Chapter 2, Problem 10P

To determine

A representative of the American clothing industry recently made the following statement. “Workers in Asia often work in sweetshop conditions earning only pennies an hour. American workers are more productive and as a result earn higher wages. In order to preserve the dignity of the American work place, the government should enact legislation banning imports of low-wage Asian clothing”

(a) Which parts are positive and normative statements?

(b) Does the policy advocate consist of wages and productivities of America and Asian workers?

(c) Whether the policy makes Americans better off or worse off.

(d) Would low-wage Asian workers benefit from or be hurt by such policy?

Concept Information:

Positive Economics:

It is based on facts and purely objective. It describes the economic issues without judging them. It is also referred to as "the economics of what is". To determine whether a statement is positive or not, we must analyze that whether the statement can be falsified or not. If it can be tested and proven, it is a positive statement.

Normative Economics:

It not only focuses on the economic issues but it judges them as well. It is based on values. It is also called the "economics of what ought to be". To identify a normative statement, one should look for modal verbs such as should, ought, or must.