Which of the following statements about a company is an example of normative analysis?

• A. Company A should pay its workers higher wages to be considered ethical.
• B. Company D produces 1,000 units of output per day.
• C. Company B employs 500 workers in its main factory.
• D. Company C's profits increased by 10% last year.

Answer: (A)

Verified step by step guidance

1. Understand the difference between positive and normative analysis in economics. Positive analysis deals with objective, fact-based statements that can be tested or verified, such as quantities, profits, or employment numbers.
2. Normative analysis involves subjective judgments or opinions about what ought to be done, often incorporating values or ethical considerations.
3. Review each statement and classify it: statements about output, number of workers, or profit changes are positive because they describe factual information.
4. Identify the statement that expresses a value judgment or recommendation, such as suggesting that a company should pay higher wages to be ethical, which is normative.
5. Conclude that the statement 'Company A should pay its workers higher wages to be considered ethical' is an example of normative analysis because it reflects an opinion about what ought to happen.