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

a. Normative economic analysis

b. Positive economic analysis

c. Positive economic analysis

d. Normative economic analysis

Positive economic analysis describes the cause and effect of the economic situation. It can be empirically verified as it based on logical facts. It studies "what is."

Normative economic analysis makes recommendations based on ethical values and judgements. It studies "what should be" or "what ought to be."