Question

Welfare and Efficiency — End of Chapter Problem a. Consider the difference between positive and normative policy analysis. Use this knowledge to complete the passages. economics involves describing what is happening or predicting what will happen. economics concerns what should occur and involves value judgments. b. Classify each statement as reflecting either positive or normative analysis. Positive Normative Answer Bank Medicine is a necessary expense and therefore should be exempt from sales tax laws. Sales tax is often higher on goods considered to be luxury goods, such as expensive watches and yachts. Sales tax should be higher on restaurant meals than on groceries because eating out is a luxury. The government should impose tariffs on imports to protect American jobs. Tariffs on imports increase the prices Americans pay for foreign-made goods. Sales tax on cigarettes reduces the amount of cigarettes sold in a year.

          Welfare and Efficiency — End of Chapter Problem
a. Consider the difference between positive and normative policy analysis. Use this knowledge to complete the passages.
economics involves describing what is happening or predicting what will happen.
economics concerns what should occur and involves value judgments.
b. Classify each statement as reflecting either positive or normative analysis.
Positive
Normative
Answer Bank
Medicine is a necessary expense and therefore should be exempt from sales tax laws.
Sales tax is often higher on goods considered to be luxury goods, such as expensive watches and yachts.
Sales tax should be higher on restaurant meals than on groceries because eating out is a luxury.
The government should impose tariffs on imports to protect American jobs.
Tariffs on imports increase the prices Americans pay for foreign-made goods.
Sales tax on cigarettes reduces the amount of cigarettes sold in a year.

Welfare and Efficiency — End of Chapter Problem
a. Consider the difference between positive and normative policy analysis. Use this knowledge to complete the passages.
economics involves describing what is happening or predicting what will happen.
economics concerns what should occur and involves value judgments.
b. Classify each statement as reflecting either positive or normative analysis.
Positive
Normative
Answer Bank
Medicine is a necessary expense and therefore should be exempt from sales tax laws.
Sales tax is often higher on goods considered to be luxury goods, such as expensive watches and yachts.
Sales tax should be higher on restaurant meals than on groceries because eating out is a luxury.
The government should impose tariffs on imports to protect American jobs.
Tariffs on imports increase the prices Americans pay for foreign-made goods.
Sales tax on cigarettes reduces the amount of cigarettes sold in a year.

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