the market for babies

  1. Describe the difference between “positive” economics (what-is or what-if statements) and “normative” economics (what should statements).
  1. Which type of proposition (positive or normative) do you think it would be easier to get a consensus on, and why?
  1. [Positive analysis] As we all know, at present it is illegal for parents who want to adopt a child to pay the birth mother for, or to offer to pay for, the babies they adopt. (Adoption agencies do charge for their services, of course.) Use economic theory to analyze the (potential) market for adoptive babies and answer this: what would happen if such payments were allowed? (Draw yourself a supply-and-demand graph to help you think about this question.)
  1. [Normative analysis] As we all also know, there are people who cannot have children who want to adopt, and there are pregnant women who for various reasons want to (or might be willing to) put their babies up for adoption. What do you think the government should do about the possibility of potential adoptive parents paying the birth mother directly for the babies they adopt – allow it, regulate it, or prohibit it? Give your reasons.
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