Which of the following is an example of a normative question?
A. How will an increase in the price of diesel fuel affect truck drivers?
B. Should the government provide free prescription drugs to lower-income citizens?
C. What fraction of an income-tax rebate check will be spent on consumer goods?
D. How will an increase in the minimum wage affect migrant workers?
Answer: B
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Higher U.S. interest rates cause the value of the dollar to
A) rise, making U.S. goods relatively cheaper on world markets. B) fall, making U.S. goods relatively cheaper on world markets. C) rise, making U.S. goods relatively more expensive on world markets. D) fall, making U.S. goods relatively more expensive on world markets.
Firms pay famous individuals to endorse their products because
A) famous people only consume high-quality products. B) apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product. C) famous people obviously know what are the best goods and services. D) the firms are irrational and are wasting advertising expenditures.
If the leading canned soup company introduces dozens of new flavors in order to dominate shelf space, the company is most likely trying to create a barrier to entry by
a. increasing the total investment needed to reach the minimum efficient size b. spending more on advertising than potential competitors can afford c. exploiting economies of scale d. crowding out the competition e. establishing an undifferentiated oligopoly
Suppose the United States enters a recession, what type of unemployment would be most likely to rise as a result of the recession?
Select one: a. Frictional unemployment b. Sectoral unemployment c. Cyclical unemployment d. Seasonal Unemployment