The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage:
a.The minimum wage law causes unemployment.
b.A minimum wage law benefits some groups and hurts others.
c.In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live in the city without minimum wage laws.
d.The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.
Which of the consequences above are positive statements and which are normative statements?
A)a, b, and c are positive statements and d is a normative statement.
B)a and b are positive statements, c and d are normative statement.
C)Only a is a positive statement, b, c and d are normative statements.
D)a and c are positive statements, b and d are normative statements.

Question

Quizplus · Accepted Answer

A positive statement is a statement of fact that can be tested or verified, whereas a normative statement is a statement of opinion or value judgment.

a. "The minimum wage law causes unemployment" is a positive statement because it is a statement of fact that can be tested through research.
b. "A minimum wage law benefits some groups and hurts others" is a positive statement because it describes a consequence of the law that can be observed and measured.
c. "In some cities such as San Francisco and New York, it would be impossible for low-skilled workers to live in the city without minimum wage laws" is a normative statement because it expresses an opinion about what should be the case. It suggests that minimum wage laws are necessary to ensure a certain standard of living for low-skilled workers in expensive cities.
d. "The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses" is a normative statement because it expresses an opinion about what should be considered more important. It suggests that the benefits to low-wage workers who receive higher wages from the law should be given more weight than the costs to businesses who have to pay those wages.

The Economic Analysis of Minimum Wage Involves Both Normative and Positive