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Economics (AS & A Level) · Oct / Nov 2022 · Paper 12 · Question 4

9708Economic methodology

What is a normative statement?

  1. AA firm receiving a government subsidy will increase the supply of a good.
  2. BNegative externalities are the most serious market failure.
  3. CA rise in incomes will lead to a rise in demand for normal goods.
  4. DA rise in the additional rate of income tax will decrease the incentive to work.

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Correct answer: B. Negative externalities are the most serious market failure.

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