Category: Economics

3.
➤ Why does consumer surplus matter in economics?
Consumer surplus shows how much benefit consumers gain beyond the price they pay. Economists use it to measure consumer welfare, compare market outcomes, and evaluate policy effects like taxes or subsidies. Changes in surplus reveal efficiency losses or gains and help estimate deadweight loss from supply and demand shifts.

➤ How do you measure employment productivity versus productivity per hour?
Measure employment productivity as total output divided by the number of employed workers (output per worker). Measure productivity per hour by dividing output by total hours worked. Use real (inflation-adjusted) output like real GDP for comparisons. Firm and industry data can refine measures with value added or physical units produced.

➤ Why does the production possibilities frontier often show increasing opportunity cost?
The PPF bows outward because resources differ in suitability across goods. Moving resources into consumer-goods production uses inputs less efficient at making them. Marginal returns fall and the forgone amount of other goods rises. This specialization and diminishing returns produce increasing opportunity cost as production shifts.

➤ Why do ethics and morals sometimes conflict with laws?
Laws sometimes conflict with ethics and morals because law focuses on order, compromise, and enforceability. Moral or ethical principles may demand actions the law forbids, or oppose legal practices considered unjust. Such tensions arise from cultural diversity, slow legislative change, or competing rights, and they often spark debate, judicial review, or reform efforts.

According to Pavan Sukhdev, who depends most on the ecosystem services?