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

Answer:

Assuming that all the price controls are binding,the following applies:

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 Positive.

Part 2

A minimum wage increases the quantity supplied of labor in the workplace. This statement is Positive.

Part 3 Governments should require higher minimum wages to increase economic growth. This statement is a Normative.

Part 4 A minimum wage won't encourage black markets to form. This statement is Normative.

Explanation:

Positive statements are objective statements that can be tested, amended or rejected by referring to the available evidence while A normative statement is one that makes a value judgment. Such a judgment is the opinion of the speaker which is not placed under scrutiny for truthfulness.