Answered: 1. Which of the following is NOT a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Which of the following is NOT a normative statement?

Select one:

a. higher interest rates should lead to increased savings

b. inflation is more harmful to Ghana than unemployment

c. if its minimum wage falls, Japan will be a better place

d. the benefits to the economy of improved equity are less than the costs of reduced efficiency

Which of the following is not necessarily an outcome of international trade?

Select one:

a. goods being obtained at lower opportunity cost

b. people specialize in activities in which they have a comparative advantage

c. all individuals within trading countries benefit

d. more efficient resource use

If a 8 percent increase in income results in a 10 percent increase in the quantity demanded of lattes, what is the income elasticity of demand for lattes, and what type of good is lattes?

Select one:

a. negative, and therefore lattes are a normal good

b. negative, and therefore lattes are an inferior good

c. positive, and therefore lattes are an inferior good

d. positive, and therefore lattes are a normal good

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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