Category: Economics

➤ Why do higher education levels often lead to lower fertility?
Higher education raises women’s opportunity costs of childbearing and often delays marriage and first births. Educated individuals also adopt family planning, seek smaller families, and prioritize career and income stability. Institutional factors like urban living, childcare availability, and gender norms modify this effect, so education is a strong but not sole determinant of fertility choices.

➤ How does the categorical imperative justify the obligation to fulfill promises?
The categorical imperative asks whether the maxim of breaking promises could become a universal law. If everyone broke promises, promising would lose meaning. That contradiction in conception shows the maxim is immoral. Therefore the imperative requires that we keep promises to maintain coherent, universalizable action-guiding principles.

2. Why does a Pepsi price cut reduce Coke purchases?
Price cuts create a substitution effect: consumers choose the lower‑priced substitute. Cross‑price elasticity captures this reaction. If elasticity is positive and sizable, a Pepsi discount pulls quantity away from Coke. Shopper sensitivity, brand preferences, and available promotions determine how many consumers switch brands during the sale.

➤ Why might a firm continue operating with negative economic profits?
A firm may operate short run if revenue covers variable costs and contributes to fixed costs. The shutdown rule lets firms run when total revenue meets or exceeds total variable cost. Managers may also wait for price improvements, cost reductions, or to avoid large sunk exit costs.