Discussion Questions

Discussion 1: "Monopoly." Please respond to the following:

• Compare and contrast your local utility company with a local farmer (corn, soy bean, cotton, etc.). Why does your utility company always operate with price is greater than marginal cost whereby the farmer attempts to produce where price equals marginal cost?

• Discuss the implications on the dead weight loss on these two markets.

Discussion 2: "Oligopoly Models." Please respond to the following:

• Compare and contrast the following models: Cournot model and Bertrand model. Explain which model you feel is best for producers to operate under.

• Discuss what the airlines which operate in an oligopoly would have to do to justify a higher ticket price. Use price leadership, barriers to entry and exit, strategic interdependence, and the characteristics of the firm in your answer.

Discussion 1: "Changes in Input Prices." Please respond to the following:

• Imagine you are a consultant hired to give advice to a fast food restaurant which is faced with employees asking for a 25% increase in pay. In order to give good advice, you need more information. Create three to four questions that you would ask this restaurant owner in order to give good advice and give your rationale for asking them.

Discussion 2: "Rental and Interest Rates." Please respond to the following:

• You want to purchase a $4,000 TV with the latest bells and whistles. Investigate which is the best deal to obtain the TV. Calculate the cost of capital for any three of the six methods below.

1. Rent-A-Centers (or a similar national rental chain)

2. Best Buy credit card

3. Pay Day Cash Advance (or any similar national cash advance chain)

4. Personal loan from your bank or credit union

5. Pay cash after saving for 24 months

6. A home equity loan through your bank

• Of your three choices, discuss the implications of the opportunity costs, the real return, and how inflation factors into your final choice.

"Aggregate Expenditure"

Please respond to the following:

• Determine whether you believe your savings habits would change if you had (or made) more money. Discuss the implications of your response to patterns in consumer consumption.

• Think about your own spending habits and discuss how the relation between income and consumption affects your life.

"Aggregate Expenditure and Aggregate Demand"

Please respond to the following:

• Discuss how changing tax rates affect consumption spending and aggregate. Provide an example not in the textbook to illustrate your answer.

• From the e-Activity, discuss how the events in the article you read will affect aggregate demand. Explain your rationale in your response.

"Aggregate Supply in the Short Run"

Please respond to the following:

• Discuss ways the economy could produce more if it is already operating at full employment. Provide specific examples to support your response.

• From the e-Activity, discuss how the factors you uncovered related to aggregate supply will likely impact the company in the next 6 to 12 months. Provide examples to support your response.

"Aggregate Supply Curve"

Please respond to the following:

• Discuss short-run aggregate supply in relation to the long run.

• Create a metaphor, simile, or very short (2-3 sentences) story to illustrate shifts in the aggregate supply curve.

"Fiscal Policy"

Please respond to the following:

• Select one automatic stabilizer in U.S. economic policy and discuss how this stabilizer would affect the economy during a recession.

• Based on what you know, explain what the U.S. government should do concerning fiscal policy over the next 10 years.

"Federal Budgets and Public Policy"

Please respond to the following:

• Discuss the fiscal impact of the federal budget with a focus on how it impacts you personally. Provide examples to support your response.

• From the e-Activity, take a position on whether reducing federal spending during a recession in order to concentrate on the national debt should be the most important item on the national agenda.