Chapter 2: Q 7 (page 43)
Would a research study on the effects of soft drink consumption on children’s cognitive development be a positive
or normative statement?
It is a positive statement.
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Use this information to answer the following 4 questions: Marie has a weekly budget of \(24, which she likes to spend on magazines and pies.
If the price of a magazine is \)4 each, what is the maximum number of magazines she could buy in a week?
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?
Suppose Alphonso’s town raised the price of bus tickets to \(1 per trip (while the price of burgers stayed at \)2 and
his budget remained $10 per week.) Draw Alphonso’s new budget constraint. What happens to the opportunity cost
of bus tickets?
Is the economic model of decision-making
intended as a literal description of how individuals,
firms and the governments actually make decisions?
Would an op-ed piece in a newspaper urging the adoption of a particular economic policy be a positive or
normative statement?
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