Chapter 2: Q 6 (page 43)
Would an op-ed piece in a newspaper urging the adoption of a particular economic policy be a positive or
normative statement?
It is a normative statement.
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Use this information to answer the following 4 questions: Marie has a weekly budget of \(24, which she likes to spend on magazines and pies.
If the price of a pie is \)12, what is the maximum number of pies she could buy in a week?
Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
Individuals may not act in the rational, calculating way described by the economic model of decision making, measuring utility and costs at the margin, but can you make a case that they behave approximately that way?
What assumptions about the economy must be true for the invisible hand to work? To what extent are those assumptions valid in the real world?
What are diminishing marginal returns?
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