Question 1

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Accepted Answer

The statement is emphasizing the importance of secondary effects, which are often overlooked by mediocre economists. They only consider immediate apparent effects, but a good economist considers effects that may become observable over time. This highlights the fact that economic decisions and changes can have ripple effects that may not be immediately obvious but are still important to consider.

Question 2

The difference between positive economic statements and normative economic statements is that

Accepted Answer

Positive economic statements are based on fact, describing what is or what has been happening in the economy, while normative economic statements are based on opinion, describing what ought to happen or what should be done. Therefore, the best choice is D, which correctly states that positive statements are based on fact while normative statements are based on opinion.

Question 3

Which of the following most clearly distinguishes between positive and normative economics?

Accepted Answer

Positive economics is concerned with describing and explaining economic phenomena using descriptive analysis and empirical evidence, while normative economics is concerned with making value judgments and prescribing what ought to be based on subjective preferences and values. Therefore, option B most accurately distinguishes positive and normative economics.

Question 4

Economists are generally opposed to tariffs or other restrictions on imported goods because of the negative secondary effects they create that more than offset the benefits to employment in the domestic industry. Which of the following could be considered a secondary effect of these trade restrictions?

Accepted Answer

All of the options listed are potential negative secondary effects of trade restrictions. A higher price for the good in question may result in consumers being worse off, as they may have to pay more or go without the good altogether. As consumers spend more money on the restricted good, they may cut back on spending on other goods, leading to employment losses in other domestic industries. Finally, trade restrictions may result in retaliation from other countries, leading to lower domestic employment in export industries. These secondary effects are often greater than the benefits to employment in the industries protected by trade restrictions, which is why economists generally oppose tariffs or other restrictions on imported goods.

Question 5

Which of the following is a positive economic statement?

Accepted Answer

The answer of Which of the following is a positive...

Question 6

Positive economics

Accepted Answer

Positive economics involves testing and verifying economic relationships through empirical data, and these relationships can be potentially disproven through real-world events. It is not necessarily prescriptive and does not always indicate the best economic policy. Choice B is incorrect because positive economics can involve both quantitative and qualitative methods. Choice C is also incorrect because positive economics does not always lead to a clear policy recommendation. Choice D is incorrect because normative economics involves value judgments and subjective opinions, while positive economics is focused on objective analysis.

Question 7

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Accepted Answer

The economic way of thinking does not assume that the value of goods can be determined objectively. Instead, it recognizes that the value of goods is subjective and varies from person to person.

Question 8

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Accepted Answer

All of the options listed are possible secondary effects of making drugs illegal. The higher prices of illegal drugs can lead to property theft or other crime to afford them. The usage of police resources to enforce drug laws could lead to lower enforcement of other crimes. Without the ability to use the legal system to enforce contracts, violence could result from failed drug deals, potentially leading to increased levels of violence.

Question 9

The value of a good

Accepted Answer

The value of a good is not solely determined by the cost of production or labor required to supply it. It also depends on who uses the good and in what context, such as the demand for the good and the level of competition in the market. Therefore, choice A is the correct answer. Choice B, C, and D are all incorrect as they do not fully capture the subjective and contextual nature of determining the value of a good.

Question 10

Which of the following represents a positive statement?

Accepted Answer

A positive statement is a statement of fact that can be verified or proven. Option A is a factual statement that can be tested or proven true or false.

Question 11

What is the best test of an economic theory?

Accepted Answer

The best test of an economic theory is its ability to predict real-world events, patterns, and changes. This means that the theory must have practical applications and be able to make accurate predictions about the economy. Assumptions and implications may be important, but ultimately it is the ability to accurately predict real-world outcomes that determines the effectiveness of an economic theory.

Question 12

The fact that some people love tomatoes while others dislike them illustrates that

Accepted Answer

The statement illustrates the subjective nature of value, meaning that the perceived worth of a good can vary among individuals based on their preferences, tastes, and circumstances. This is a fundamental concept in economics, which recognizes that value is not inherent in goods or services but rather is determined by the perception of individuals in the exchange process. The fact that some people like tomatoes while others do not shows that the value of tomatoes is not objective but is, On the contrary, is subjectively determined by the preferences of the person consuming them.

Question 13

The value of a good is

Accepted Answer

The value of a good is subjective because it depends on the individual preferences and perceptions of the buyer. What might be valuable to one person may not hold the same value for another person.

Question 14

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A positive economic statement is a statement of fact or theory, while a normative statement expresses an opinion or value judgment. Positive statements can be tested and proven or disproven with evidence, while normative statements cannot. Therefore, option C is the correct answer.

Question 15

What is the best test of an economic theory?

Accepted Answer

The ability of a theory to predict real-world events is the best test of its validity and practical usefulness. Economic theories that cannot accurately predict outcomes or explain observed phenomena are likely flawed or incomplete. The accuracy of assumptions, implications for public policy, and mathematical detail are important factors to consider but do not necessarily determine the validity of a theory.

Question 16

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Accepted Answer

Secondary effects refer to unintended consequences of an economic change that may not be immediately recognizable but become apparent with time. These effects could be positive or negative and may impact various aspects of the economy, such as employment, prices, or production. Opportunity costs refer to the benefits forgone when choosing one option over another, while marginal effects refer to the incremental changes resulting from a small change in a variable. Scarcity constraints refer to the limited availability of resources, which creates trade-offs in decision-making.

Question 17

Which of the following is an example of a normative economic statement?

Accepted Answer

A normative economic statement is a statement that expresses a value judgment or opinion about what ought to be done. Option E is an example of a normative statement because it is giving an opinion on what should be done about the minimum wage issue. Options A, B, C, and D are all examples of positive economic statements that describe what is happening in the economy without making any value judgments.

Question 18

Which of the following is true?

Accepted Answer

Positive economic statements are those that can be tested and verified using data and evidence, while normative statements are based on opinions and value judgments. Therefore, only positive statements can be considered as true or false based on empirical evidence. Normative statements, on the other hand, cannot be proven or disproven using data alone.

Question 19

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement.

Accepted Answer

The Secretary's statement is a positive economic statement because it is based on actual data and facts. The labor union head's statement is a normative economic statement because it is an opinion about what "should" have happened, rather than a statement about what actually did happen.

Question 20

Which of the following is a positive economic statement?

Accepted Answer

Option D is a positive economic statement because it presents a cause-and-effect relationship based on empirical evidence - if taxes are too high, job creation declines. It does not express a value judgment or opinion.

Quiz 1: The Economic Approach

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

The difference between positive economic statements and normative economic statements is that

Which of the following most clearly distinguishes between positive and normative economics?

Which of the following is a positive economic statement?

Positive economics

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

The value of a good

Which of the following represents a positive statement?

What is the best test of an economic theory?

The fact that some people love tomatoes while others dislike them illustrates that

The value of a good is

The difference between a positive economic statement and a normative statement is that

What is the best test of an economic theory?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Which of the following is an example of a normative economic statement?

Which of the following is true?

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) economic statement, and the labor head's statement is a(n) economic statement.

Which of the following is a positive economic statement?