QUESTION 1 2 points Saved Which of the following are positive statements? (A) Th
ID: 1153869 • Letter: Q
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QUESTION 1 2 points Saved Which of the following are positive statements? (A) The introduction of taxes in 2018 will increase firms' profits (B) Spending by small businesses should be tax exempt (C) Cigarettes ought to be taxed more than sugary drinks OA Statement A and C, only OB. Statement A, only Statement A and B, only None of the statements are QUESTION 2 2 points Saved Amira earns S25,000 per year (after taxes), and Amira's husband, Abbas, earns S35,000 (after taxes). They have two pre- school children. Childcare for their children costs $12,000 per r. Amira has decided to stay yea home and take care of the children. Amira must OA value spending time with the children as much than does Abbas. OB. value spending time with the children by more than $12,000 OC value spending time with the children by more than $25,000 OD value spending time with the children by more than S13,000Explanation / Answer
1) Solution: The introduction of taxes in 2018 will increase firm's profits
Explanation: Positive economic statements are those that can be tested and proved or disproved
2) Solution: value spending time with children by more than $13,000
Explanation: The cost-benefit principle states that an action will be taken if the gains are at least as great as its costs. Because Amira decided to stay at home, thus marginal benefit of staying at home is at least as great as the marginal cost. The marginal cost of staying at home is the salary means giving $25,000 per year and marginal benefit of staying at home includes the Amira receives $25,000 per year (after taxes), and her husband receives $35,000 (after taxes) amount that the family will save due to the no longer needing childcare, and the value of the time that she spends with her children. Thus because the family will save $12,000 by no longer using childcare, thus reflects that Amira values spending time with her children by at least $13,000 (=$25,000 - $12,000) because she choose to stay at home.
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