20econ 2030

20econ 2030 - Positive vs. Normative economics Positive...

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Positive vs. Normative economics Positive economics focuses upon that which is; Normative economics is concerned with what should be be Positive Economics -“what is” refers to economic study based upon observable and tested phenomenon -Cause and Effect based upon collected data, we know sales will rise 10% if prices are lowered by 5% -emphasis on reality not opinion or conjecture NORMATIVE ECONOMICS -“what should be” refers to that study concerned with advancing ideals and values -More philosophical than empirical no one should pay more than 25% of their earnings in taxes “Why” Because any more than that goes against the idea of small government and a dynamic free market MICROECONOMICS vs. MACROECONOMICS -Micro is concerned with the primary elements of an economy; that is, an individual, a firm, a particular industry, or specific market -Macro studies that economy as a whole, firms and individuals reacting to scarcity in the collective sense MICROECONOMICS -Individual (referred to as consumer) level economic activity
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20econ 2030 - Positive vs. Normative economics Positive...

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