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How do Economists Approach the World? · Paper 1 — Free Economics SL Practice Questions
1MasterySAQ-SNormative vs positive economics4 marksPaper 1~6 min
A newspaper headline reads: "Government should subsidise electric vehicles to reduce carbon emissions by by 2030. Currently, electric vehicles make up of all car sales."
(a)
Using a fully labelled , show the effect of a government subsidy on the market for electric vehicles. [2 marks]
(b)
Using your , distinguish between how a positive economist and a normative economist would each approach the claim that "subsidising electric vehicles will reduce carbon emissions by ." [2 marks]
Solutions
2MasterySAQ-SNormative vs positive economics9 marksPaper 1~14 min
A finance minister states: "Raising taxes on the richest of earners will increase government revenue by USD 8 billion. This fair because the rich should contribute more to society."
(a)
Define the term positive statement. [1 mark]
(b)
Using a fully labelled Laffer curve , identify the condition under which the minister's claim that revenue will rise by USD 8 billion is valid. [2 marks]
(c)
Explain why the claim that the policy "is fair" is a normative statement, and analyse why no economic can resolve whether this claim is correct. [3]
Total: [6 marks]
Solutions
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