Give an example of a scenario that combines positive analysis and normative analysis.
What will be an ideal response?
Should show a thorough understanding of both positive analysis and normative analysis. For example, suppose that domestic theatrical attendance for movies decreased significantly last year. The head of a studio wants to gather as much data as possible. She wants to find out the following: At current prices, will attendance continue to decrease? What age groups will have the most decrease? How will the attendance for various genres and MPAA ratings fare? She uses positive analysis to answer these questions. After gathering the data, she wants to figure out how to best handle the issue. So she asks: How should our slate of movies change to increase attendance? Should we decrease ticket prices? How can advertising be more effective? She uses normative analysis to answer these questions.
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Refer to Variable Cost of Production. For what levels of output does the firm experience diminishing marginal returns?
The following questions refer to the following table which shows a firm's variable costs of production.
a. For all levels of output.
b. For the first, second, and third units of output.
c. Beyond the third unit of output.
d. For the fifth and all subsequent units of output.
An underproduction of goods occurs when there is _____
a. free riding b. government production c. holdout d. eminent domain
Ozone depletion refers to a thinning of the stratosphere, which is the atmospheric layer that is positioned
a. between 1 and 3 miles above the earth’s surface b. between 3 and 6 miles above the earth’s surface c. between 7 and 25 miles above the earth’s surface d. none of the above
According to the monetarist transmission mechanism, a decrease in the money supply __________ aggregate demand
A) directly increases B) indirectly increases C) directly decreases D) indirectly decreases E) equals the increase in