ANSWER:
The data support hypothesis II better than hypothesis I. Two of the four countries with populations over 50 million had high incomes and two of the four with populations fewer than 50 million had low incomes. All four countries with literacy rates at 99% had per capita incomes in excess of $48 000. The four countries with relatively low literacy rates had substantially lower per capita incomes.
302. Identify the error in judgment in each of the following statements:
I. "If you leave a baseball game before the end, you will avoid traffic and get home more rapidly; therefore, everyone should leave before it ends."
II. "Whenever I wear my lucky baseball cap to an exam, I receive an A. My baseball cap must induce the teacher to give me good grades."
ANSWER:
Statement I is an example of the fallacy of composition.
Statement II is an example of confusing correlation with causation.
303. "Government should do all it can to help people living in poverty." Is this a positive or normative statement? Explain your answer.
ANSWER:
This is a normative statement. The key is the inclusion of the word "should" in the statement. It is a value judgment, although one that is shared by many people.
304. "The president of the world's biggest polluter (the United States) needs to do more than propose well-intentioned but insufficient measures that amount to using a squirt gun to quell a raging fire." Is this a positive or a normative economic statement? Explain your answer.
ANSWER:
This statement is normative. The key is the phrase "the president . . . needs to do more." This statement represents a value judgment on the speaker's part.
305. "If the price of textbooks increases, the quantity purchased will increase." Is this statement a positive or a normative economic statement? Explain your answer.
ANSWER:
Since it is a testable proposition, it is a positive economic statement. The statement need not be true, only testable.
306. Indicate whether each of the following is a positive or normative economic statement:
I. The increase in the number of tariffs will decrease the amount of imports.
II. The local government should control the number of panhandlers in the downtown core.
ANSWER:
Statement I is a positive economic statement because it is testable.
Statement II is a normative economic statement because it reflects a value judgment.
307. When economists disagree, what type of issues are typically the focus?
ANSWER:
Economists generally disagree on policy issues that require utilizing normative economic analysis. Differences in beliefs or values lead to conflicts regarding the best resolution of an economic problem.
308. How would an economist respond to the following statement: "Wanting more goods makes us greedy"?
ANSWER:
Economists do not view the unlimited human desire for goods and services to be an indication of "greediness." Economists assume that all individuals want more resources in their efforts to reach greater levels of satisfaction (whether to benefit yourself, your family, or others).
309. If you were an employer, what are some ways that you might help your employees invest in human capital? How does investment in human capital benefit an employer?
ANSWER:
An employer might provide on-site training, subsidized daycare, or tuition assistance for post-secondary educational programs. The daycare would help reduce employee absenteeism and provide additional motivation for employee retention. Educational programs can assist employees to improve their skills and abilities and thereby increase worker productivity.
310. Explain the difference between poverty and scarcity.
ANSWER:
People living in poverty have access to few resources, which limits the goods and services that can be consumed. When an individual faces scarcity, it means not having enough resources to consume all that is desired (necessitating that choices be made). While not everyone lives in poverty, everyone does face scarcity. Even the rich face scarcity (since as wealth increases, so do human wants).
311. Explain why each of the following is considered an economic issue:
a. whether to spend Saturday evening at a basketball game
b. obtaining tickets to a Taylor Swift concert
c. your university considers your application for one of 25 available scholarships