1. The three basic economic questions a society must answer are _________ products do we produce? _________ do we produce the products? _________ consumes the products?
2. List the five factors of production.
3. Which of the following statements is true?
a. Positive statements answer questions like what will happen if . . .? Normative economic statements answer questions like what ought to happen to . . .?
b. Normative statements answer questions like what will happen if . . .? Positive economic statements answer questions like what ought to happen to . . .?
c. Most modern economics is based on normative analysis.
4. Indicate whether each of the following questions is normative or positive.
a. Should your city build levees strong enough to protect the city from Category Five hurricanes?
b. How did Hurricane Katrina affect housing prices in New Orleans and Baton Rouge?
c. Who should pay for a new skate park?
d. Should a school district increase teachers’ salaries by 20 percent?
e. Would an increase in teachers’ salaries improve the average quality of teachers?