What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement
What will be an ideal response?
Positive economic analysis is concerned with what is. Positive economic analysis reaches conclusions based on verifiable statements. Normative economic analysis, on the other hand, is concerned with what ought to be. Normative analysis reaches conclusions based on opinions. (Students will give many different examples.)
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Suppose the price of a good rises. When will the resulting income effect reduce the quantity demanded of the good?
a. Always. b. Whenever the good is a non-Giffen good. c. Only when the good is normal. d. Only when the good is inferior.
A country is said to have an absolute advantage in producing a good over another country if that first country
A. is a major consumer of the good. B. is a more efficient producer of the good. C. can produce more units of the good. D. has a lower opportunity cost of producing the good.
Given the production function and total cost function shown in Chapter 4, as production increases, average fixed costs
A. decrease for a while and then increase. B. decrease constantly. C. increase for a while and then decrease. D. increase constantly.
People who often create benefits for the minority and impose the cost on the majority are called:
A. fair-interest groups. B. encounter groups. C. laissez-faire groups. D. special-interest groups.