Question

1. “You are the best student in the class. You can get into Harvard." Which part of the statement is positive? Which part of the statement is normative? 2. The government has been trying to discourage the use of plastic bags. Give one negative incentive to achieve that. 3. Give one opportunity cost of watching TV rather than studying. 4. Dexter decides to buy a new smartphone and offset the cost by selling his old phone to one of his friends. His friend has no money and wants to barter for the old phone. Dexter's preference for the items offered is in this order: laser printer, television, headphones, and bicycle. Dexter can only exchange his old phone for one of the four items. If Dexter accepts the headphones as payment, what is his opportunity cost of this exchange? 5. What happens to the PPF when more resources for production are discovered. 6. Refer to the following table, give the range of the price of errands such that both Lo and Manuel will be willing to trade. Assume the opportunity cost is constant. (Don't forget the units) Errands Dishes Run Washed LO 12 SO Manuel 40 7. Suggest one government policy such that the PPF of a country can shift out a lot in the future.

Answer 1

1) No part of the statement is positive.A positive statement is an objective statement that can tested amended or rejected on the basis of verifiable evidence.It doesn't include value judgement such as in " You are the best student in the class" . Positive statement doesn't use modal verb such as 'can' as in the sentence " You can get into Harvard" .

Modal verbs and value judgement are used in normative sentence.

Therefore both part of the quotation is normative sentence.

2) Negative incentive is on which discourages the activity on which it is put. Example of negative incentive is tax , fine .

To discourage the use of plastic bag heavy tax can be imposed on plastic bags.

3) Opportunity cost the the next best alternative forgons.

If one watches T.V. , he has to forgo study for that time period. Hence opportunity cost of watching tv is studying which means forgoing the satisfaction from gaining knowledge and learning.

4) Opportunity cost is the next best alternative forgone. The best alternative was laser printer which he forgo . Opportunity cost is laser printer .

5) PPF curve shifts forward when resources are discovered. PPF curve represents that Maximum combination of 2 goods that can be produced in the economy using upto its potential all the factors of production. Discovery leads to an increase in factor of production and hence maximum goods that can be produced increases.