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Still, economists often do engage in normative economics and give policy advice.
How can they do this when there may be no “right” answer? One reason is that econ-
omists are also citizens, and they have their own opinions. But economic analysis can
often be used to show that some policies are clearly better than others, regardless of
individual opinions.
Suppose that policies A and B achieve the same goal, but everyone will be better
off with policy A than with policy B — or at least policy A makes some people better off
without making other people worse off, while policy B does the opposite. Then A is
clearly more beneficial than B. That’s not a value judgment: we’re talking about how
best to achieve a goal, not about the goal itself.
The study of economics can provide clarity on both the way the economy works
and the best decisions going forward.

Adventures in
®
AP Economics
Module 1.1 Review Watch the video:
Graphing Tricks & Tips

Check Your Understanding

1. What is it about most resources that forces everyone to Analysis, Inc., which would pay you $50,000 per year,
make choices? and you must consider the trade-offs. Is each of the
2. Under which category does each of the following following elements an opportunity cost of accepting the
resources fall? new job at Analysis, Inc.? Answer yes or no, and explain
a. time spent making pizzas at a restaurant your answer.
b. a bulldozer a. the increased time spent commuting to your
c. a river new job
b. the $45,000 salary from your old job
3. You make $45,000 per year at your current job with c. the more spacious office at your new job
MCJ Consultants. You are considering a job offer from

®
Tackle the AP Test: Multiple-Choice Questions

1. Which of the following is an example of capital? 3. Suppose that you prefer reading a book you already own
a. a cheeseburger dinner to watching videos and that you prefer watching videos
b. a construction worker to listening to music. If these are your only three choices,
c. petroleum what is the opportunity cost of reading?
d. a factory a. watching videos and listening to music
e. an acre of farmland b. watching videos
2. Which of the following is not an example of resource c. listening to music
scarcity? d. sleeping
a. There is a finite amount of petroleum in the e. the price of the book
world. 4. Which of the following statements is normative?
b. Farming communities are experiencing droughts. a. The price of gasoline is rising.
c. There are not enough physicians to satisfy all desires b. The price of gasoline is too high.
for health care in the United States. c. Gas prices are expected to fall in the near future.
d. Cassette tapes are no longer being produced. d. Cars can run on gasoline, electricity, or diesel fuel.
e. Teachers would like to have more instructional e. When the price of gasoline rises, drivers buy less
technology in their classrooms. gasoline.

8 Macro • Unit 1 Basic Economic Concepts
Copyright © Bedford, Freeman & Worth Publishers.
Strictly for use with its products. For review purposes only. Not for redistribution.

02_APKrugman4e_40932_MacroU01_002_062.indd 8 05/07/22 10:49 AM