Economics

Question 1

What causes movement along the demand curve?

Answer 1

Changes in price

Question 2

What causes a shift in the demand curve?

Answer 2

Changes in preference
Changes in income
Changes in the price of related goods
Changes in population
Special circumstances

Question 3

What causes movement along the supply curve?

Answer 3

Changes in price

Question 4

Effect of change in demand on price and quantity

Answer 4

An increase in demand would lead to a higher quantity of goods sold at a higher price
A decrease in demand would lead to a lower quantity of goods sold at a lower price

Question 5

Formula for elasticity

Answer 5

Average percentage change in quantity over average percentage change in price

Question 6

Effect of change in demand considering supply elasticity

Answer 6

A more elastic curve means a change in price will lead to a greater change in supply
A more inelastic curve means a change in price would not lead to as big a supply change

Question 7

Why is the housing supply curve kinked?

Answer 7

Houses aren’t just demolished when demand decreases, so is perfectly elastic below equilibrium price. Above equilibrium, the elasticity of housing is dependent on factors like geography and housing policies

Question 8

What kind of effect does changes in housing demand have on prices based on supply elasticities?

Answer 8

When demand falls below equilibrium price tends to fall dramatically because houses are hard to get rid of
When demand increases the effect on price can vary based on the elasticity

Question 9

Effect of change in housing supply on price and quantity

Answer 9

Increases quantity and reduces price

Question 10

What is skill biased technological change?

Answer 10

The idea that recent changes in technology have tended to increase the productivity of only workers with higher human capital

Question 11

Polarization in labor markets

Answer 11

High income jobs and low income jobs are seeing wage growth, while middle income jobs are seeing declines because they tend to have the highest levels of “routineness”

Question 12

Causes of inequalities in educational attainment

Answer 12

Cost of school
Educational level of parents
Lack of public education funding
Differing benefits of college education

Question 13

What is the policy that has had the greatest effect on reducing poverty for kids?

Answer 13

Earned income tax credits

Question 14

In kind payments

Answer 14

Ways that the government provides assistance to people without directly handing them cash

Question 15

What is the size of the disincentive for people to work more because of SNAP?

Answer 15

An extra dollar earned reduces benefits by 24 cents, because the benefit reduction is 30% of income after taking away 20%

Question 16

How do section 8 vouchers work?

Answer 16

They allow people to live in private housing at or above fair market rent, and the voucher covers the fair market rent minus 30% of the person’s income

Question 17

What tax policies do we have that benefits homeowners?

Answer 17

Tax breaks for owning houses, deducting mortgage interest on owner occupied housing and deducting local property tax from federal tax
Capital gains from the sale of houses is exempt up to $500,000

Question 18

Effect of minimum wages on workers considering supply elasticity

Answer 18

When supply is elastic, minimum wages is bad for workers as more of them lose their jobs than wages increase
When supply is inelastic, workers gain because they earn more than the number of workers fired

Question 19

Effect of rent control on the housing market

Answer 19

In the short term prices will be lowered but some of the people that weren’t willing to pay the previous price won’t be able to get housing
In the long term it may cause shortages as demand will increase and there will be people who were willing to pay market rent but still can’t get housing