Difference Between Positive & Normative Economic Analysis - Economic Assignment Help
- Country :
Canada
Assignment Task
Question
a) What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.
b) Economics cannot be scientific because it is based upon the value judgment that 'more (output) is better'. Do you agree? Explain.
Question
Refer to Table below. The Nut House produces only cashews and almonds. The table below shows the maximum possible output combinations of the two nuts using all resources and currently available technology
Possible Output
- Combinations
- Cashews
- (thousands of
- kilograms)
- Almonds
- (thousands of
- kilograms)
- A 35 0
- B 30 20
- C 25 35
- D 20 47
- E 15 57
- F 10 64
- G 5 68
a. Graph the Nut House's production possibilities frontier. Put almonds on the horizontal axis and cashews on the vertical axis. Be sure to identify the output combination points on your diagram.
b. Suppose the Nut House is currently producing at point F. What happens to the opportunity cost of producing more and more cashews? Does it increase, decrease, or remain constant? Explain your answer.
c. Suppose the Nut House is plagued by a variety of white root-rot disease, which destroys cashew trees but not almond trees. Show in a graph what happens to its PPF. (3 marks)
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