What is meant by comparative statics? Explain with an example
What will be an ideal response?
Comparative statics is the comparison of economic outcomes before and after some economic variable has changed. For example, a consumer might decide to buy more ice cream in hot weather. In this example, the increase in the consumption of ice cream is the economic outcome that changes in response to a change in a second variable, the weather.
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What will be an ideal response?
The price elasticity of demand for a variable input will be greater
A) the fewer substitutes there are for the final product. B) the easier it is for a particular input to be substituted for by other inputs. C) the lower the price elasticity of supply of all other inputs. D) the smaller the proportion of total costs accounted for by a particular variable input.
If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately:
A. 22 years. B. 20 years. C. 14 years. D. 8 years.
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line. B. negatively sloped and "bowed inward" toward the origin. C. negatively sloped and "bowed outward" from the origin. D. a positively sloped straight line.