Question

3.5 Dr. Strangelove's theory is that the price of mushrooms is determined by the activity of subatomic particles that exist in another universe parallel to ours. When the sub- atomic particles are emitted in profusion, the price of mushrooms is high. When subatomic particle emissions are low, the price of mushrooms is also low. How would you go about testing Dr. Strangelove's theory? Discuss whether this theory is useful. 3.6 Related to the Don't Let This Happen to You on page 15) riefly explain which of the following statements represent positive analysis and which represent normative analysis. a. A 50-cent-per-pack tax on cigarettes will lead to a 12 percent reduction in smoking by teenagers. b. The federal government should spend more on AIDS research. c. Rising wheat prices will increase bread prices. d. The price of coffee at Starbucks is too high. 3.7 (Related to the Don't Let This Happen to You on page 15) fficer of the invest-

Answer 1

3.6) Positive statements are objective and fact-based. It can be verified against evidences and can be approved or disapproved.

Normative statements are subjective and value-based. It looks at the world as it "should be".

a) A 50% pack tax on a cigarette will lead to a 12% reduction in smoking by teenagers. This can be tested by accumulating the data. If the data match with the statement then it will be approved otherwise it will be disapproved. So the statement is positive.

b) The federal government should spend more on AIDS research. It has no data so it can not be tested. moreover the word "should be" defines the statement is normative.

c) Rising wheat price increases bread prices. By collecting the data of the price of wheat and bread the statement can be tested. If the test supports the statement it will be approved otherwise disapproved. So the statement is positive.

d) The price of coffee at Starbucks is too high. By collecting the data of price of Starbuck's coffee it can be tested. If the data support the high price it will be approved otherwise disapproved. So the statement is positive.