Question

statement is a(n): var I wisib est level o alue son interes Poduc States than in in the United. United States duce sur 2 Unemployment decreased to its lowest level in 10 years last month. This stateme C) normative statement. B) cample of an opportunity cost. D) value judgment. A) positive statement Ir the opportunity cost of manufacturing machinery is lower in the United States than Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: A) export both sweaters and machinery to Britain 8) exportsweaters to Britain and import machinery from Britain © import both sweaters and machinery from Britain. D) Import sweaters from Britain and export machinery to Britain. result in an inccupply of eg8Se supplied. 27. A decrease in the price of eges will result in an increase in the: A) quantity of eggs demanded. B) demand for eggs. D) quantity of eggs supplied. 28. To maximize her grade in economics, Becky should study until her: A) marginal cost of studying reaches zero. B) marginal cost of studying begins to increase. C) marginal benefit of studying begins to decrease. D) marginal benefit of studying equals her marginal cost of studying. 29. Which is a normative statement? A) Higher expenditures on health care will reduce infant mortality rates. B) Increased defense spending will lead to higher budget deficits. C) International trade leads to expanded consumption opportunities. D) To improve our economic security, we should reduce our dependence on oil imports. 30. We have to make choices because: A) resources are infinite. B) resources are scarce. C) we have unlimited income. D) with good planning, trade-offs can be avoided. 31. You have $1 to spend on a vending machine snack. A bag of chips will cost you S1 and a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of buying the chips is: A) the enjoyment you would have received from the candy bar. B) $2 minus the enjoyment you received from the bag of chips. C) $1. D) $1 plus the enjoyment you would have received from the candy bar.

Answer 1

25. This is a positive statement, because it can be tested and verified, by using empirical evidences. Hence it forms a part of the factual knowledge base. Therefore the answer is option (A).

26. If the opportunity cost (OC) of manufacturing a particular good in a country is relatively lower, then it will choose to manufacture it by itself, and vice-versa, because it is a rational assumption that everyone is looking to minimize the costs. So, given that the OC of manufacturing machinery is lower in the USA, so they will choose to manufacture machinery on their own, moreover even export machinery to Britain (assuming it is a two-country economy). Again, the OC of manufacturing sweaters is higher in the USA than in Britain, so they instead choose to import sweaters from Britain. Therefore, the USA exports machinery and imports sweaters. Therefore, the answer is option (D).

27. We are familiar with the law of demand, which states that price and the quantity demanded of a normal good are inversely related to each other. Assuming that eggs are normal good here, if there is a decrease in the price of eggs, it makes the quantity demanded of eggs go up. Hence the answer is (A).

28. Becky should study until her marginal benefit of studying equals the marginal cost. We arrive at this conclusion from the cost benefit analysis. If the marginal benefit exceeds the marginal cost of studying, then there is a scope for increasing the studying. On the other hand, if the marginal cost exceeds the marginal benefit of studying, then Becky should cut down on studying. This means that the answer is (D).