Question

. Which of the following are examples of positive economic analysis? Which are normative?

a. The federal minimum wage should increase from $7.25 to $10.10 per hour because that would help create a more even income distribution.

b. The minimum wage in San Francisco, CA is $15.59 per hour as of July 2019.

c. New reserves discovered in Western Canada and North Dakota have helped drive down the price of natural gas for North American consumers.

d. Ecuador should discontinue its consumer gasoline price subsidy because rising prices have made it too expensive to continue the program.

Answer 1

Answer

The positive economic analysis is tested and proven. It is based on fact, which has already happened.and has evidence. The normative economic analysis is based on values, judgments. It is the opinion of experts what should be.

a. The federal minimum wage should increase from $7.25 to $10.10 per hour because that would help create a more even income distribution. - Normative economic analysis.

- the above statement is an opinion what should be and why it should be.

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b. The minimum wage in San Francisco, CA is $15.59 per hour as of July 2019. - Positive economic analysis.

- the above statement is based on fact. It is true.

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c. New reserves discovered in Western Canada and North Dakota have helped drive down the price of natural gas for North American consumers. - Positive economic analysis.

- the statement is based on fact;it has happened and is proven.

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d. Ecuador should discontinue its consumer gasoline price subsidy because rising prices have made it too expensive to continue the program. - Normative economic analysis.

- the above statement is the opinion of expert/experts what Ecuador should do but what they are saying is not a proven fact.It is just an opinion and based on judgments. There may be other reasons of what they are thinking.

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