Economists often make a number of judgements these can be:
- Positive statements – these are supported by facts
- Normative statements – these contain a “value judgement” which can not be supported by facts
Normative statements describe what the economy should look like
Normative economics looks at the desirability of certain parts of the economy
Quick Questions
1. Are goods tangible or intangible
A. Tangible
2. What is a want?
A. Something that people desire
3. Name the missing factor of production – land, labour, enterprise
A. Capital
4. Which of the following would be classified under land? A factory, a forest
A. A forest
5. What is a maximising objective?
A. It means that you get the most out of what you do
6. What is the main aim of shareholders?
A. High profits and dividends
7. Whose objective is high wages?
A. Employees
8. What is the main objective of firms?
A. To maximise profits
9. What does scarcity mean?
A. That resources are limited
10. What else does the economic problem look at: how goods / services should be produced, what should be produced and ?
A. For whom they should be produced for
11. Define the term opportunity cost
A. The cost of the next best alternative
12. Where is efficient on the PPF?
A. Any point on the curve
13. What are normative statements?
A. Those that contain a value judgement of what should be done
14. Which of the following is a positive statement: The Bank of England should lower interest rates, The UK housing market will crash next year, The current rate of inflation is 2.1%
A. The current rate of inflation is 2.1%
15. What are the features of positive statements?
A. They are supported by facts
