Tute_1answers - Introductory microeconomics ECON1001_2010...

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ECON1001 Tutorial 1 1 Introductory microeconomics ECON1001_2010 Tutorial 1 1. Which of the following statements/questions are positive or normative and why? Positive statements are descriptive. Normative statements are prescriptive. (a) Is it possible to design and make products that do not emit gases that reduce the ozone layer? Positive (b) Should Australia try to reduce emissions of ozone depleting gases? Normative (c) Low rents will restrict the supply of housing. Positive (d) High interest rates lower the demand for mortgages and new houses. Positive (e) No family ought to pay more than one-quarter of its income to rent decent housing. Normative 2. Draw the production possibility curve for an economy that can produce either cars or bicycles. (a) Show a point in which the economy is not producing efficiently. Point x (see diagram below) (b) Show a point that is unattainable given the current state of technology. Point z (c) Show a point where the economy is producing efficiently. Point y (d) Relate shifts along the production possibility curve to the concept of opportunity cost. The slope of the production possibilities curve shows the trade-off – or opportunity cost - for the country between the two goods.
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Tute_1answers - Introductory microeconomics ECON1001_2010...

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