Multiple Choice
Which of the following is one of the assumptions of the rational decision-making process?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following statements is agreed upon by all economists?
A
The government should always intervene in markets to correct inequalities.
B
An increase in the minimum wage will raise the incomes of some workers.
C
Taxes should be lowered to maximize economic growth.
D
Free markets always lead to fair outcomes.
Verified step by step guidance1
Step 1: Understand that economists often have differing opinions on policy prescriptions such as government intervention, taxes, and market fairness because these involve value judgments and empirical debates.
Step 2: Recognize that the statement 'An increase in the minimum wage will raise the incomes of some workers' is a positive statement about economic outcomes, which is generally agreed upon because raising the minimum wage directly increases pay for workers who keep their jobs at the new wage.
Step 3: Note that the other statements involve normative claims (what should happen) or assumptions about market outcomes that are not universally accepted among economists.
Step 4: Therefore, the statement about minimum wage increasing incomes for some workers is the one that all economists agree on, as it is a straightforward consequence of raising wages legally.
Step 5: Summarize that when evaluating statements, distinguish between positive economics (descriptive, testable claims) and normative economics (opinions or prescriptions), as consensus is more likely on positive statements.
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