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
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.
Your observation about the lack of material on the Simon Abundance Index is a valid one. Perhaps its newness accounts for a general lack of peer-reviewed material on the subject.
There are very few places to find county-level farm rental rate information. Iowa State has conducted a long-running survey on farm rental rates.
Small business owners who most effectively use economics knowledge to the advantage of their business do so through the lens of unit economics. What are the per-unit expenses of the business and how do those expenses compare to revenues per unit...
John Green, Nicole Swepson, and I recently completed a paper, College Quality as Revealed by Willingness-to-Pay for College Graduates, that addresses this question. First, we examined the correlation between traditional measures of
You can do a lot of different things with an economics degree so it's a bit of a tough question to answer. Of course, one thing you can do is be an economist.
A seller has market power if it is able to PROFITABLY price higher than the competitive price because it has a downward sloping demand curve and sets its output where marginal revenue equals marginal cost but sets its price above its marginal...
Continue Reading AnswerLet's recall that inflation is usually computed as a year-on-year (annual) percentage change in the consumer price index. Therefore, CPI inflation for June 2021 will compare the CPI in June 2021 to the CPI in June 2020.
As is usually the case in economics and economic data analysis, the answer is "it depends."
My short answer from ten years ago: When consumers are made better off in the short and long run.
My short answer today: That’s a toughie.
You have described an economic concept called tax incidence. There is a wealth of studies centered around this in the field of public finance. The basic question, similar to what you have articulated, is who bears how much tax burden?
With a major in Economics, one does NOT need to decide on a specific career field until they graduate when they likely will have multiple options to choose from. The Econ degree will prepare graduates for various career paths, even if the de