Multiple Choice
In the context of positive and normative analysis, the task of top executives in making corrective adjustments includes which of the following?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following statements best distinguishes between positive and normative analysis in economics?
A
Both positive and normative analysis are concerned only with ethical considerations.
B
Positive analysis is subjective, whereas normative analysis is objective.
C
Positive analysis describes what is, while normative analysis prescribes what ought to be.
D
Normative analysis describes factual relationships, while positive analysis involves value judgments.
Verified step by step guidance1
Step 1: Understand the definitions of positive and normative analysis in economics. Positive analysis deals with objective statements that can be tested or verified, describing 'what is'. Normative analysis involves subjective value judgments about 'what ought to be'.
Step 2: Evaluate each statement by checking if it correctly reflects these definitions. For example, check if the statement claims positive analysis is objective and descriptive, and normative analysis is subjective and prescriptive.
Step 3: Identify any statements that confuse the roles of positive and normative analysis, such as mixing up which one is subjective or objective, or which one involves ethical considerations.
Step 4: Recognize that positive analysis is not concerned with ethics or value judgments but with factual relationships, while normative analysis explicitly involves ethical or value-based judgments.
Step 5: Conclude that the statement 'Positive analysis describes what is, while normative analysis prescribes what ought to be' best captures the distinction between the two types of economic analysis.
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