Which of the following is an example of a positive, as opposed to normative, statement?
a. The federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession.
b. Congress should agree on lower government spending for the next fiscal year.
c. The Federal Reserve Bank should increase interest rates in response to the higher-than-expected inflation in the economy.
d. The unemployment rate last year was lower than any other year in the last century.
d
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Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
A) $180 B) $100 C) $80 D) $20
What might explain a professional baseball player having lower production the year after signing a multi-million dollar contract?
A) the substitution effect B) the endowment effect C) bounded rationality D) the income effect