Question

Using your knowledge of positive and normative statements from earlier chapters, identify each of the following statements relating to price ceilings and price floors as either positive statements or normative statements. Assume that all the price controls are binding.Part 1 A price floor in the form of a minimum wage is necessary to provide a living wage to people in the country. This statement is a statement. Positive or NormativePart 2 A minimum wage increases the quantity supplied of labor in the workplace. This statement is a statement. Positive or NormativePart 3 Governments should require higher minimum wages to increase economic growth. This statement is a statement. Positive or NormativePart 4 A minimum wage won't encourage black markets to form. This statement is a statement.Positive or Normative

Answer 1

In the context of price controls like minimum wages, statements advocating what should be done are normative, while those that describe testable outcomes are positive.

Step-by-step explanation:

Part 1: A price floor in the form of a minimum wage is necessary to provide a living wage to people in the country. This statement is Normative. Normative statements express judgments about what ought to be and are subjective. They often contain words indicating a value judgment, such as 'necessary' or 'should'.

Part 2: A minimum wage increases the quantity supplied of labor in the workplace. This statement is Positive. Positive statements can be tested and validated, they relate to descriptions about the world that are objective and fact-based.

Part 3: Governments should require higher minimum wages to increase economic growth. This statement is Normative. Again, it leans on what should be done, suggesting action based on a value judgment about economic growth.

Part 4: A minimum wage won't encourage black markets to form. This statement is Positive. It is a statement that can be tested and verified, hypothesizing a factual outcome of a policy.