Philip Is an Average Contractor in Town, and He Earns

question 159

Multiple Choice

Philip is an average contractor in town, and he earns $40,000 a year. Billy is the best contractor in town, and he earns $480,000 a year. Philip's contracting services

• A)are valued more by the market relative to Billy's and that explains why his income is higher than Billy's.
• B)are valued less by the market relative to Billy's and that explains why his income is higher than Billy's.
• C)are valued less by the market relative to Billy's and that explains why his income is lower than Billy's.
• D)are more expensive because he receives a compensating differential.

---

Definitions:

Positive Statements

Objective statements that can be tested, amended, or rejected by referring to the available evidence.

Normative Statement

A value judgment about what ought to be, expressing opinions or assertions that cannot be tested or verified.

Positive Statement

An objective statement based on factual evidence that can be tested and validated, often describing what is, rather than what ought to be.

Microeconomics

A branch of economics that focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders.