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 Run	Dishes Washed
Lo	2	50
Manuel	4	40

7. Suggest one government policy such that the PPF of a country can shift out a lot in the future.

Answer 1

Ques 1.