Which of the following statements concerning the distinction between positive and normative economics is TRUE?
A. Positive statements are concerned with what is while normative statements are concerned with what will be.
B. Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be.
C. Positive statements are true while normative statements are false.
D. Positive statements are concerned with what people think, while normative statements are concerned with what people do.
Answer: B
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If a perfectly competitive firm raised the price of its product,
A) its profits would increase. B) the quantity of output it sells decreases to zero. C) rival firms will follow suit and raise their prices also. D) the firm will be forced to advertise more. E) its total revenue would rise but its total cost would rise by more.
Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply of candy and demand for candy increase the same amount. As a result, the price of candy ________ and the quantity of candy ________
A) rises; does not change B) falls; increases C) does not change; increases D) does not change; does not change E) rises; increases