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Microeconomic discussion questions

1. If there were no tax benefits and behavior is governed by rational self interest, would people give to charitable institutions? use economic principles to explain.

2. What good is economic theory if it cannot predict an individual's behavior? give examples of the use of economic theory.

3. In a response to an increase in illegal aliens, congress made it a federal offense to hire them. how will this affect the production possibilities frontier? Will industries be affected equally?

4. Under what conditions is it possible to increase production of one good without decreasing production of another? I need to develop a model

5. Discuss role of markets in coordinating the independent decisions of buyers and sellers.

Solution Preview

Here are a few ideas to get you started on this review. There are likely other aspects to these questions other than what I have mentioned. Be sure to review your homework assignments for key points that your instructor has stressed.

1. Individual purchasing decisions are based on marginal utility. The law of diminishing returns suggests that people value additional units of a good less. Thus, after they have purchased many goods, they may still have money left and nothing appeals to them. In this case, charitable contributions would be a rational decision. Even if they are only motivated by self-interest, charitable giving has benefits. It improves social standing, as people often admire generosity. In addition some charities to improve everyone's lives by the nature of the work they do. For example, there will likely be less criminal activity if ...

Solution Summary

Microeconomic discussion questions related to illegal aliens, marginal utility, and rational self interest.