Positive and Normative Economics

Class 11 Microeconomics — Facts vs Value Judgements

Positive Economics

Positive economics studies the facts of life — it deals with 'things as they are'. It describes what was, what is, or what will be under given circumstances. These statements do not pass any value judgements.

Examples: "India is an overpopulated country." • "Prices are constantly rising."

Positive statements may be true or false — they can be verified with actual data. Positive Economics is neutral between ends; an economist analyses things as they are without moral judgement.

Normative Economics

Normative economics tells us 'what ought to be'. It deals with desirable vs undesirable things and gives decisions regarding value judgements.

Examples: "India should not be overpopulated." • "Prices should not rise."

Positive vs Normative — Side by Side

Viewing: Positive Economics

Meaning

It deals with what is or how economic problems are actually solved.

Verification

Can be verified with actual data.

Purpose

To make real description of an economic activity.

Value Judgements

Does not give value judgements — neutral between ends.

Examples

1. Prices in Indian economy are constantly rising. 2. There are inequalities of income in our economy.

Positive and Normative Economics

Notes

Positive and Normative Economics

Positive Economics

Normative Economics

Positive vs Normative — Side by Side

Quick Reference — Question Words

Positive Economics (What is?)

Normative Economics (What ought to be?)