The Economic Analysis of Minimum Wage Involves Both Normative and Positive

question 49

Multiple Choice

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.Unemployment would be lower without a minimum wage law.
C.Minimum wage laws benefit some workers and harm others.
D.The minimum wage should be more than $7.25 per hour.
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.

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Definitions:

Fixed Manufacturing Cost

A rephrased definition for Fixed Manufacturing Overhead; these are costs that do not change with the level of manufacturing activity, such as property taxes on a factory.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including utilities, depreciation, and salaries for management.

Fixed Manufacturing Cost

Costs that remain constant regardless of the level of production, such as salaries of permanent employees and depreciation of factory equipment.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, depreciation, and maintenance of equipment.