Explanation (a) “When people must pay higher taxes on their wage earnings, it reduces their incentive to work” is a positive statement. The statement is true . This is a positive statement because if the people are asked to pay higher taxes they will be left with very less money for themselves even after working hard. This shall discourage people to work for longer hours to earn more, because the marginal benefit they will get will be less than the money left with them. Instead of the worker been benefited it is the government benefiting so the worker is demotivated. Conclusion: Thus, it is a positive statement. (b) “We should lower taxes to encourage more work” is a positive statement. The statement is false . This is not a positive statement because lower taxes will not encourage people to work longer hours. Rather people will be encouraged to spend extra hours to utilize extra money that is left after taxes in the entertainment sources. Conclusion: Thus, it is a normative statement. (c) Economics cannot always be used to completely decide what society ought to do. The statement is true . This is not a true statement because although the positive economics helps to understand what the society ought to do...

Whether the given statements are true or false. Positive and Normative Economics Positive economics construct its statements on the basis of objectivity and facts while normative economics construct its statements on the basis of personal judgment, interpretations and experiences.

Economics

5th Edition

ISBN: 9781319066604

Author: Paul Krugman, Robin Wells

Publisher: Worth Publishers

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Laffer Curve Analysis

In terms of economics, the Laffer curve was popular among those economists who were or who belonged to the supply side of the economic peripheral. This concept was popularized by the famous supply-side economist known as Arthur Laffer. This curve illust…

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Chapter 2, Problem 11P

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Whether the given statements are true or false.

Positive and Normative Economics

Positive economics construct its statements on the basis of objectivity and facts while normative economics construct its statements on the basis of personal judgment, interpretations and experiences.

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Chapter 2, Problem 10P

Chapter 2, Problem 12P

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