Identify the positive and normative economic analyses.

Question

Immediately after an ice storm brought down power lines throughout the region, hardware stores were sold out of batteries and flashlights. However, within a couple of days, special deliveries brought in extra batteries and flashlights, and everyone who wanted to buy a flashlight or batteries was able to do so. Which of the following principles of economic interaction best describes this scenario? 1. When markets do not achieve efficiency, government intervention can improve overall welfare. 2. Markets allocate goods effectively. 3. All costs are opportunity costs. 4. There are gains from trade.

Answer 1

Question

Chapter 1, Problem 2RQ

(a)

To determine

Identify the positive and normative economic analyses.

(b)

To determine

Identify the positive and normative economic analyses.

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Immediately after an ice storm brought down power lines throughout the region, hardware stores were sold out of batteries and flashlights. However, within a couple of days, special deliveries brought in extra batteries and flashlights, and everyone who wanted to buy a flashlight or batteries was able to do so. Which of the following principles of economic interaction best describes this scenario? 1. When markets do not achieve efficiency, government intervention can improve overall welfare. 2. Markets allocate goods effectively. 3. All costs are opportunity costs. 4. There are gains from trade.

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