Use the Following Two Statements to Answer This Question: I

question 4

Multiple Choice

Use the following two statements to answer this question: I. In order to answer normative questions, it is necessary to make value judgments.
II) In order to conduct positive economic analysis, it is always necessary to use empirical evidence in addition to economic theories.

• A) I and II are incorrect.
• B) I is correct, II is incorrect.
• C) I is incorrect, II is correct.
• D) Both I and II are correct.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, intending to protect consumers from excessive prices.

Price Floor

A price floor is a government- or authority-imposed minimum price set above the equilibrium price, preventing the market price from falling below it.

Shortage

A situation where demand for a product or service exceeds its supply in a market.

Surplus

The amount by which the quantity supplied of a good exceeds the quantity demanded at a specific price.