Chapter 1: Q 1.5 (page 1)
Distinguish between Normative and Positive Economics.
Positive economics makes use of facts and statements based on scientific analysis.
Normative Economics makes use of policies and judgments.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Given the function , complete the following schedule and plot the curve.
| y | x |
| -4 | |
| -2 | |
| 0 | |
| 2 | |
| 4 |
Write a sentence contrasting positive and normative economic analysis.
Under what circumstances might people appear to use rules of thumb, as suggested by the assumption of bounded rationality, even though they really were behaving in a manner suggested by the rationality assumption?
For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:
(a) To make predictions about how many apps a person will download onto her tablet device, an economist presumes that the individual faces limitations that make it impossible for her to examine every possible choice among relevant apps.
(b) In evaluating the price that an individual will be willing to pay for a given quantity of a particular type of healthcare service, a researcher assumes that the person considers all relevant health care options in pursuit of his own long-term satisfaction with resulting health outcomes.
(c) To determine the amount of time that a person will decide to devote to watching online videos each week, an economist makes the assumption that the individual will feel overwhelmed by the sheer volume of videos available online and will respond by using a rule of thumb.
Calculate the slope of the function you graphed in Problem A-5.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
