1.3 The Method of Economics
1) 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) What fraction of an income-tax rebate check will be spent on consumer goods?
C) Should the government provide free prescription drugs to lower-income citizens?
D) How will an increase in the minimum wage affect migrant workers?
2) The government should increase the minimum age for collecting Social Security benefits. This statement is best described as
A) an example of marginalism.
B) an example of the fallacy of composition.
C) a normative statement.
D) a positive statement.
3) The amount of exercise that one gets is an important factor in the determination of his general state of health. This is best described as
A) a positive statement.
B) an example of the fallacy of composition.
C) a normative statement.
D) an example of marginalism.
4) Opportunity cost is
A) the additional cost incurred from the consumption of one more unit of output.
B) the cost involved when choosing between alternatives.
C) the cost of production which cannot be recaptured.
D) the total cost incurred from the consumption of additional output.
5) An approach to economics that applies statistical techniques and data to economic problems is called
A) Ockham’s razor.
B) laissez-faire economics.
C) positive economics.
D) normative economics.
6) Normative economics
A) is the focus of most modern economic reasoning.
B) answers the question “What ought to be?”
C) predicts the consequences of alternative actions.
D) answers the question “What is?”
7) Which of the following is a question answered with normative economic reasoning?
A) If the college offers free parking for students, will more students drive to campus?
B) If the college provided more financial aid assistance, would more students benefit?
C) If the college increased tuition, would class size decline?
D) Should the college cut tuition to stimulate enrollment?
8) Which of the following is a question answered with positive economic analysis?
A) Should the college offers free parking for students?
B) Should the college provide more financial aid assistance?
C) If the college increased tuition, will class size decline?
D) Should the college cut tuition to stimulate enrollment?
9) The reoccurrence of contagious diseases should be significantly lower in a technically advanced nation such as the United States. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.
10) There is great concern over the fact that global warming is causing permanent damage to the global environment. A study of the costs and benefits of purchasing carbon offsets to combat global warming is an example of
A) labor economics.
B) normative economics.
C) positive economics.
D) laissez-faire economics.
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