Econ Chapter 1

Econ Chapter 1 - theories to make business decisions 2...

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Quentin Stephens Jr. Microeconomics 520 P. 18, Q.R. 1,2 Ex. 2 09/01/08 Questions for Review 1. Theories that cannot be evaluated empirically are not good theories because with any economic theory you should be able to make some kind of quantitative prediction or observation explaining how a firms output level may change due to a drop or increase in prices or other market factors. Ultimately, if a theory cannot be backed up by data, it does little for industry leaders, policymakers and managers who rely on good sound
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Unformatted text preview: theories to make business decisions. 2. Statement a. involves positive economic analysis and statement b. involves normative economic analysis. The two kinds of analysis differ because one kind of analysis describes a relationships of cause and effect while the other looks at how things ought to be. Ex. 2 a. The price of butter has decreased since 1980 b. 2.52-3.929/3.929 = -.359 c. 208.98/100 * 1.99 = 4.159...
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