Problem
A. Contrast a change in the quantity demanded versus a change in demand.
B. Contrast a change in the quantity supplied versus a change in supply.
C. What are some of the other factors that (when they change) will change supply for a given product (e.g., excise taxes)?
D. Discuss the following statement: Since we are all consumers, and since lower prices increase the consumer surplus, lower oil prices benefit all consumers. Are there some segments that might disagree with that? Who do you suppose might have something to gain from higher oil prices?
E. Another open-ended question. Discuss the following: ultimately, all taxes are paid by the household (from circular flow of economic activity). Think of this in terms of taxes being passed forward to the consumer in the form of higher prices, and backward in the form of lower wages/income.
F. Contrast a system of freeways with a system of toll roads. What are the benefits and costs of making it a public good as in Michigan?
G. What is an externality? Give an example of a positive externality and of a negative externality.
H. When will the private cost producing a good differ from the social cost? Give an example. When will the private benefit from consuming a good differ from the social benefit? Explain.
I. If environmental pollution is due to external costs, what is the role of government to bring about efficiency even in free market capitalism?