Multiple Choice
Which of the following statements applies to the economic model of social responsibility?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
From an economist's perspective, which of the following statements is an example of positive analysis?
A
Society ought to provide free healthcare for all citizens.
B
It is unfair that some workers earn less than others.
C
The government should increase the minimum wage to improve living standards.
D
Increasing the minimum wage will lead to higher unemployment among teenagers.
Verified step by step guidance1
Understand the difference between positive and normative analysis in economics. Positive analysis deals with objective, testable statements about how the economy works, while normative analysis involves subjective opinions about what ought to be done.
Identify that positive statements can be verified or falsified through data and evidence, such as predictions about cause and effect relationships.
Review each statement and classify it: statements about fairness or what should be done are normative, while statements predicting outcomes or describing facts are positive.
Recognize that the statement 'Increasing the minimum wage will lead to higher unemployment among teenagers' is a positive statement because it makes a testable prediction about the effect of a policy change.
Conclude that this statement exemplifies positive analysis, as it can be evaluated using empirical data, unlike the other normative statements that express value judgments.
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