Multiple Choice
Which of the following is most likely to occur in a market economy without a strong legal system?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
To ensure that his plans are moving his company in the right direction, Joaquin can apply a:
A
randomized analysis to introduce unpredictability into decision-making
B
positive analysis to objectively evaluate outcomes based on factual evidence
C
subjective analysis to ignore data and rely on intuition
D
normative analysis to focus solely on personal opinions and values
Verified step by step guidance1
Step 1: Understand the difference between positive and normative analysis in microeconomics. Positive analysis deals with objective, fact-based evaluation of outcomes, while normative analysis involves subjective opinions and value judgments.
Step 2: Recognize that subjective analysis refers to relying on intuition or personal feelings rather than data, which is not suitable for objective decision-making.
Step 3: Note that randomized analysis is a method used in experimental or probabilistic contexts to introduce unpredictability, but it is not the standard approach for evaluating company plans objectively.
Step 4: Identify that Joaquin wants to ensure his plans are moving the company in the right direction by evaluating outcomes based on factual evidence, which aligns with positive analysis.
Step 5: Conclude that applying positive analysis allows Joaquin to objectively assess the effectiveness of his plans using data and factual information, rather than opinions or randomness.
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