Refer to Scenario 1.1 below to answer the questions that follow.
SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.
-Refer to Scenario 1.1. The statement, "the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers," is an example of
A) marginal economics.
B) normative economics.
C) positive economics.
D) the fallacy of composition.

Question

Quizplus · Accepted Answer

The statement is an example of normative economics, which involves making value judgments about what ought to be done. It goes beyond merely describing the relationship between minimum wage and teenage unemployment (positive economics) and suggests a policy recommendation based on personal beliefs and values.