Ask an Economist
Welcome to Ask an Economist, a public service of the Department of Economics at Iowa State University, designed to answer your economic questions.
Our talented faculty and alumni can answer questions on a variety of economic topics to help you make more informed choices about your day-to-day decisions--or to just add a more reasoned voice when talk of the economy comes up around the dinner table.
Questions & Answers
People sometimes have different ideas in mind when considering home price appreciation. Most conventional discussions do not adjust for inflation. A more nuanced consideration could account for rises in the general price level, i.e., i
Running a business is always risky, and owning an auto mechanic shop is no different. Your concern about changing technology is interesting because I see two main avenues of change.
Economics provides a framework for understanding aspects of individual and collective behavior. In particular, economics focuses on how individuals and societies allocate resources. Economists also offer important insights about how di
Yes, more timely inflation measures do exist. For example, academics have used new data-gathering techniques, referred to as "big data", to create daily inflation measures; see, e.g., the Billion Prices Project (...Continue Reading Answer
It is not a necessity to use a seasonally adjusted data for VAR and Granger Causality.
As you wrote, to compute concentration ratios, you would need data on quantities produced or sold (property appraisals in your case) and a reasonable market definition, which can be a separate challenge on its own.
You asked how a monopolist might use marketing campaigns to increase profit. As you discussed, marketing efforts would likely result in consumers willing to pay more, shifting the demand out. This can only be good news for the firm if
Indeed, one answer to a fundamental question in international trade -- why do countries trade? -- is that specialization based on comparative advantage leads to gains from trade for all countries.
Printing more money does not solve a country’s financial problems, rather it would exacerbate those. Suppose an economy prints more money, it would mean that the consumers can now buy more goods or a greater quantity of the same good.
First, it is important to understand what a proportional or regressive tax means. A proportional tax system requires all taxpayers to pay the same proportion of their income regardless of how much money they earn.
When the Fed raises interest rates, it raises the cost of borrowing by firms which raises their cost of doing business. That induces firms to hire less, delay or eliminate capacity expansions, etc.
The term you’re looking for is “non-rivalry.” Rival goods (in contrast to non-rival goods) are the standard stuff of economics: chairs, computers, etc.
Economists start from the presumption that producers want to maximize their profits, and are not running a business to promote social welfare or social justice. If a producer can sell 1 unit of a good to Mr.
The sudden and persistent drop in labor force participation that began with the pandemic has been called the Great Resignation.
The question is based on the definition of the MRTS of B for A as the (the amount of input A)/(the amount of input B), which is flipping the numerator and the denominator of the correct definition, probably because of the definition of t
Steady-state level of output per worker is roughly the same as per capita income in the long run.
There are several statistical reasons why you would covert the variable into a logarithm. Logarithm transformation, for example, can change a highly skewed variable into a more normalized distribution.
Standard theory describes channels through which raising rates affects both demand and supply. Higher rates raise the opportunity cost of spending and thus tend to dampen both business investment and household consumption. All else equ
I should be clear that economics cannot provide an answer, but it can help us to organize our thoughts about an answer.
Interesting idea. As you note, the idea is extreme, but it addresses some of the underlying causes of high healthcare prices.
You ask, “Is it moral to have their customers pay” by raising prices? Well, let’s ask it this way.
Great question. First off, when we’re talking about a firm, be careful with what you label economic (or opportunity) costs: they are the sum of implicit and explicit costs.
You are correct in observing that efforts to limit competition have the potential to produce market outcomes that diverge from the "free market ideal" that economists commonly use as their baseline of comparison.
I know you are asking this out of intellectual curiosity and for fun; in the U.S., it is illegal to create any sort of currency. Having said that, you raise an important point.
Interesting question. The Braves defeated the Dodgers on Oct. 20 (2021) to take a 3-1 game lead in the National League Championship Series and are now just one game away from the World Series.