Question : Bearing in mind the assertion that economics is a "positive" and not a "normative" science, with which of the following problems would an economist be concerned?
I. The unfairness of the distribution of wealth
II. The effect on prices due to speculation in raw materials
III. The results of union pressure for increased wages
IV. The rights and wrongs of exaggerated advertising claims
Option 1: I only
Option 2: II, III
Option 3: I, III
Option 4: I, II, III, IV
Correct Answer: II, III
Solution : The correct answer is (b) II, III
An economist, as a practitioner of positive economics, would primarily focus on objective analysis and explaining economic phenomena as they are, rather than making subjective value judgments. Based on this understanding, an economist would typically be concerned with problems that can be studied and analyzed using positive economics principles.
The effect of speculation on raw material prices and the results of union pressure for increased wages can be analyzed and studied using positive economics principles. These issues involve economic factors, market dynamics, and their impact on the economy, which can be examined through empirical analysis and objective study.
The unfairness of wealth distribution and the rights and wrongs of exaggerated advertising claims, on the other hand, involve normative judgments about fairness and ethics, which fall outside the scope of positive economics.
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