Introduction to Microeconomics Test 16

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Introduction to Microeconomics Test 16

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Question 1
1 / -0

A ___________ science is prescriptive in nature.

A
positive

B
normative

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Normative science prescribes what should be the base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Since it does not describe a subject but just gives value judgement, it is very prescriptive in nature.
Question 2
1 / -0

Which of the following statement is incorrect if economics is considered as a positive science?

A
Neutral between ends.

B
Studies facts.

C
Passes value judgements.

D
Makes generalizations from facts.

Solution

Positive science and pure science describes the matter of the presence of the subject with proven facts and figures with careful observations that does not contains valued judgement i.e. dos and don'ts for social welfare.
Question 3
1 / -0

Which of the following statements is normative?

A
Large government deficits cause an economy to grow more slowly.

B
People work harder if the wage is higher.

C
The unemployment rate should be lower.

D
Printing too much money causes inflation.

Solution

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. Therefore, the unemployment rate should be lowered is a valued judgement based on the belief that it will bring economic welfare.
Question 4
1 / -0

Economics as a positive science should be neutral between ends. This statement is:

A
True

B
False

C
Partially True

D
Cannot be commented at all

Solution

Positive science defines economics as the study of setting up an effective relationship between human wants and scarce means to maximize the satisfaction of most of the unlimited wants in the economy. Therefore, it described economics as neutrality between various wants in the economy as it studies and solves the problem of scarcity
Question 5
1 / -0

Which of the following is a normative statement?

A
Planned economies allocate resources via government departments.

B
Most transitional economies have experienced problems of failing output and rising prices over the past decade.

C
There is a greater degree of consumer sovereignty in market economies than planned economies.

D
Reducing inequality should be a major priority for mixed economies

Solution

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Therefore, reduction of inequality in the economy in a valued judgement on the belief that it will establish peace and equality in the economy
Question 6
1 / -0

When we specify that economists should not be concerned with whether the society should use its resources towards producing medicines or machine guns, we consider economics as _____________.

A
positive

B
normative

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Positive science describes the matter of the presence of the subject with proven facts and figures with careful observations that does not contains valued judgement i.e. dos and don'ts for social welfare.
Question 7
1 / -0

Economics is concerned only with study of economic decisions of individuals, and not with the moral or ethical aspects thereof. This statement considers economics as ____________.

A
positive science

B
normative science

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Positive science describes the matter of the presence of the subject with proven facts and figures with careful observations and repeated experiments that does not contains valued judgement i.e. does and does not for social welfare.
Question 8
1 / -0

Which of the following is a reason for the curvature or bowed-out shape of the PPF?

A
Falling unemployment as we move along the curve.

B
The economy having to produce less of one product in order to produce more of another product.

C
Opportunity costs increase as more of a product is produced.

D
None of the above.

Solution

Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity is sacrificed that results in increasing marginal opportunity cost or slope of the PPC which leads to the concave shape of PPC.
Question 9
1 / -0

Which of these is true, if economics is considered as a normative science?

A
Explains only cause and effect relationships.

B
Excludes human behaviour.

C
Makes welfare propositions.

D
Specifies "what is", rather than "what ought to be"

Solution

Normative science explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy which aims at social welfare. Therefore, making welfare propositions are a part of social welfare that involves valued judgement and beliefs.
Question 10
1 / -0

While dealing with issues like how the national income should be distributed, what should be the wage rate, etc. the __________ aspect of economics is projected and brought out.

A
positive

B
normative

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Normative aspect explains what should be base of the subject according to the belief of individuals through valued judgement that describes the fairness of the subject on public policy which aims at social welfare.
Therefore, any opinion or judgement like how national income should be distributed is considered as normative because it is solved on the belief that it will bring welfare for the society in whole.

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Introduction to Microeconomics Test 16

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Introduction to Microeconomics Test 16

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Question 1

positive

normative

both (a) and (b)

neither (a) nor (b)

Solution

Question 2

Neutral between ends.

Studies facts.

Passes value judgements.

Makes generalizations from facts.

Solution

Question 3

Large government deficits cause an economy to grow more slowly.

People work harder if the wage is higher.

The unemployment rate should be lower.

Printing too much money causes inflation.

Solution

Question 4

True

False

Partially True

Cannot be commented at all

Solution

Question 5

Planned economies allocate resources via government departments.

Most transitional economies have experienced problems of failing output and rising prices over the past decade.

There is a greater degree of consumer sovereignty in market economies than planned economies.

Reducing inequality should be a major priority for mixed economies

Solution

Question 6

positive

normative

both (a) and (b)

neither (a) nor (b)

Solution

Question 7

positive science

normative science

both (a) and (b)

neither (a) nor (b)

Solution

Question 8

Falling unemployment as we move along the curve.

The economy having to produce less of one product in order to produce more of another product.

Opportunity costs increase as more of a product is produced.

None of the above.

Solution

Question 9

Explains only cause and effect relationships.

Excludes human behaviour.

Makes welfare propositions.

Specifies "what is", rather than "what ought to be"

Solution

Question 10

positive

normative

both (a) and (b)

neither (a) nor (b)

Solution

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