by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Poverty Line?Poverty is measured by the number of people who fall below a certain level of income—called the poverty line—that defines the income one needs for a basic standard of living. The US poverty line has traditionally been based on the cost of a...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Income Inequality?Income inequality compares the share of the total income (or wealth) in society that different groups receive. For example, compare the share of income that the top 10% receive to the share of income that the bottom 10% receive.The labor...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Tragedy of Commons for Common Resources?There are some goods that do not fall neatly into the categories of private good or public good. While it is easy to classify a pizza as a private good and a city park as a public good, what about an item that is...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Role of Government in Paying for Public Goods?The key insight in paying for public goods is to find a way of assuring that everyone will make a contribution and to prevent free riders. For example, if people come together through the political process and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Free Rider Problem for Public Goods?Private companies find it difficult to produce public goods. If a good or service is nonexcludable, like national defense, so that it is impossible or very costly to exclude people from using this good or service, then...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are some Government Approaches to Encouraging Innovation?The primary government approaches to encouraging innovation include: Intellectual property – Granting intellectual property rights, a firm is able to earn monopoly profits on its product for a period...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Education yield a Private and Social Rate of Return?The investment in anything, whether it is the construction of a new power plant or research in a new cancer treatment, usually requires a certain upfront cost with an uncertain future benefit. The investment...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does New Technology give rise to Positive Externalities?Will private firms in a market economy underinvest in research and technology? If a firm builds a factory or buys a piece of equipment, the firm receives all the economic benefits that result from the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Market Competition Affect Innovation?Market competition can provide an incentive for discovering new technology because a firm can earn higher profits by finding a way to produce products more cheaply or to create products with characteristics consumers...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How are Usury Laws as Price Ceilings in Financial Markets?Usury Laws act as Price Ceilings in Financial Markets as they prohibit lenders from charging above a stated rate of interest.The demand and supply model predicts that at the lower price ceiling interest rate,...
