Describe how delays can prevent economic policy from being successful.
What will be an ideal response?
There is a period of time between when an economic problem emerges and when it can be recognized. Once it is recognized, it takes time to design a policy response and time for the policy to be implemented. By the time the policy has an impact on the economy, the economic situation may have changed, and the action may propel the economy in the wrong direction.
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One year ago, Ms. Case and Mr. Bond opened a jewelry store called T & J. They invested $1,000,000 of their savings into the partnership to buy equipment and initial inventory
They rented a building for $90,000 a year, and hired two employees for an annual wage of $40,000 each. Case and Bond believed that the best alternative investment of their money would be government bonds, which could yield an annual return of 8 percent. To run the store, Case quit her previous job, at which she earned $100,000, but her former boss told her that she was welcome to return anytime. Bond kept his job with the government, but gave up 6 hours of leisure each week (for 50 weeks), the time he used to spend playing golf. Bond used to say: "I'd only give up my golf time if someone paid me $100 an hour." During the first year of operation, T & J paid $20,000 for utilities and the firm's total revenue was $350,000. The market value of T & J's equipment was $200,000 at the beginning of the year and $170,000 at the end of the year. a) What is the economic depreciation of their capital? b) What are T & J's opportunity costs? c) What is the firm's economic profit in the first year of operation?
John raises bees to pollinate his orchard. A couple of bees which escaped ended up pollinating his neighbor's orchard, so
A) John's neighbor has received an internal cost of John's bee-keeping. B) John's neighbor has received an external cost of John's bee-keeping. C) John's neighbor has received an external benefit of John's bee-keeping. D) None of the above is correct.