Refer to the figure above. If A forms a customs union with C, the value of trade diversion will be

Positive economics

a. postulates relationships among economic variables that are potentially refutable by real-world events. b. is strictly quantitative and is, therefore, of little value to policy makers. c. will usually indicate which economic policy is best. d. is the same as normative economics.

An electronics manufacturer can produce either MP3 players or cell phones. As the result of a decrease in the price of cell phones, the firm produces more MP3 players and fewer cell phones. An economist would explain this by saying

A. the supply of cell phones increased and the quantity supplied of MP3 players decreased. B. there has been a decrease in the quantity supplied of cell phones and an increase in the supply of MP3 players. C. there has been an increase in the quantity supplied of cell phones and a decrease in the quantity supplied of MP3 players. D. the supply of cell phones increased and the supply of MP3 players decreased.