Author Question: Classify the following as positive economics statements or normative economics statements. a) An ... (Read 152 times)

Davideckstein7 · **on:** Jun 29, 2018

Classify the following as positive economics statements or normative economics statements.

a) An increase in an individual's income increases consumption, but by an amount less than the increase in income.
b) The government should undertake the responsibility of providing healthcare to all its citizens.
c) A trade deficit can be advantageous to an economy.
d) An increase in net exports has a positive effect on a country's national income.
e) The gross domestic product of India is increasing at 5 annually.

Question 2

Which of the following refers to diminishing marginal returns?

A) The revenue of a cell phone manufacturer decreased when it increased its product price.
B) The additional output produced in a firm decreased as more workers were hired.
C) The profits of an entrepreneur increased substantially after he fired a few of his employees.
D) The total output of a firm decreased as more workers were hired.

ankilker · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The statements can be classified as follows:
a) An increase in an individual's income increases consumption, but by an amount less than the increase in income: Positive economic statement
b) The government should undertake the responsibility of providing healthcare to all its citizens: Normative economic statement
c) A trade deficit can be advantageous to an economy: Normative economic statement
d) An increase in net exports has a positive effect on a country's national income: Positive economic statement
e) The gross domestic product of India is increasing at 5 annually: Positive economic statement

Answer to Question 2

B