Problem 1. It is well documented in scientific research that smoking is harmful to health. Smokers have higher incidences of coronary disease, cancer, and other catastrophic illnesses. Knowing this, about 30 percent of young people begin smoking, and about 25 percent of the U.S. population smokes. Are the people who choose to smoke irrational?
What do you think of the argument that we should ban smoking in order to protect these people from themselves?
Problem 2. Are the following statements normative or positive? If a statement is normative, change it to a positive statement.
a. The government should provide free tuition to all college students.
b. An effective way to increase the skills of the work force is to provide free tuition to all college students.
c. The government must provide job training if we are to compete with other countries.
Problem 3. In the New York Times Magazine in 1970, Milton Friedman, a Nobel Prize-winning economist, argued that "the social responsibility of business is to increase profits." How would Friedman's argument fit with the basic economic model that people behave in ways that they believe are in their best self-interest?
Problem 4. Use economics to explain why diamonds are more expensive than water, when water is necessary for survival and diamonds are not.
Problem 5. During China's Cultural Revolution in the late 1960s and early 1970s, highly educated people were forced to move to farms and work in the fields. Some were common laborers for eight or more years. What does this policy say about specialization and the PPC? Would you predict that the policy would lead to an increase in output?