Which of the following statements is an example of positive analysis?

• A. The government should increase the minimum wage to help low-income workers.
• B. Raising taxes on the wealthy is the fair thing to do.
• C. It is better for society if healthcare is provided for free.
• D. An increase in the minimum wage will lead to higher unemployment among teenagers.

Answer: (D)

Verified step by step guidance

1. Understand the difference between positive and normative analysis in economics. Positive analysis deals with objective, testable statements about how the economy works, while normative analysis involves subjective opinions about what ought to be done.
2. Identify that positive statements can be verified or falsified by evidence, such as predictions or cause-effect relationships, whereas normative statements express value judgments or opinions.
3. Review each statement in the problem and classify it: statements about what should be done (e.g., 'The government should increase the minimum wage') are normative, while statements predicting outcomes (e.g., 'An increase in the minimum wage will lead to higher unemployment among teenagers') are positive.
4. Recognize that the correct answer is a positive statement because it makes a testable claim about the effect of increasing the minimum wage on teenage unemployment.
5. Summarize that positive analysis focuses on describing and explaining economic phenomena without making judgments, which is why the statement about minimum wage and unemployment is an example of positive analysis.