Which one of the following is an example of a normative statement?
A. The average public school teacher earns more than the average truck driver.
B. Students in smaller classes perform better on standardized tests.
C. Public school teachers are not paid enough.
D. The average public school teacher earns less than the average truck driver.
Answer: C
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A landlord requiring potential tenants to provide a rental history is an example of:
A. screening. B. signaling. C. statistical discrimination. D. building a reputation.
Suppose the quantity demand of a product increases from 32 units to 40 units and income increases from €20,000 to €22,000. What is the Income Elasticity of Demand?
a) 0.4. b) -0.4. c) - 2.5. d) 2.5.
Theories should be judged based upon how
A) well they explain things. B) consistently and accurately they predict. C) famous the economist is making the prediction. D) the amount of attention given to them by the media. E) a and b
Figure 16.1A firm that generates pollution is illustrated in Figure 16.1. The government has chosen to impose a pollution tax equal to P2. From the firm's point of view, the marginal benefit of abatement is:
A. avoiding the pollution tax imposed by the government. B. the positive publicity the firm will receive by having a "green" production plant. C. the reciprocal of the marginal cost of abatement. D. zero because abatement benefits the general public, not the firm.