ions, indicate I 18r TTUe nswer is A, B. C or D. For True False q . A \"normativ

Question

ions, indicate I 18r TTUe nswer is A, B. C or D. For True False q . A "normative" economic statement is one which (a) is based on statistical data or facts (b) is based on value judgments (e) pertains to how economic activity would work under "normative" conditions (d) uses a statistical "norm" to determine cause and effect economic relationships "The safest way for an individual to leave a burning theater is to run for the nearest exit, it is theref post hoc, propter hoc fallacy (b) fallacy of composition (c) fallacy of unintended consequences (d) correlation fallacy -2. 6 fore also the best means of escape for the entire audience." This statement illustrates the (a) 3. When economists say that "two variables are inversely related," this means that an increase in 4. The four factors of production are considered "scarce" resources because (a) there is a limit to material wants (c) demand for resources exceeds supply in all economies (d) all of the above one of the variables will typically lead to an increase in the other how muc h resources an economy can absorb (b) no economy has enough resources to fulfill all 5. An example of the factor of production "capital" is (a) a share of IBM stock (b) an entrepreneur's savings account (e) my laptop computer (d) all of the above are "capital g our output, our production process has demonstrated an "economy of scale." 7. According to the law of diminishing returns, if you increase the amount of labor in a oods" 6. If, in producing a good, we double all of the factors of production and, as a result, we triple production process while leaving the other factors of production unchanged, the result will be an increase in total output that becomes smaller and smaller with each additional worker added. 8. Thomas Malthus believed that food production would always fall short of what a growing population would need to survive. He based his theory on (a) the production possibilities curve and the law of increasing costs (b) the production process and the law of diminishing returns (c) failure of the market system to allocate enough resources to food production (d) all of the above 9. David Ricardo believed that wages would inevitably fall to the subsistence level because (a) population would grow faster than food production (b) the law of diminishing returns would reduce marginal productivity (c) the law of increasing costs would prevent entrepreneurs from paying high wages (d) all of the above

Explanation / Answer

1. (b)
Normative statements are based on value judgements and not on facts or data.

2. (b)
The statement refers to the fallacy of composition that is what is true for the individual must be true for the group.

3. FALSE
Inversely related means that an increase in one variable leads to a decrease in another variable.

4. Option (d)
Options - a,b,c represent why four factors of production are scarce. Hence option d is the best option.

PS: According to chegg rules, in the event of multiple MCQs, first four are attempted.

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