Question : Which of the following is an example of positive economics?
Option 1: The government should invest more in renewable energy sources.
Option 2: Higher taxes on cigarettes will reduce smoking rates.
Option 3: Income inequality is a moral issue that needs to be addressed.
Option 4: Economic growth is essential for societal well-being.
Correct Answer: Higher taxes on cigarettes will reduce smoking rates.
Solution : The correct answer is (b) Higher taxes on cigarettes will reduce smoking rates.
Positive economics is concerned with analyzing economic data and facts to provide objective analysis and understanding of how the economy functions. It aims to describe and explain economic phenomena without making value judgments or prescribing how the economy should function. Option (b) is an example of positive economics because it is based on empirical evidence and economic analysis.
