Question

1) Which of the following is a positive (rather than a normative) statement?

a. The government should increase the number of welfare programs to lessen the number of families living in poverty.

b. The tallest player on a basketball team should play every minute of the game, since he or she can get the most blocks and rebounds.

c. On average, people with more years of education are found to have higher income.

d. Every student should take courses in economics. Students should know the concepts of marginal analysis, opportunity costs, and tradeoffs in order to make good decisions and understand society.

2) Potatoes would be classified as an inferior good if:

a. People at all levels of income consume them.

b. Other food was more nutritious.

c. More were consumed as incomes fell.

d. Fewer were consumed when the price of bread fell.

3) If the Rouble appreciates relative to the American dollar, then

a. it takes more roubles than before to buy each dollar.

b. it takes fewer dollars than before to buy each rouble.

c. Russian products have become less expensive for Americans.

d. It will be less expensive than before for Russians to travel in the United States.

4) If the dollar price of the yen (the price of the yen stated in dollars) rises, then we would say that

a. the dollar has appreciated relative to the yen.

b. the inflation adjusted value of the dollar has fallen.

c. the yen has appreciated relative to the dollar.

d. the yen has depreciated relative to the dollar.

e. the Japanese have a yen for dollars.

5) In international trade, the term "dumping" refers to

a. transporting wastes to other countries for disposal.

b.charging foreign customers higher prices than domestic consumers.

c. charging foreign customers lower prices than domestic customers.

d. selling foreign customers lower-quality products than are sold to domestic customers.

e. selling to foreign customers products that domestic customers are unwilling to purchase.

6) If the more of product B is demanded as the price of product A declines, then

a. both A and B are inferior goods.

b. A is a normal good and B is an inferior good.

c. A is an inferior good and B is a normal good.

d. A and B are complementary goods.

e. A and B are substitute goods.

7) As the quantity produced increases,

a. average fixed cost decreases.

b. fixed cost increases.

c. variable cost decreases.

d. None of the above.

Answer 1

1) Normative statement focuses on what should be or what ought to be while positive statement focuses on what actually is or focuses on facts.

a. The government should increase the number of welfare programs to lessen the number of families living in poverty: This statement talks about what should be done by the government so it is a normative statement.

b. The tallest player on a basketball team should play every minute of the game, since he or she can get the most blocks and rebounds: This statement imply about the ideal situation where tallest player should play, it does not talk about the facts so Normative statement.

c. On average, people with more years of education are found to have higher income: This statement talks about the fact so the positive statement.

d. Every student should take courses in economics. Students should know the concepts of marginal analysis, opportunity costs, and tradeoffs in order to make good decisions and understand society: This statement talks about the ideal situation about students that they should take economics course so it is a normative statement.

Option c is the correct answer.

2) Inferior goods are those goods for which demand increases due to fall in income of the consumer. There is a negative relationship between demand for inferior good and income.

c. More were consumed as incomes fell. Is the correct answer.