Multiple Choice
Which of the following scenarios best illustrates the difference between positive and normative analysis in economics?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following is a positive economic statement?
A
It is unfair that some people earn less than others.
B
Society ought to provide free healthcare for everyone.
C
An increase in the minimum wage will lead to higher unemployment among teenagers.
D
The government should increase the minimum wage to help low-income workers.
Verified step by step guidance1
Understand the difference between positive and normative economic statements. Positive statements describe the world as it is and can be tested or validated with evidence, while normative statements express opinions or what ought to be and cannot be tested.
Review each statement and classify it as positive or normative. For example, statements that include words like 'unfair,' 'ought,' or 'should' are typically normative because they express value judgments.
Identify the statement that makes a testable claim about cause and effect without expressing an opinion. This is usually a positive economic statement.
In this problem, the statement 'An increase in the minimum wage will lead to higher unemployment among teenagers' predicts an outcome that can be tested with data, making it a positive statement.
Confirm that the other statements express opinions or value judgments, so they are normative and not positive economic statements.
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