Question

Maneesha has completed an analysis of the market for prescription medication. She has determined that the policymaker should act to prevent an increase in the price of this drug on the grounds that the mainly elderly consumers of the medication already have spent their lives paying too much for pharmaceuticals. They ought not to have to pay higher prices, Maneesha has concluded, so the government should act to halt any further price increases in the market. Has Maneesha applied positive or normative economic analysis?

Short answer

Maneesha has applied normative economic analysis.

Step-by-step solution

Step 1. Normative Analysis.

Normative Economic Analysis considers value judgments on various economic policies. It helps us consider whether the statement is good or bad.

Step 2. Reason.

Maneesha has applied normative economic analysis. She has analyzed the past records of medication prices for elderly people and led to the conclusion that prices are too high for them and the government should not increase the price.