What is possitive economices ecplain with an example?
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Positive Economics deals with What Is i.e. analysing economic behaviour without making a judgement about the outcome, whether it is good or bad.
Examples of Positive Economic Statements are:
Higher Taxes on Cigarettes causes people to smoke less due to the increased price
Demand falls when Price Rises
Income Inequality exists in all countries
The sentences do not say whether people smoking less or fall in demand is good or bad, just that it is an effect of the action
This is as opposed to Normative Economics, which looks at what ought to be i.e. makes value judgements of what should be done. Eg: 'People should smoke less', or 'The government should take steps to control rise in price' or 'Income Inequalities should be reduced'.
Examples of Positive Economic Statements are:
Higher Taxes on Cigarettes causes people to smoke less due to the increased price
Demand falls when Price Rises
Income Inequality exists in all countries
The sentences do not say whether people smoking less or fall in demand is good or bad, just that it is an effect of the action
This is as opposed to Normative Economics, which looks at what ought to be i.e. makes value judgements of what should be done. Eg: 'People should smoke less', or 'The government should take steps to control rise in price' or 'Income Inequalities should be reduced'.
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