Introduction to Business EconomicsMTP Aug 24Question 724 of 209
All Questions

Which of the following falls within the domain of Normative Economics?

Options

AHow national income between different individuals is distributed?
BWhat actual wage rate is determined under monopsony in labour market?
CWhat wage should be paid to the labourers so that they should not be exploited?
DNone of these
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Correct Answer

✅ Option c — What wage should be paid to the labourers so that they should not be exploited?

All Options:

  • AHow national income between different individuals is distributed?
  • BWhat actual wage rate is determined under monopsony in labour market?
  • CWhat wage should be paid to the labourers so that they should not be exploited?
  • DNone of these

Detailed Solution & Explanation

• Normative economics deals with "what ought to be" or "what should be." It involves value judgments, opinions, and prescriptions about how the economy should work. It focuses on fairness, equity, and ideal outcomes. • Option (C) "What wage should be paid to the labourers so that they should not be exploited?" clearly falls under normative economics. The word "should" indicates a value judgment about a desirable outcome (preventing exploitation) and suggests a policy recommendation. It's not about describing how wages are determined, but how they *ought* to be determined based on a moral or ethical standard. • Option (A) "How national income between different individuals is distributed?" is a question of positive economics. It describes an existing economic phenomenon or fact – the actual distribution of income. It doesn't make a judgment about whether that distribution is fair or ideal, just how it is. • Option (B) "What actual wage rate is determined under monopsony in labour market?" is also a positive economic statement. It describes a factual situation or an observable outcome in a specific market structure (monopsony). It aims to explain how the economy *is*, not how it *should be*.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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