NORMATIVE VS POSITIVE ECONOMICS CLASS 11 MICROECONOMICS

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Normative vs Positive economics | Class 11th | Chapter - 1 • Normative economics and positive economics are two distinct approaches in economics: • Positive Economics • 1. _Focuses on facts_: Examines economic phenomena as they are, without judgment. • 2. _Descriptive_: Describes what is happening in the economy. • 3. _Objective_: Aims to be neutral and unbiased. • 4. _Analyzes cause-and-effect relationships_: Studies how economic variables. • 5. _Predictive_: Tries to forecast economic outcomes. • Normative Economics • 1. _Focuses on values_: Evaluates economic phenomena based on moral or ethical judgments. • 2. _Prescriptive_: Recommends what should be done to improve the economy. • 3. _Subjective_: Involves personal opinions and biases. • 4. _Evaluates economic outcomes_: Assesses the desirability of economic results. • 5. _Policy-oriented_: Aims to inform policy decisions. • Key differences: • Positive economics seeks to understand and explain economic behavior, while normative economics seeks to evaluate and improve it. • Positive economics is objective, while normative economics is subjective. • Positive economics focuses on what is, while normative economics focuses on what ought to be. • Examples: • Positive economics: The unemployment rate is 5%. • Normative economics: The unemployment rate should be lower, and policies should aim to reduce it. • Understanding both perspectives is essential, as they complement each other in economic analysis and policy-making.The central problems of an economy are: • 1. *What to produce*: Deciding which goods and services to produce, given limited resources. • 2. *How to produce*: Choosing the most efficient methods and technologies to produce goods and services. • 3. *For whom to produce*: Determining who will receive the goods and services produced, based on factors like income, need, and social welfare. • 4. *How to allocate resources*: Allocating scarce resources like labor, capital, and raw materials among different industries and uses. • 5. *How to manage economic growth*: Balancing economic growth with social and environmental considerations. • 6. *How to manage economic fluctuations*: Mitigating the effects of economic booms and busts, like recessions and inflation. • 7. *How to distribute income*: Addressing income inequality and ensuring fair distribution of wealth. • 8. *How to manage externalities*: Dealing with externalities like pollution, climate change, and social costs. • 9. *How to make economic decisions*: Making informed decisions about resource allocation, investment, and consumption. • 10. *How to balance individual and social interests*: Reconciling individual freedoms with social welfare and collective interests. • These central problems are the core challenges that economies face, and addressing them is crucial for achieving economic efficiency, equity, and sustainability. • Micro Chapter 1 class 11. • #oneshot • #economics11th • #class11economics • #commerce • #microeconomicschapter1 • #microeconomics

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