Question

Which of the following is considered to fall under the Deductive method of economic investigation?

• A. Engel's Law of Family Expenditure
• B. Malthusian Theory of Population
• C. Distribution Theory
• D. Consumer's Surplus

Hint:

Exam Tip: To identify a deductive theory, look for theories that start with broad assumptions or axioms and then derive conclusions through logic. Inductive theories are based on data, observation, and empirical evidence.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question tests knowledge of the methodology of economics. The two primary methods of economic investigation are the Deductive method and the Inductive method.

Step 2: Defining the Methods:

• Deductive Method: This method proceeds from general principles to particular conclusions. It starts with a set of fundamental assumptions or premises and then logically derives conclusions from them. It is often called the abstract, analytical, or a priori method.
• Inductive Method: This method proceeds from particular observations to general principles. It involves collecting and analyzing data to derive generalizations or theories.

Step 3: Analyzing the Options:
Let's evaluate each option based on how it was developed:

• (A) Engel's Law of Family Expenditure: This law is based on empirical observations of family spending patterns. It was derived from statistical data and observation. This is an example of the Inductive method.
• (B) Malthusian Theory of Population: Thomas Malthus developed this theory based on a few fundamental assumptions: population grows geometrically while food supply grows arithmetically. He then deduced the consequences of this disparity. This is a classic example of the Deductive method.
• (C) Distribution Theory: Distribution theories have been developed using both deductive and inductive approaches. However, the classical and neo-classical theories of distribution (like Marginal Productivity Theory) are largely based on deductive reasoning.
• (D) Consumer's Surplus: The concept of consumer's surplus was developed by Alfred Marshall using deductive logic and the law of diminishing marginal utility. While (C) and (D) have strong deductive elements, the Malthusian Theory is the most clear-cut and widely cited example of a deductive theory among the options.

Step 4: Final Answer:
The Malthusian Theory of Population is considered to fall under the Deductive method of economic investigation. Therefore, option (B) is correct.