Category: Economics

Which of the following is not typically associated with innovation by smaller firms:
Group of answer choices
Increased external links.
Increased exports.
Increased profitability.
Increased employment.

What is a solution to problems which would otherwise create a ‘race-to-the-bottom’ dynamic between states, as exemplified by the issue of child labor during the post-Civil War industrialization?

➤ Why does a command economy restrict private ownership and competition?
Command systems limit private ownership to concentrate control over resources and direct economic outcomes. The state often nationalizes key industries to coordinate investment, achieve social goals, and remove profit incentives. Restricting competition helps planners enforce production targets, control prices, and prioritize public projects over individual enterprise.

➤ How do you distinguish positive and normative statements in economics?
Ask whether the claim is testable or expresses a value judgment. Positive statements state facts or hypotheses that can be checked, such as an unemployment rate. Normative statements express opinions or prescriptions and often include words like “should” or “ought,” for example recommending a target unemployment rate or judging policy fairness.

➤ How do you compute the percentage change in quantity from a known elasticity?
Use the relation %ΔQd = ε × %ΔP. Multiply the elasticity by the percentage price change to get the percentage change in quantity demanded. If price rises, treat %ΔP as positive and interpret the sign for the direction of quantity movement accordingly.