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Positive vs Normative Economics Explained

This document outlines key concepts in economics. It discusses positive and normative statements, with positive statements describing economic situations factually and normative statements providing opinions on what policies should be adopted. It also describes scarcity as a core consideration, where resources are limited and choices must be made about what and how much to produce, how to produce it, and who will receive it. Opportunity cost is defined as what must be sacrificed to choose one production option over another due to scarce resources.

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Glecy Fampulme Fajiculay
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44 views1 page

Positive vs Normative Economics Explained

This document outlines key concepts in economics. It discusses positive and normative statements, with positive statements describing economic situations factually and normative statements providing opinions on what policies should be adopted. It also describes scarcity as a core consideration, where resources are limited and choices must be made about what and how much to produce, how to produce it, and who will receive it. Opportunity cost is defined as what must be sacrificed to choose one production option over another due to scarce resources.

Uploaded by

Glecy Fampulme Fajiculay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

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.

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