Positive Economics

Positive economics is the branch of economics that deals with the description and prediction of economic phenomena. It is concerned with the relationships between economic variables, such as the price of a good and the quantity of that good that is demanded. Positive economics does not make value judgments about whether or not these relationships are good or bad.

Positive economics is based on the assumption that economic agents are rational and make decisions based on their own self-interest. This assumption allows economists to make predictions about how economic agents will behave in certain situations. For example, an economist might predict that the price of a good will rise if the supply of that good decreases.

Positive economics is important because it provides a foundation for understanding how the economy works. It also allows economists to make predictions about how economic policies will affect the economy. However, positive economics does not tell us whether or not these policies are good or bad. That is the realm of normative economics.

Normative economics is the branch of economics that deals with value judgments about economic phenomena. It is concerned with whether or not certain economic policies are good or bad. Normative economics is based on the assumption that there is a set of values that all people should agree on. For example, most people would agree that it is good to have a high standard of living and that it is bad to have poverty.

Normative economics is important because it allows us to make decisions about how the economy should be run. It also helps us to evaluate the effects of different economic policies. However, normative economics is more subjective than positive economics because it is based on value judgments.

Positive and normative economics are two different branches of economics that are concerned with different things. Positive economics is concerned with the description and prediction of economic phenomena, while normative economics is concerned with value judgments about economic phenomena. Both positive and normative economics are important for understanding how the economy works and for making decisions about how the economy should be run.