Ask an Economist

Setting your salary as a fixed proportion of the minimum salary may signal your commitment to invest excess earnings back in the company. This could generate more optimism in the company’s future growth and interest from potential investors.

The discount rate is enormously important in benefit-cost analysis of environmental policy. 

Unfortunately, what you are experiencing is a perfect example of inelastic supply (the quantity of helmets available doesn’t change much with price).

You have posed an interesting question.   Before answering your question, though, it is helpful to take a short detour into economic theory to understand how prices in a market like the one you describe are set.

Upward pressure on prices is expected from the removal of the wedge between prices received and paid, resulting in fewer quantities transacted in the market. This would hurt both buyers and suppliers, but free up taxpayers’ money.

That's a really interesting point about AI changing future employment opportunities.

A government, like any of us, has expenses (called government expenditure) and it has income (it generates revenues). If a government overspends, it means it committed to spend more than it earned which means it is running a deficit.

If the purpose of the skatepark is to have income generating events, the sponsorship should be locked in before committing to construction.

I’m an applied economist, and I have found both graduate school and my job to be challenging, varied, rewarding, and, I hope, impactful. Economics gives us a useful set of skills, and an intuitive way to understand the world.

Thank you for your question. This is a classic example of how economic reasoning and distributional impacts come into play in pricing decisions.

Tariffs by the US hurt Americans, somewhat, when they want to purchase imported goods (because tariffs are akin to a tax on imported goods).

You raise a wonderful point. In a globalized world, countries produce goods in which they have some sort of comparative advantage.

Countries are not taxing other countries or their governments; they are setting up a machinery (the entire system of tariffs) to tax the companies of foreign nations who wish to sell foreign-made products in the country.

When Canada retaliates, as you observe correctly, Canadians pay more for American goods yes, but that action also hurts US companies trying to sell American goods to Canada.

It is difficult to be exact about the effects of such mass layoffs of federal employees (although some people have had their jobs reinstated).

Even though economic theory suggests that consumer behavior can be rationalized through a utility function, a growing body of research explores the role of sociodemographic, psychological, emotional, and cognitive factors in decision-making.

The scenario you describe is entirely possible although economists believe a whole new set of jobs will be created once AI takes over our lives.

To begin, for those not familiar with it, Alexander’s book is an examination of the economic decline of Lancaster, Ohio, a city dependent especially on Anchor Hocking Glass.  Like many smaller cities throughout the American Midwest that were

Whether buying farmland at current prices is “worth it” depends largely on financing, cash flow expectations, and long-term goals.

Economics, broadly speaking, is not a predictive subject, certainly not in the way, say, meteorology is. Meteorology is very useful at predicting both short-and long term weather, when it will rain, will we get snow or a tornado, etc.