When a generalization is made based on observed facts, it is

Step 1: Analyze the question The question asks what we call it when we move from observed facts (specific cases) to a general statement or rule.

Step 2: Explain the concept Economics uses two main methods of reasoning:

• Inductive reasoning: you start with specific observations or data and draw a general conclusion from them. It goes from the particular to the general. Example: You observe that each time the price of tomatoes in Mile 12 Market rises, the quantity bought falls. You then generalize that "when price rises, quantity demanded falls" (the law of demand).

• Deductive reasoning: you start with a general principle or assumption and apply it to a specific case. It goes from the general to the particular. Example: "Demand falls when price rises, so if the price of garri rises, demand for garri will fall."

Other options:

• Normative reasoning deals with value judgments and opinions about what ought to be (e.g., "The government should increase the minimum wage"). It is not based on facts alone.
• Theoretical reasoning is not a standard method of generalizing from facts. Theories are the result of reasoning, not the name for the process itself.

Step 3: Apply to the question "A generalization made based on observed facts" means going from specific observations to a general rule. That is the definition of inductive reasoning.

Step 4: Answer The correct option is A. inductive reasoning.

Tip: Remember Inductive = Instances to a general rule (specific → general). Deductive = Down from a general rule to a specific case.