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, minimum wage laws are necessary for low-skilled workers to stay in the city.
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?
A)a, b, and c are positive statements and d is a normative statement.
B)a and b are positive statements, c and d are normative statement.
C)Only a is a positive statement, b, c and d are normative statements.
D)a and c are positive statements, b and d are normative statements.

Question

Quizplus · Accepted Answer

a) This is a positive statement as it is an observable consequence of the minimum wage law.
b) This is also a positive statement as it describes the distributional effects of the minimum wage law in terms of winners and losers.
c) This is a normative statement as it makes a judgment about what is necessary for low-skilled workers to stay in the city.
d) This is a normative statement as it assigns different values to the gains and losses, based on the identity of the parties affected.

The Economic Analysis of Minimum Wage Involves Both Normative and Positive