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Economics Homework Three Answers - Student Twenty-One (view source)
Revision as of 16:14, September 24, 2009
, 16:14, September 24, 2009no edit summary
Michelle F-in progress
Michelle F
1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.
1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.
A price ceiling below the equilibrium causes a shortage, because the supply and demand curves are not allowed to meet at the free market price. When the price is unnaturally lowered, the demand increases. The supply, however, does not change. So there are more people who want to buy the product, but the same amount of people supplying the product, creating a shortage. If the price ceiling was removed, manufacturers would charge more for their good, lowering the demand. The free market does not work properly with government interference.
A price ceiling below the equilibrium causes a shortage, because the supply and demand curves are not allowed to meet at the free market price. When the price is unnaturally lowered, the demand increases. The supply, however, does not change. So there are more people who want to buy the product, but the same amount of people supplying the product, creating a shortage. If the price ceiling was removed, manufacturers would charge more for their good, lowering the demand. The free market does not work properly with government interference.
10. Do you support "free trade" because it creates wealth, or do you oppose it for simply redistributing wealth to foreigners, some hostile to the United States?
I think there’s a little more to the issue than that. I think the question to be asked is how free trade affects our economy. What do we stand to lose, and what could we gain? American businesses would have to improve their products and finances in order to match the other nations. They might be encouraged to be more responsible with their money. Are we encouraging laziness when we make it easier for American manufacturers to compete with foreign ones? When there are quotas or tariffs imposed, or subsidies and bailouts given, what are we saying? That the other nations’ products are just that much better, that without government assistance American companies wouldn’t have a chance of competing? If that is indeed the case, then we need to rethink some things. What about the ingenuity that helped create this country and caused it to prosper? Is the government killing it? I think that the positive aspects of free trade outweigh the negative ones by far, and that all parties involved in it benefit. Not just those hostile towards our country.