billion,
    financed through an increase in exogenous taxes of $1billion. Derive the formula for the multiplier needed to analyse the effect of this fiscal policy on
    equilibrium GDP. Calculate the value of the change in equilibrium GDP.

    I derived the complete Keynesian three sector formula as follows Y (GDP) = 1/(1-c) (c bar – cT + I + G) and the multipler equation is 1/(1-x), but I have no idea how to derive the formula for the question or go about approaching it. Any hints to understanding it will be much appreciated. thanks Mate

  4. I can’t work out how outsourcing, regardless of whether you outsource to bradford or bangalore improves the economy. Don’t the benefits in terms more money for shareholders or in lower assume demand remains constant. Shouldn’t aggregrate demand fall as the previous employed workers stop spending?

    Or at the very least isn’t it just a transfer from the workers who used to be employed to the new workers alongside the increased profits ( from the reduction in wages) for shareholders without any actual increase in Agg demand.

    I know these arguments are wrong but I can’t work out why

  5. Sales of fish are down but consumers opting to buy meet could be causing prices for fish to go up , why is this statement wrong and what impact would this have on the fish market? thank u

  6. If you lose jobs to robotics at the automobile plant, are you then structurally unemployed or frictionally unemployed?

  7. how can we derive cost curves ..i,e
    ATC from TC
    long run TC from Short Run TC
    LRAVC & MC from SRAVC &MC??

  8. What type of return on investment is typically expected from low risk investments? If the ROI on a low risk investment goes up, how will this effect the interest in this investment? What area of economics deals with this type of problem?

  9. 3.) For each of the following statements, draw a diagram that illustrates the likely effect on the market for eggs. Indicate in each case the impact on equilibrium price and equilibrium quantity.
    1. A surgeon warns that high-cholesterol foods cause heart attacks.
    2. The price of bacon, a complementary product, decreases.
    3. An increase in the price of chicken feed occurs.
    4. Caesar salads become trendy at dinner parties. (The dressing is made with raw eggs.)
    5. A technological innovation reduces egg breakage during packing.

  10. 4.) Do you agree or disagree with each of the following statements? Briefly explain your answers.
    1. The price of a good rises, causing the demand for another good to rise. Therefore, the two goods are complements.
    2. A shift in demand causes the price of a good to fall. The shift must have been a decrease in demand.
    3. When the price of a good changes, the quantity of that good demanded or supplied changes—that is, the curve shifts, or changes position.
    4. Two inferior goods cannot be substitutes for each other.
    5. If demand increases and supply increases at the same time, prices will clearly rise.
    6. The price of Good A falls. This causes a decrease in the price of Good B. Therefore, Goods A and B are substitutes.

  11. A Producer of a Veblen Good wishes to expand the supply and lower the price with a view to attract more buyers. what can be the outcome?

  12. Using demand and supply diagrams and the concept of elasticity, how can we best explain or demonstrate a business increase in their sales revenue and market share.

  13. A producer of Veblen good wishes to expand the supply and lower the price with a view to attract more buyers. What can be the outcome?

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