Multiple Choice
Why do centrally planned economies often have difficulty meeting consumer needs?
95
views
0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following best explains, from a normative perspective, why the Persian people opposed their ruler's policy of selling business concessions to Europeans?
A
They assumed the policy would lead to lower prices for consumers.
B
They thought the policy would increase overall economic efficiency.
C
They expected the policy to reduce government revenue.
D
They believed the policy was unfair and harmed national interests.
Verified step by step guidance1
Step 1: Understand the difference between normative and positive economics. Normative economics involves value judgments about what ought to be, focusing on fairness, justice, or what is desirable, while positive economics deals with objective analysis and facts about what is.
Step 2: Identify the nature of the statements given. Statements about lower prices, increased efficiency, or reduced government revenue are positive economic claims because they can be tested or measured.
Step 3: Recognize that the statement 'They believed the policy was unfair and harmed national interests' reflects a value judgment about fairness and national welfare, which is a normative perspective.
Step 4: Connect the normative perspective to the opposition of the Persian people. Their opposition is based on their belief about fairness and harm to national interests, not just on measurable economic outcomes.
Step 5: Conclude that from a normative standpoint, the opposition is best explained by concerns about fairness and national interest rather than purely economic efficiency or price effects.
Related Videos
Related Practice
