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Chapter 1: Q 1.5 (page 1)

Distinguish between Normative and Positive Economics.

Short Answer

Expert verified

Positive economics makes use of facts and statements based on scientific analysis.

Normative Economics makes use of policies and judgments.

Step by step solution

01

Step 1. Definition of Normative and Positive Economics

Normative Economics deals with policies and their judgements whereas Positive Economics considers facts.

02

Step 2. Differences.

Positive economics considers statements and predictions. It means that if a condition is true in one country it will also be true in another country as well.

For example, India is the second-largest populated country.

Normative economics involves value judgments on certain economic policies and suggestions to control. It shows whether the statement is true or false or whether it is good or bad. It is a kind of critical analysis.

For example, If the price of gas rises, people will buy it less.

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Most popular questions from this chapter

In a single sentence, contrast microeconomics and macroeconomics. Next, categorize each of the following issues as either a microeconomic issue, a macroeconomic issue, or not an economic issue.

(a) The national unemployment rate.

(b) The decision of a worker to work overtime or not.

(c) A family’s choice to have a baby.

(d) The rate of growth of the money supply.

(e) The national government’s budget deficit.

(f) A student’s allocation of study time across two subjects.

Explain why economics is a science.

During her years of college, Dominique discovered that her three favorite subjects were astronomy, chemistry, and political science. She chose to major in astronomy because she had seen data indicating that science majors earn higher-than-average wages and because she liked astronomy better than both chemistry and political science. Upon graduation, however, she learned that average wages in chemistry fields were 20percent higher than average wages earned by astronomers. Did Dominique's behavior violate the rationality assumption?

Identify the three basic economic questions and the two opposing sets of answers.

One of your classmates, Sally, is a hardworking student, serious about her classes, and conscientious about her grades. Sally is also involved, however, in volunteer activities and an extracurricular sport. Is Sally displaying rational behavior? Based on what you read in this chapter, construct an argument supporting the conclusion that she is.
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