Which of the following statements about normative analysis is correct?
A)Normative analysis, because it is based on opinion, rarely employs any positive analysis when prescribing a solution to a given problem.
B)Normative analysis typically cannot be trusted because it is only someone's opinion.
C)Normative analysis ignores exogenous variables when making predictions.
D)Normative analysis typically focuses on issues of social welfare.

Question

Quizplus · Accepted Answer

Normative analysis is concerned with prescribing what should be done or what is desirable in a particular situation. It often focuses on issues of social welfare, such as how to maximize overall well-being or achieve a fair distribution of resources. While normative analysis is based on value judgments and subjective opinions, it can still be informed by positive analysis and empirical evidence. Normative analysis typically focuses on issues of social welfare, including questions of ethics and morality, and seeks to prescribe a course of action based on what is deemed to be the morally or ethically correct choice. However, normative analysis should be supported and informed by positive analysis, which involves the use of empirical evidence to understand the cause-and-effect relationships that underlie economic phenomena.

Which of the Following Statements About Normative Analysis Is Correct