Category: Economics

Explain how and why the social contract theory is a prisoner’s dilemma.

➤ How must a party respond to interrogatories and what are common objections?
A responding party must file written, verified answers or timely objections, often within 30 days. Common objections include overbreadth, relevance, privilege, and undue burden. Parties should state the legal basis for objections, answer unobjected questions fully, and supplement responses if new information appears during litigation.

➤ How do net taxes affect GDP and aggregate demand?
Net taxes reduce disposable income and therefore consumer spending, which lowers aggregate demand. Lower net taxes or higher transfers raise disposable income and boost consumption. Net taxes also shape the government’s fiscal stance: they influence public spending, budget deficits, investment incentives, and interest rates, all of which affect overall economic activity and GDP.

➤ Why is equilibrium quantity often easier to predict than price?
Equilibrium quantity is often clearer because both shifts directly add or subtract from traded units. If supply and demand move in the same direction, quantity changes are unambiguous. Price is more sensitive to relative strengths and elasticities, so opposing shifts commonly leave price indeterminate without further information about curve steepness or magnitude.

➤ Why is equity law important and how does it relate to common law?
Equity law developed alongside common law to offer fair remedies when rigid rules produced injustice. Equity courts provide injunctions, specific performance, and trust remedies. Equity principles guide judges to consider conscience and fairness, and they often supplement statutory and common law to achieve just outcomes in contracts, property, and fiduciary disputes.

➤ How can you tell a movement along the supply curve from a shift?
A movement along the supply curve is a change in quantity supplied caused by a change in the good’s own price. A shift in supply occurs when non-price factors change, such as input costs, technology, taxes, subsidies, expectations, or the number of sellers. Check whether the product’s market price changed.

3.
➤ Why would the government buy or store the surplus created by a $6 floor?
Governments buy or store surplus to maintain the $6 floor and protect farmer incomes. Purchasing prevents market prices from falling and supports producers. However, it raises fiscal costs for storage, transport, and spoilage. It may also require export programs or disposal policies to manage long-term stocks.