Your dormitory roommate plays loud music most of the time, you, however prefer more peace and quiet. You suggest that she buy some headphones. She responds that although she would be happy to use headphones, she has many other things that she would prefer to spend her money on right now. You discuss this situation with a friend who is an economics major. The following exchange takes place: He: How much would it cost to buy headphones? You: $15 He: How much do you value having some peace and quiet for the rest of the semester? You: $30 He: It is efficient for you to buy the headphones and give them to your roommate. You again more than you lose, the benefits exceed the cost. You should do that. You: It just isn’t fair that I have to pay for the headphones when I’m not the one making the noise. (a) Which part of the conversation is positive and which part is normative? (b) Construct different arguments based on different situations. Concept Information: Positive Economics: It is based on facts and purely objective. It describes the economic issues without judging them. It is also referred to as "the economics of what is". To determine whether a statement is positive or not, we must analyze that whether the statement can be falsified or not. If it can be tested and proven, it is a positive statement. Normative Economics: It not only focuses on the economic issues but it judges them as well. It is based on values. It is also called the "economics of what ought to be". To identify a normative statement, one should look for modal verbs such as should, ought, or must.

Question

Want to see the full answer?

Answer 1

Question

Chapter 2, Problem 9P

To determine

Your dormitory roommate plays loud music most of the time, you, however prefer more peace and quiet. You suggest that she buy some headphones. She responds that although she would be happy to use headphones, she has many other things that she would prefer to spend her money on right now. You discuss this situation with a friend who is an economics major. The following exchange takes place:

He: How much would it cost to buy headphones?

You: $15

He: How much do you value having some peace and quiet for the rest of the semester?

You: $30

He: It is efficient for you to buy the headphones and give them to your roommate. You again more than you lose, the benefits exceed the cost. You should do that.

You: It just isn’t fair that I have to pay for the headphones when I’m not the one making the noise.

(a)
Which part of the conversation is positive and which part is normative?
(b)
Construct different arguments based on different situations.
Concept Information:

Positive Economics:

It is based on facts and purely objective. It describes the economic issues without judging them. It is also referred to as "the economics of what is". To determine whether a statement is positive or not, we must analyze that whether the statement can be falsified or not. If it can be tested and proven, it is a positive statement.

Normative Economics:

It not only focuses on the economic issues but it judges them as well. It is based on values. It is also called the "economics of what ought to be". To identify a normative statement, one should look for modal verbs such as should, ought, or must.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A linear programming computer package is needed. As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars). 6 Year 1 23. 4 Payment 160 185 210 255 285 430 The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1,000). Funds not invested in these securities will be placed in savings. Security Current Price 1 $1,055 Rate (%) Years to Maturity 6.750 3 2 $1,000 5.125 Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to…

Put the sections of Cornell notes in the order of completion.

agree or disagree with the post Hi Class! Egyptian dates are much sweeter! Due largely to their climate and geography, Egypt, Saudi Arabia, Algeria, and Iran produce more dates than either the US or Canada. Dates grow best in hot dry climates with long dry growing seasons, which these nations naturally offer. They also produce a lot of dates because of their extensive agricultural, infrastructure, and centuries-old date-growing expertise. Conversely, the U.S., there aren't many places in Canada and California that are suitable for date farming, only a select few, like the Coachella Valley, in California can produce dates on a large scale. Although California produces some dates, it is not as much as countries like Saudi Arabia and Egypt. Depending only on U.S., because of increased labor and production costs, dates grown in this way may have a limited supply and raise prices. We can obtain a greater supply of dates at competitive prices while maintaining consistent quality by…