Micro-Basic economic problem: Positive & normative economic statements

Question 1

What role do economists have within the basic economic problem?

Answer 1

1. Providing objective and opinion-free analysis
2. Making decisions and providing judgments based on opinions/values
   => makes it science and art fact and fiction

Question 2

What is a positive statement?

Answer 2

Objective and opinion-free analysis
Example: A fall in income will lead to a rise in demand for own-label supermarket food.

Question 3

What is a Normative statement?

Answer 3

Making decisions and providing judgments based on opinions/values
Example: Pollution is the most serious economic problem

Question 4

What are the common features of a positive statement?

Answer 4

1. Focus on data
2. Factual
3. Objective
4. Can be tested
5. Words is, was, will be

Question 5

What are the common features of a normative statement?

Answer 5

1. Focus on opinions, judgments and values
2. Prescriptive
3. Subjectivet cannot be tested
4. Words: should, could, ought to unfair, fair