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1.1 Economic methodology and the economic problem

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Question 69

During a parliamentary debate on environmental policy, an economist presents the following four statements:

  1. "A 15% increase in the fuel duty will lead to a 3% reduction in urban traffic congestion within twelve months."
  2. "The revenue raised from this fuel duty increase ought to be ring-fenced to fund regional rail electrification."
  3. "Minimising urban traffic congestion is more important than keeping fuel affordable for low-income commuters."
  4. "Implementing a fuel duty increase is a fairer policy than introducing a nationwide road-pricing scheme."

Which one of the following options correctly classifies these statements according to economic methodology?

A

Statement 1 is positive because it can be tested against empirical data, while Statement 2 is normative because it contains a value judgement on how tax revenue should be allocated.

B

Statement 1 is normative because the precise future reduction in congestion cannot be predicted with absolute certainty, while Statement 4 is positive because fairness can be scientifically quantified.

C

Statement 3 is positive because urban congestion is an objective physical phenomenon, while Statement 2 is normative because it involves public sector expenditure.

D

Statement 4 is positive because equity is a well-defined economic term with no subjective interpretation, while Statement 1 is normative because tax rates are politically determined.

Markscheme

1.1 Economic methodology and the economic problem Questions

  1. A Level
  2. /Economics
  3. /1.1 Economic methodology and the economic problem

123 exam-style questions on AQA A Level Economics 1.1 Economic methodology and the economic problem, covering 1.1.1 Economic methodology, 1.1.2 The nature and purpose of economic activity, 1.1.3 Economic resources, 1.1.4 Scarcity, choice and the allocation of resources, and 1.1.5 Production possibility diagrams. Each one has a worked solution and a mark scheme showing where the marks go.

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