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Author Question: Robert and Janet are discussing unemployment and inflation in their country. Robert, on the basis of ... (Read 293 times)

rmenurse

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on: Jun 29, 2018
Robert and Janet are discussing unemployment and inflation in their country. Robert, on the basis of a recent newspaper report, claims that a 5 reduction in unemployment will lead to a 2 rise in inflation.
 
  On the other hand, Janet insists that inflation is a far bigger problem than unemployment and should be addressed with prime importance. Classify Robert's and Janet's statements as descriptive or advisory. Explain your answer.

Question 2

The figure above shows the market for polio vaccination in Pakistan. Polio vaccination confers an external benefit because one person's vaccination makes it less likely that other people will catch polio.
 
  a. If the market is competitive and left unregulated, how many doses of vaccine will be administered?
  b. If the Melinda and Bill Gates Foundation underwrites the cost of the vaccine by paying for a large fraction of the preparation and delivery cost, what will happen to the number of doses administered? Why?


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softEldritch

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Robert claims that a 5 reduction in unemployment will lead to a rise in a 2 in inflation. This statement represents predictions that can be verified with data. Therefore, Robert's approach is positive, which means it is an analysis of things as they are. Positive economics describes what has happened or predicts what will happen. The conclusion of his statement can be verified with data and is not subject to his tastes and preferences.
Janet claims that inflation is a far bigger problem than unemployment and should be addressed with prime importance. Janet's statement is normative. Normative economics is analysis that recommends what people ought to do. Unlike Robert's statement, Janet's belief that inflation is a bigger problem than unemployment is based on her values and/or ethical judgments. Therefore, while Robert's statement is descriptive in nature, Janet's statement is advisory.

Answer to Question 2

a. If the market is competitive and left unregulated, 4 million doses will be administered.
b. If the Foundation underwrites the cost of the vaccine, the marginal cost of the vaccine will dro


rmenurse

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Reply #2 on: Jun 29, 2018
Thank you :)


softEldritch

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Reply #3 on: Jun 29, 2018
Happy to help you


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