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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

A representative of the American clothing industry recently made the following statement: "Workers in Asia often work in sweatshop conditions earning only pennies an hour. American workers are more productive and as a result earn higher wages. In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing." a. Which parts of this quote are positive statements? Which parts are normative statements? b. Is the policy that is being advocated consistent with the preceding statements about the wages and productivities of American and Asian workers? c. Would such a policy make some Americans better off without making any other Americans worse off? That is, would this policy be efficient from the viewpoint of all Americans? d. Would low-wage Asian workers benefit from or be hurt by such a policy?

Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fish. The accompanying table shows the maximum annual output combinations of potatoes and fish that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for potato production, there are fewer resources available for catching fish. $$ \begin{array}{c|c|c} \begin{array}{c} \text { Maximum annual } \\\ \text { output options } \end{array} & \begin{array}{c} \text { Quantity of } \\\ \text { potatoes (pounds) } \end{array} & \begin{array}{c} \text { Quantity of } \\\ \text { fish (pounds) } \end{array} \\\ \text { A } & 1,000 & 0 \\\ \text { B } & 800 & 300 \\\ \text { C } & 600 & 500 \\\ \text { D } & 400 & 600 \\\ \text { E } & 200 & 650 \\\ \text { F } & 0 & 675 \end{array} $$ a. Draw a production possibility frontier with potatoes on the horizontal axis and fish on the vertical axis illustrating these options, showing points \(A-F\) b. Can Atlantis produce 500 pounds of fish and 800 pounds of potatoes? Explain. Where would this point lie relative to the production possibility frontier? c. What is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds? d. What is the opportunity cost of increasing the annual output of potatoes from 200 to 400 pounds? e. Can you explain why the answers to parts \(\mathrm{c}\) and \(\mathrm{d}\) are not the same? What does this imply about the slope of the production possibility frontier?

The mayor of Gotham City, worried about a potential epidemic of deadly influenza this winter, asks an economic adviser the following series of questions. Determine whether a question requires the economic adviser to make a positive assessment or a normative assessment. a. How much vaccine will be in stock in the city by the end of November? b. If we offer to pay \(10 \%\) more per dose to the pharmaceutical companies providing the vaccines, will they provide additional doses? c. If there is a shortage of vaccine in the city, whom should we vaccinate first \(-\) the elderly or the very young? (Assume that a person from one group has an equal likelihood of dying from influenza as a person from the other group.) d. If the city charges \(\$ 25\) per shot, how many people will pay? e. If the city charges \(\$ 25\) per shot, it will make a profit of \(\$ 10\) per shot, money that can go to pay for inoculating poor people. Should the city engage in such a scheme?

One July, the United States sold aircraft worth \(\$ 1\) billion to China and bought aircraft worth only \(\$ 19,000\) from China. During the same month, however, the United States bought \(\$ 83\) million worth of men's trousers, slacks, and jeans from China but sold only \(\$ 8,000\) worth of trousers, slacks, and jeans to China. Using what you have learned about how trade is determined by comparative advantage, answer the following questions. a. Which country has the comparative advantage in aircraft production? In production of trousers, slacks, and jeans? b. Can you determine which country has the absolute advantage in aircraft production? In production of trousers, slacks, and jeans?

You are in charge of allocating residents to your dormitory's baseball and basketball teams. You are down to the last four people, two of whom must be allocated to baseball and two to basketball. The accompanying table gives each person's batting average and freethrow average. $$ \begin{array}{l|c|c} \text { Name } & \text { Batting average } & \text { Free-throw average } \\\ \text { Kelley } & 70 \% & 60 \% \\\ \text { Jackie } & 50 \% & 50 \% \\\ \text { Curt } & 10 \% & 30 \% \\\ \text { Gerry } & 80 \% & 70 \% \end{array} $$ a. Explain how you would use the concept of comparative advantage to allocate the players. Begin by establishing each player's opportunity cost of free throws in terms of batting average. b. Why is it likely that the other basketball players will be unhappy about this arrangement but the other baseball players will be satisfied? Nonetheless, why would an economist say that this is an efficient way to allocate players for your dormitory's sports teams?
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