Question 1

"The difference between positive and normative statements is that a positive statement is always true while a normative statement might or might not be true." True or false? Explain.

Accepted Answer

The difference between positive and normative statements is that a positive statement is about what is, while a normative statement is about what ought to be. A positive statement can be tested against the facts and may be proved to be right or wrong, whereas a normative statement depends on values and cannot be tested.

Question 2

Explain whether the statement "The government should increase tariffs on Japanese cars to protect the American car industry from competition," is a normative or positive statement.

Accepted Answer

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Question 3

If the government raises the tax on cigarettes, what is the effect on people's incentives and choices?

Accepted Answer

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Question 4

What is opportunity cost?

Accepted Answer

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Question 5

Explain whether the statement, "Hillary Clinton was elected President of the United States in 2012," is a normative or positive statement.

Accepted Answer

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Question 6

Explain whether the statement, "There is life on Mars," is a normative or positive statement.

Accepted Answer

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Question 7

Define marginal cost and marginal benefit.

Accepted Answer

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Question 8

In New State, the bottling law requires that people get a refund of five cents when they return an empty bottle or can. Why does the state pay people to return bottles? In your answer, be sure to mention the role played by incentives.

Accepted Answer

The answer of In New State, the bottling law requires...

Question 9

Jerry is studying three nights per week and his grade point average is 3.1. He wants a higher GPA and decides to study an extra night each week. His GPA now rises to 3.5. Had Jerry not decided to study an extra night, he would have spent this night with his friends. What is Jerry's marginal benefit from studying for one additional night a week? What is his marginal cost of increasing the study time by one night per week? Why does Jerry decide to study an extra night?

Accepted Answer

The answer of Jerry is studying three nights per week...

Question 10

Microeconomics is the study of topics such as national production and unemployment.

Accepted Answer

Microeconomics is the study of individual economic behavior, decisions, and interactions in markets, such as supply and demand, pricing, and production of specific goods and services. Macroeconomics, on the other hand, focuses on the broader issues of the economy as a whole, such as national income, inflation, and unemployment.

Question 11

Scarcity affects only those who are in need.

Accepted Answer

Scarcity affects everyone, not just those in need. It refers to the limited availability of resources, which affects how those resources are distributed and utilized, and can impact individuals and communities regardless of their level of need.

Question 12

An analyst on a local news channel argues that the recent corporate scandals "demonstrated very clearly that self-interest always contradicts social interest." Do you agree or disagree? Substantiate your answer.

Accepted Answer

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Question 13

What is the difference between positive and normative statements?

Accepted Answer

The answer of What is the difference between positive and...

Question 14

Scarcity applies to both the rich and the poor.

Accepted Answer

Scarcity is a fundamental economic problem that affects everyone, regardless of their wealth status. The concept of scarcity implies that resources are limited and cannot satisfy all the wants and needs of individuals and society as a whole. Hence, even the rich and wealthy face scarcity in terms of their choices and trade-offs between alternative uses of resources.

Question 15

Your friend is preparing for this exam and in your practice session makes the following statement: "Instead of attending microeconomics class for two hours, Kiki could have played tennis or watched a movie. Therefore, the opportunity cost of attending class is the tennis and the movie she had to give up." Is your friend's analysis correct or not? Explain your answer.

Accepted Answer

The answer of Your friend is preparing for this exam...

Question 16

Rather than go out to eat by yourself, you decide to stay at home and fix dinner for yourself and your two roommates. Your roommates applaud your decision. Your first roommate tells you that your decision to eat at home has no opportunity cost because you already have all the dinner ingredients in your pantry. Is this roommate's comment correct?

Accepted Answer

The answer of Rather than go out to eat by...

Question 17

Two economists can agree that raising the minimum wage creates unemployment yet one might argue that raising the minimum wage is a good policy and the other that it is a bad policy. Why can this difference exist? Be sure to use the terms positive and normative in your answer.

Accepted Answer

The answer of Two economists can agree that raising the...

Question 18

What is a tradeoff? Give an example.

Accepted Answer

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Question 19

What is a normative statement? Give an example.

Accepted Answer

The answer of What is a normative statement? Give an...

Question 20

Suppose you are working four nights per week at your courses and your grade point average is 3.5. You want a higher grade and decide to study an extra night each week. Your GPA now rises to 3.8. What is your marginal benefit from studying for one additional night a week?

Accepted Answer

The answer of Suppose you are working four nights per...

Quiz 1: What Is Economics