,1. One of the aims of positive economics is to rank policies under consideration from most desirable to least desirable.
a. True
b. False
ANSWER: False
RATIONALE: Positive economics aims to predict the consequences of policies, not to evaluate them as more or less
desirable.
POINTS: 1
DIFFICULTY: A & B-Section Material
QUESTION TYPE True / False
:
HAS VARIABLES: False
DATE CREATED: 2/11/2015 10:52 PM
DATE MODIFIED 2/11/2015 10:52 PM
:
2. Positive economics can tell us which policies are efficient and which are not.
a. True
b. False
ANSW True
ER:
RATIO Efficiency is an objectively defined concept: A situation is efficient if there is no way to make some people better
NALE: off without making others worse off. To say that one situation is more efficient than another is not a normative
statement --- even if often people think it is the same as saying that one situation is better than another.
POINT 1
S:
DIFFI A & B-Section Material
CULT
Y:
QUES True / False
TION
TYPE:
HAS V False
ARIAB
LES:
DATE 2/11/2015 10:52 PM
CREA
TED:
DATE 2/11/2015 10:52 PM
MODI
FIED:
,3. When economists say that policy A is more efficient than policy B, they mean policy A is better than policy B.
a. True
b. False
ANSWE False
R:
RATION To say that policy A is more efficient than policy B is only to say that, at least in principle, it is possible to make
ALE: everyone better off (or at least as well off) under policy A than policy B. This is not the same as making a
normative judgment about which policy is better.
POINTS 1
:
DIFFIC A & B-Section Material
ULTY:
QUESTI True / False
ON TYP
E:
HAS VA False
RIABLE
S:
DATE C 2/11/2015 10:52 PM
REATE
D:
DATE M 2/11/2015 10:52 PM
ODIFIE
D:
4. Economists talk about trade-offs a lot because they have come to understand that whenever there is a winner from a
policy or transaction, there must also be a loser.
a. True
b. False
ANSWER: False
RATIONA One of the fundamental lessons of economics is that there are many situations when everyone can win. In a
LE: willing trade (i.e., I pay $2 for a cappuccino to the coffee shop owner), no one is hurt, and both of us are better
off.
POINTS: 1
DIFFICU A & B-Section Material
LTY:
QUESTIO True / False
N TYPE:
HAS VARIFalse
ABLES:
DATE CR 2/11/2015 10:52 PM
EATED:
DATE M 9/4/2015 2:12 PM
ODIFIED
:
, 5. A spontaneous order emerges from individual decisions that cause something to “work” without anyone planning for it
to “work”.
a. True
b. False
ANSW True
ER:
RATI A spontaneous order is an order that is unplanned but simply arises from individuals doing the best they can given
ONAL their circumstances. One example of this is the provision of complex goods and services in the market where
E: thousands of individuals participate in the creation of something without most of them being aware that this is what
they are doing.
POIN 1
TS:
DIFFI A & B-Section Material
CULT
Y:
QUES True / False
TION
TYPE:
HAS V False
ARIA
BLES:
DATE 2/11/2015 10:52 PM
CREA
TED:
DATE 2/11/2015 10:52 PM
MODI
FIED:
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