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Students' Questions Answered by Dirk	Topics
Can you define efficiency and give a few examples? Efficiency means doing something at the lowest possible cost. For the firm that means operating ... more Asked by Anonymous 0 5 3	Supply & Demand Government & the Economy Money & Banking The Firm
If a perfectly competitive firm is at the breakeven point, does this mean that it has an accounting profit of zero? Actually, it has an economic profit of zero and a positive accounting profit. The difference occurs ... more Asked by Anonymous 0 5 3	Supply & Demand The Firm
Can you give me an example of a sunk cost? The definition is still a little abstract to me. Try thinking of your car. If you decide to keep your old car (because it still runs) when you'd ... more Asked by Anonymous 0 5 4	Supply & Demand The Firm
I have been reading Paul Krugman and he talks about the confidence fairy... what is the free market answer to rebuttal the confidence fairy? Good question. There is no simple answer. Confidence is a hugely important aspect ... more Asked by Chris B. from Silverton HS 0 5 2	Pricing
Hi Dirk, First of all, cool web page. I have always been a little confused about the concepts of the "income effect" and "substitution effect". Could you explain these concepts in a simple way? Econ student from Dominican Republic. I'm glad you found my webpage. The income effect refers to the purchasing power of your ... more Asked by Anonymous 0 5 4	Supply & Demand Marginal Thinking
How does the real interest rate, the nominal interest rate, and the equilibrium quantity of loanable funds change when the expected inflation rate increases? Since the increase in inflation is expected this has no affect on the real rate of interest but ... more Asked by Ted . 0 5 1	Economic Crisis
why do changes in monetray policy have different effects over different time horizons? Monetary policy, like fiscal policy, has short-term and long-term impacts. The immediate impact ... more Asked by Olusegun S. 0 5 1	The Business Cycle Monetary & Fiscal Policy
How does Costco's Code of Ethics—which puts customers, employees, and vendors ahead of shareholders—remain consistent with their fiduciary responsibility to their shareholders? I don't find these two to be inconsistent at all. Costco has been very profitable and it has ... more Asked by Anonymous 0 5 1	Incentives
The demand curve has nothing on the supply curve! Do you have any tips for how to keep straight all the different definitions and formulae for marginal, average, and total cost, product, and revenue? My tip is to work with the data. I discourage my students from trying to memorize formulas. I assign ... more Asked by Geoff B. from Mount Royal University 0 5 1	Marginal Thinking
Does supply and demand effect the equilibrium price or does equilibrium price cause the supply and demand to change? Changes in the equilibrium price are a result of changes in supply and demand. In other words, ... more Asked by Anonymous 0 5 1	Supply & Demand

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