Differentiate between positive and normative economics using examples
What will be an ideal response?
Positive economics is analysis that generates objective descriptions or predictions about the world that can be verified with data. It is analysis that describes what people actually do. "A 5% fall in the unemployment rate will lead to a 2% increase in the inflation rate" is an example of a positive economic statement. Normative economics, on the other hand, is analysis that prescribes what an individual or society ought to do. It is subjective and depends on personal preferences, tastes, attitudes, feelings, or ethical judgments. "Pollution in developing countries is one of the biggest global environmental problems" is an example of a normative economic statement.
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A reason for an increase in labor productivity growth is
A) an increase in the population so that firms hire more workers. B) a decrease in the capital stock so that firms must hire more workers. C) an increase in people's human capital. D) an increase in the quantity of labor. E) growth in the supply of labor.
Which of the following games is NOT analyzed with game theory?
A) State Lottery B) Poker C) Car Chases D) Auctions