Question

Innovation often requires "creative destruction" in which the new products or technologies make previous products or technologies obsolete. For example, typewriters became useless when personal computers were invented. Hence, the personal computer "destroyed" the typewriter. This process of creative destruction often results in structural unemployment because workers who knew how to build and maintain the old products have skills that are no longer in demand. What is the government's role in limiting how often new products are created or in helping those workers who are displaced because of the new product?
a. The government can limit how often new products are introduced to help those workers who are displaced because of the new product.
b. The government shouldn't limit how often new products are introduced. Technological changes will always result in winners and losers, so helping those workers who are displaced because of the new product is a normative issue.
c. The government shouldn't limit how often new products are introduced. Technological changes will always result in winners and losers, so helping those workers who are displaced because of the new product is a positive issue.
d. The government can limit how often new products are introduced to help those workers who benefit from the new product

Answer 1

Answer:

The correct answer is option b.

Explanation:

Positive economics is a branch of economics that is concerned with explanation of economic phenomena. It is based on facts and data. It answers to what is, what was.

Normative economics, on the other hand, is concerned with judgment. It answers to what should be or what ought to be.  

Structural unemployment is caused because of a mismatch between the skills that the workers possess and the skills that the employers want.  

Innovation and technological changes will always cause structural unemployment and create winners and losers. So the government should focus on helping the displaced workers in finding new jobs, instead of limiting innovation.  

As this involves what should be done, it is a normative issue.