- How does the use of a very simplified model of the economy such as those found in a production possibilities frontier help you to understand the economy?
- The buy local movement is fairly strong in Colorado. How can you think about it in terms of the PPF? Watch this video: http://www.mruniversity.com/courses/everyday-economics/buy-local-movement-shop-small-business (Links to an external site.) How do his arguments relate to economic efficiency?
- Give an example of a positive or normative statement about the economy. Why does it matter which it is? (If you happen to have a favorite example of a politician or political candidate confusing the two include it here. :^))
- The economy is complex and full of nuance. Using a very simplified model really helps to break down the simple relationships that are at the core of what drives economic factors.
2. I like the idea of buying local, but in real economic terms I don’t think buying local is always such a great idea. As an example of what I see around me, I live in a small Colorado mountain town. We don’t have many stores, but we do have a lot of seasonal tourists that come for the ski season, or the summer season. In my town it is quite common to see items on store shelves that are 2x as expensive as Amazon can deliver. I am sure the tourists can afford to pay these prices as these businesses are all still in business. Myself as a longtime local knows better and can just save the cost by waiting on Amazon to deliver it to me in 2 days. I think that if you pay a local shop some money, it is probably likely that business owner will spend that money outside of our community too. Trade is good for everyone.
3. A positive statement about the economy is saying something about the way the economy is. A normative statement about the economy is saying something about the way it should be. To say “Minimum-wage laws cause unemployment” is a positive statement. When we listen to economic experts, congressional policy makers, or other leaders in our community, it is good that we know the difference about a fact vs an opinion. Often data and claims are tossed about recklessly and when listening it is easy to be deceived or led to believe something that just isn’t accurate.
A quote I like was when Trump said “Our jobs are being taken out by the deal that Hillary Clinton’s husband signed, NAFTA, one of the worst deals ever. Our Jobs are being sucked out of our economy.” It is a good one to spark a debate over Positive vs Normative. But also the debate over free trade, outsourcing labor, and efficient production.
Dude.World 