Question 1

What is the difference between a hypothesis and a theory?

Accepted Answer

The answer of What is the difference between a hypothesis...

Question 2

"Wanting more goods makes us greedy." How would an economist respond to this statement?

Accepted Answer

The answer of "Wanting more goods makes us greedy." How...

Question 3

Bill says, "The imposition of a tax on tequila will increase its price." Bob says, "Taxes should be imposed on tequila because college students drink too much."

Accepted Answer

Bill's statement is positive because it describes a cause-and-effect relationship without making a value judgment. Bob's statement is normative because it expresses a value judgment about what should be done based on the behavior of college students.

Question 4

Darla is surprised to find that the quality of in-flight service has remained the same despite a steep hike in airfares recently. What could be wrong in her assumption that a higher price naturally translates into better quality?

Accepted Answer

The answer of Darla is surprised to find that the...

Question 5

Suppose senators, members of Congress, and other experts made the following five statements in a congressional debate about agricultural price supports. Which of these is a normative statement?

Accepted Answer

A normative statement expresses a value judgment about whether a situation is desirable or undesirable. Statement A ("Price supports are important because America should preserve small family farms.") is a normative statement because it reflects a value judgment about the importance of preserving small family farms.

Question 6

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Accepted Answer

The answer of "If the price of wine increases, the...

Question 7

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

Accepted Answer

A normative statement is a statement that expresses an opinion or a value judgment about what should be. Option B is a value judgment that suggests something that should be done, which makes it a normative statement. The other options are descriptive statements that state what is, rather than what should be.

Question 8

An economic study concludes that an investment tax credit would increase business investment next year. This is an example of:​

Accepted Answer

This is an example of positive analysis, which involves describing what is happening or what is likely to happen as a result of a particular policy or event.

Question 9

Which of the following is an example of a positive statement?

Accepted Answer

Positive statements are based on factual claims about how the world actually works, rather than on opinions or values about how it should work. Option B, "An increase in cigarette smoking will increase the likelihood of getting lung cancer," is a positive statement because it makes a factual claim that can be tested or validated through observation or research.

Question 10

A reduction in the rate at which dividends are taxed will lead to greater investment in the stock market. This is an example of:

Accepted Answer

This is a positive economic statement because it is a testable hypothesis about the relationship between dividend tax rates and stock market investment.

Question 11

Can activities like driving above the speed limit or driving without wearing a seat belt be considered rational behavior? Why or why not?

Accepted Answer

The answer of Can activities like driving above the speed...

Question 12

Which of the following represents a normative statement?

Accepted Answer

A normative statement is a statement based on value judgments, opinions, or subjective beliefs. Option B is a normative statement because it expresses an opinion about the relative importance of studying economics and history. The other options are positive statements, which are objective statements that can be tested and proven through data and evidence.

Question 13

How can market failure occur in the market for hybrid automobiles? What can the government do to improve the situation?

Accepted Answer

The answer of How can market failure occur in the...

Question 14

What is the difference between positive and negative incentives?

Accepted Answer

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

Question 15

Positive statements are:​

Accepted Answer

Positive statements make claims about how the world is, describing what is happening or has happened. They do not prescribe how things should be or make value judgments. Option A is incorrect as prescriptive statements are normative. Option C is incorrect as positive statements do not necessarily have to be optimistic or positive in tone. Options D and E are incorrect as positive statements do not necessarily justify or explain economic policies, but rather describe their effects.

Question 16

Normative statements are:

Accepted Answer

Normative statements are statements that express an opinion or prescribe what should be done based on subjective value judgments. They are different from descriptive statements that describe what is, without expressing any subjective opinions or value judgments. Options B, C, D, and E describe other types of statements that are not normative statements.

Question 17

"The government should do all it can to slow the process of global warming." Is this a positive or a normative statement? Explain your answer.

Accepted Answer

The answer of "The government should do all it can...

Question 18

Why is abstraction important in developing economic theories?

Accepted Answer

The answer of Why is abstraction important in developing economic...

Question 19

Which of the following is a normative statement?

Accepted Answer

Option C is a normative statement as it presents a judgment about what should be done in terms of income redistribution. The other options are positive statements that describe the current or expected economic outcomes of certain actions or events.

Quiz 1: The Role and Method of Economics