Key Takeaways

There are two economic statements of modern economics: the Positive Statement and Normative
Statement.
 Positive Statement or Positive economics deals with the objective explanation of the current
economic situations and development with precise details and fact-based statements. It
answers the question “what it is?”
 Normative Statement or also known as Policy economics is the subjective statements that are
opinion-based suggesting “What should be done?”
Scarcity is the most important consideration on the study of economics. It is the state when resources
are limited to give the wants of people.
Because resources are limited, people need to make an intelligent choice. Choice is made in deciding
which goods to produce or not to produce.
There are four question in economics:
 “What to produce?” Because there are several needs and wants to be satisfied, the society
needs to choose to which resources are to prioritize.
 “How to produce?” Once what resources to produce are identified, the next concern is how to
produce them.
 “For whom to produce?” Another important aspect of decision making is how the total outputs
are going to be distributed among the population.
 “How much to produce?” It is also a concern to identify the quantity of good to be produced.
Opportunity Costs is defined as a measure of what must be given up or sacrificed when one chooses to
give over resources in the production in favor of another.

Most economic decisions and policies that are made or will be made by the leaders of an
organizations are influenced by the Positive and Normative economic statements. It will be useful for
leaders of the organizations to base on Normative economics for the reason that it concerns with value
judgments and statements of “what should be” or “what ought to be”. It aims to provide possible
solutions but it can’t be the only basis for decision making of important economic issues. Positive
economics can also help leaders when making policies to decide on important matters under the
guidance of fact- based statements.

Scarcity is the fall short in supply or resources to satisfy the unlimited needs and wants of many
people. Hence, choice is needed to be made. The leader have to make an intelligent choice of what to
produce or consume. Otherwise, resources will be wasted. Every choice made has a so-called
opportunity cost.

These economic theories and concepts are used by administrators and leaders to formulate
policies and make a good decision to certain economic problems. They are the basis and sometimes the
influence of how the decision was made.