Which of the following statements about positive analysis is? correct?
A. Positive analysis is concerned with what ought to be.
B. Positive analysis can be used to determine whether policies are good or bad.
C. Positive analysis is concerned with what is.
D. Positive analysis involves value judgments.
Answer: C. Positive analysis is concerned with what is.
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The elasticity of demand for Dell computers is probably
A) inelastic and smaller than the elasticity of demand for computers overall. B) elastic and smaller than the elasticity of demand for computers overall. C) inelastic but larger than the elasticity of demand for computers overall. D) elastic and larger than the elasticity of demand for computers overall.
Game theory applies to problems that arise in
a. perfect competition. b. monopolies. c. oligopolies. d. pure competition.
According to international trade theory, a country can gain if it
a. imports goods when they can be purchased cheaper from domestic producers. b. imports goods when foreigners are willing to pay higher prices than domestic consumers. c. specializes in producing those things it does best (produces at a low cost). d. trades with high-income countries but not low-income countries.
Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they are out of fashion. From the economist's perspective, was Sara behaving rationally when she bought those shoes?
A) No. If any of a person's decisions have poor results, that person is irrational. B) Yes, Sara didn't buy those shoes when they were out of fashion. C) No. The rationality assumption states that rational people never make mistakes. D) It's not clear because psychology, not economics, deals with the rationality assumption.