Question

The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum​ wage: a. The minimum wage law causes unemployment. b. A minimum wage law benefits some groups and hurts others. c. In some cities such as San Francisco and New​ York, it would be impossible for low−skilled workers to live comfortably in the city without minimum wage laws. d. The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses. Which of the consequences above are positive statements and which are normative​ statements?

Answer 1

Explanation:

First, remember that the difference between normative and positive economic analysis is that;

Normative analysis take a somewhat neutral view by stating how the world should be. While

The Positive analysis states the facts. That is, it describes the world as it is.

Thus, a Normative analysis of the consequence of minimum​ wage would be the following statements:

c. In some cities such as San Francisco and New​ York, it would be impossible for low−skilled workers to live comfortably in the city without minimum wage laws.

d. The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.

And a Positive analysis of the consequence of minimum​ wage would be the following statements:

a. The minimum wage law causes unemployment.

b. A minimum wage law benefits some groups and hurts others.