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Key Differences Between Positive and Normative Economics
- Positive Economics refers to a science which is based on data and facts. Normative economics is described as a science based on opinions, values, and judgment.
- Positive economics is descriptive, but normative economics is prescriptive.
- Positive economics explains cause and effect relationship between variables. On the other hand, normative economics pass value judgments.
- The perspective of positive economics is objective while normative economics have a subjective perspective.
- Positive economics explains ‘what is’ whereas normative economics explains ‘what should be’.
- The statements of positive economics can be scientifically tested, proved or disproved, which cannot be done with statements of normative economics.
- Positive economics clearly define economic issues. Unlike normative economics, in which the remedies are provided for the economic issues, on the basis of value judgment.
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It refers to the value of next best activity which has to forego.
A teacher gets 50,000, if he leaves job and do tuition work and gets 60000, so his opportunity cost is 50000 ie teaching job as he go with best and next best is opportunity cost.
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Sanjeev Parjapati 7 years, 6 months ago
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