Refer to Scenario 1.1 below to answer the question(s) 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) Ockham's razor.

Question

Quizplus · Accepted Answer

The statement is an example of normative economics because it includes a value judgment about what ought to be, suggesting that minimum wages should be reduced or eliminated to increase employment among teenagers. Normative economics involves opinions and subjective statements about what is good or bad, as opposed to positive economics, which is based on factual statements and hypotheses that can be tested.