Give an example of a scenario that combines positive analysis and normative analysis.
What will be an ideal response?
Should show a thorough understanding of both positive analysis and normative analysis. For example, suppose that domestic theatrical attendance for movies decreased significantly last year. The head of a studio wants to gather as much data as possible. She wants to find out the following: At current prices, will attendance continue to decrease? What age groups will have the most decrease? How will the attendance for various genres and MPAA ratings fare? She uses positive analysis to answer these questions. After gathering the data, she wants to figure out how to best handle the issue. So she asks: How should our slate of movies change to increase attendance? Should we decrease ticket prices? How can advertising be more effective? She uses normative analysis to answer these questions.
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A distinction between stocks and bonds is that
A) although the return on a bond is determined by the forces of supply and demand, the return on a stock is set by the stock exchange. B) stocks represent ownership claims to the company and bonds do not. C) bonds must be held for a fixed number of years whereas stocks can be bought and sold at any time. D) bonds can be traded many times in the bond market, while stocks are non-transferable. E) bonds cannot be sold to anyone other than the company that issued it while stocks can be resold to anyone.
Two key properties of indifference curves are that an indifference curve slopes
A) upward and is bowed out from the origin. B) downward and is bowed out from the origin. C) upward and is bowed in toward the origin. D) downward and is bowed in toward the origin.