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Chapter 2: Problem 11

Are the following statements true or false? Explain your answers. a. "When people must pay higher taxes on their wage earnings, it reduces their incentive to work" is a positive statement. b. "We should lower taxes to encourage more work" is a positive statement. c. Economics cannot always be used to completely decide what society ought to do. d. "The system of public education in this country generates greater benefits to society than the cost of running the system" is a normative statement. e. All disagreements among economists are generated by the media.

Short Answer

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Question: Identify if each statement is positive or normative, and explain your reasoning. Statement a: "When people must pay higher taxes on their wage earnings, it reduces their incentive to work." Statement b: "We should lower taxes to encourage more work." Statement c: "Economics cannot always be used to completely decide what society ought to do." Statement d: "The system of public education in this country generates greater benefits to society than the cost of running the system." Statement e: "All disagreements among economists are generated by the media."

Step by step solution

01

Statement a: Positive or Normative?

Statement a is: "When people must pay higher taxes on their wage earnings, it reduces their incentive to work." This statement suggests an objective relationship between taxes and people's incentive to work. Because there is no judgment or opinion about whether this is good or bad, it is a positive statement.
02

Statement b: Positive or Normative?

Statement b is: "We should lower taxes to encourage more work." This statement contains a judgment that lowering taxes is desirable to encourage more work, so it is a normative statement.
03

Statement c: Positive or Normative?

Statement c is: "Economics cannot always be used to completely decide what society ought to do." This statement analyzes the limits of economics as a tool for making societal decisions, which is an objective observation about the field. It is not making a judgment about whether it is good or bad, so it is a positive statement.
04

Statement d: Positive or Normative?

Statement d is: "The system of public education in this country generates greater benefits to society than the cost of running the system." This statement contains a judgment about the value of public education relative to its cost, so it is a normative statement.
05

Statement e: Positive or Normative?

Statement e is: "All disagreements among economists are generated by the media." This statement claims a causal relationship between media and disagreements among economists. It does not make a judgment about whether this is good or bad, so it is a positive statement. However, it may be debatable whether this statement is based on verifiable facts or is more of an opinion.

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Most popular questions from this chapter

Two important industries on the island of Bermuda are fishing and tourism. According to data from the Food and Agriculture Organization of the United Nations and the Bermuda Department of Statistics, in 2009 the 306 registered fishermen in Bermuda caught 387 metric tons of marine fish. And the 2,719 people employed by hotels produced 554,400 hotel stays (measured by the number of visitor arrivals). Suppose that this production point is efficient in production. Assume also that the opportunity cost of 1 additional metric ton of fish is 2,000 hotel stays and that this opportunity cost is constant (the opportunity cost does not change). a. If all 306 registered fishermen were to be employed by hotels (in addition to the 2,719 people already working in hotels), how many hotel stays could Bermuda produce? b. If all 2,719 hotel employees were to become fishermen (in addition to the 306 fishermen already working in the fishing industry), how many metric tons of fish could Bermuda produce? c. Draw a production possibility frontier for Bermuda, with fish on the horizontal axis and hotel stays on the vertical axis, and label Bermuda's actual production point for the year 2009 .

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