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"If the price of wine increases, the quantity purchased will increase." Is this a...

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yaga49 | (Level 1) Valedictorian

Posted April 16, 2013 at 1:50 AM via web

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"If the price of wine increases, the quantity purchased will increase." Is this a positive or normative economic statement?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 16, 2013 at 2:01 AM (Answer #1)

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This is a statement of positive economics.  There is nothing about this statement that is normative.

Economics can be divided into two categories.  There is positive economics and normative economics.  Positive economics deals with describing the world, it deals in what is.  Normative economics deals with prescribing things.  It deals with how the world should be. 

Statements of positive economics are falsifiable.  They can be proven to be true or untrue.  They are statements of fact.  Statements of normative economics cannot be falsified.  They are opinions and cannot be proven true or untrue.

The statement that you have given is a statement of positive economics.  You are probably being asked this particular question to see if you understand that false statements are still statements of positive economics.  The statement about wine is false, but it is still a positive statement.

The statement given can easily be tested.  You can simply raise the price of wine and see what happens.  You can measure the levels of sales and know whether the statement was true.  Therefore, the statement is a statement of positive economics.

If it were a statement of normative economics, it would need to state an opinion.  It might say something like “the government should try to reduce the amount of wine sold.”  Or it might say “the price of wine is too high.”  These are opinions.

The statement given is not an opinion and is therefore a statement of positive economics.

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