Which of the following is a statement of normative economics? a. The minimum wage is good because it raises wages for the working poor. b. The minimum wage is supported by unions. c. The minimum wage reduces the number of jobs for less-skilled workers. d. The minimum wage encourages firms to substitute capital for labor.

Short Answer

Expert verified
The answer is a. The minimum wage is good because it raises wages for the working poor. This statement represents normative economics because it contains a value judgment.

Step by step solution

01

Analyze the statements

Let's take a closer look at each statement: a. The minimum wage is good because it raises wages for the working poor. b. The minimum wage is supported by unions. c. The minimum wage reduces the number of jobs for less-skilled workers. d. The minimum wage encourages firms to substitute capital for labor.
02

Identify the normative economics statement

Recalling that normative economics deals with value judgments or opinions, we can eliminate the statements that are based on facts or cause-and-effect relationships: a. The minimum wage is good because it raises wages for the working poor. (This statement contains a value judgment, as it expresses the belief that raising wages for the working poor is a good thing.) b. The minimum wage is supported by unions. (This statement is a fact, as it describes the position of unions regarding the minimum wage.) c. The minimum wage reduces the number of jobs for less-skilled workers. (This statement reflects a cause-and-effect relationship, as it discusses the potential consequences of the minimum wage on less-skilled workers.) d. The minimum wage encourages firms to substitute capital for labor. (This statement is a cause-and-effect relationship, as it explains how firms might adjust their strategies in response to the minimum wage.)
03

Confirm the correct statement

Based on our analysis, the statement representing normative economics is: a. The minimum wage is good because it raises wages for the working poor. (This statement contains a value judgment, indicating that it is a normative economics statement.) Thus, the answer is statement a.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free