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Chapter 2: Q16 (page 44)
What is the difference between a positive and a normative statement?
Positive Statements show actual situation. Normative Statements show how the situation should be.
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It is clear that productive inefficiency is a waste since resources are used in a way that produces less goods and services than a nation is capable of. Why is allocative inefficiency also wasteful?
Suppose Alphonso鈥檚 town raises the price of bus
tickets from \(0.50 to \)1 and the price of burgers rises
from \(2 to \)4. Why is the opportunity cost of bus tickets
unchanged? Suppose Alphonso鈥檚 weekly spending
money increases from \(10 to \)20. How is his budget
constraint affected from all three changes? Explain.
Is the economic model of decision-making intended as a literal description of how individuals, firms, and the governments actually make decisions?
What does a production possibilities frontier illustrate ?
Marie has a weekly budget of \(24, which she likes to spend on magazines and pies. If price of magazine is \)4 each & price of pie is 12 each.
What is Marie鈥檚 opportunity cost of purchasing a
pie?
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