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 that an increase in the minimum wage causes an increase in teenage unemployment is an example of
A) a fallacy.
B) an economic theory.
C) normative economics.
D) deductive reasoning.

Question

Quizplus · Accepted Answer

The statement is an example of an economic theory because it proposes a causal relationship between two economic variables (minimum wage and teenage unemployment), which is a characteristic of economic theories.