positive economics

Examples of positive economics in the following topics:

• Normative and Positive Economics

  • Positive economics is defined as the "what is" of economics, while normative economics focuses on the "what ought to be".
  • Positive and normative economic thought are two specific branches of economic reasoning.
  • As a science, positive economics focuses on analyzing economic behavior.
  • Positive economics does impact normative economics because it ranks economic policies or outcomes based on acceptability (normative economics).
  • Positive economics is defined as the "what is" of economics, while normative economics focuses on the "what ought to be. " Positive economics is utilized as a practical tool for achieving normative objectives.

• Milton Friedman

  • His article, "The Methodology of Positive Economics" in Essays in Positive Economics [1953] was one of the most important influences on economic thought.
  • In this important piece, Friedman sets the standards for normative and positive economics as well as influencing several generations of economists.
  • He argues that positive economics is "independent of any ethical position" and its task is to provide "a system of generalizations that can be used to make predictions about the consequences of any change in circumstances;" it is deals with "what is" (Friedman, p 4).
  • Normative economics is dependent on positive economics and deals with "what ought to be. "
  • Friedman argues that economics can be a positive science.

• Which Methodology is "Correct?"

  • Methodological problems apply to all knowledge including Newtonian mechanics, the theory of relativity and quantum mechanics as well as economics.
  • Modern economic theory has a long tradition of following a "modernist" methodology characterized by a strong faith in empiricism and rationalism.
  • Within modern economics, knowledge is believed to be advanced by inductive or empirical investigations that can verify (or fail to falsify) "positive" concepts, hypothesis, theories or models developed by deductive or rationalist logic.
  • Normative economics (or the study of what "ought to be") is seen as distinctly separate from positive economics.
  • When economics is studied as a process of provisioning, normative and positive issues become interrelated.

• Sources and Determinants of Profit

  • Economic profits may be positive, zero, or negative.
  • If economic profit is positive, other firms have an incentive to enter the market.
  • Despite earning an economic profit of zero, the firm may still be earning a positive accounting profit.
  • The reasons for the positive economic profit are barriers to entry, market power, and a lack of competition.
  • If the price level were set above ATC's minimum point, there would be positive economic profit; if the price level were set below ATC's minimum, there would be negative economic profit.

• Arguments in Favor and Opposed to Economic Growth

  • In other words, economic growth is an expansion of the economic output of a country.
  • There are numerous arguments in support of economic growth that describe its positive impact on society.
  • Increased productivity: in countries that experience positive economic growth, the growth is often attributed to an increase in human and physical capital.
  • Equitable growth: it has been found that while economic growth has a positive impact on society as a whole, it is common that poor sections of society are not able to participate in economic growth.
  • Economic growth has many positive effects, but a society must not favor economic growth over solving pressing social issues such as poverty.

• Is Economic Growth a Good Goal?

  • Economic growth is typically viewed as positive, but there are mixed repercussions of increased productivity within an economic system.
  • Throughout history, economists have typically assumed a positive relationship between economic growth (increased productivity) and the well-being of a society.
  • Is economic growth the appropriate objective?
  • In this circumstance there is limited utilitarian value to economic growth.
  • It is imperative that increased productivity can be created in a context in which the value can be captured in a positive and meaningful way.

• Catch-Up: Possible, but not Certain

  • In order to assess economic growth it must be measured.
  • Some of the factors that impact economic growth include:
  • Employment rate: in order for the employment rate to have a positive impact on economic growth there must also be increases in productivity.
  • The study of the economic aspects of development in low-income countries is called development economics.
  • All of the factors listed previously impact economic growth - most of them positively.

• Externality Impacts on Efficiency

  • In economics, the term "economic efficiency" is defined as the use of resources in order to maximize the production of goods and services.
  • Externalities are either positive or negative depending on the nature of the impact on the third party.
  • An example of a positive externality would be an individual who lives by a bee farm.
  • Positive and negative externalities both impact economic efficiency.
  • Positive externalities are beneficial to the third party at no cost to them.

• Improving Education and Health Outcomes

  • Education economics studies economic issues related to education, such as the demand for education and the financial cost of education.
  • Human capital requires investment, but also provides economic returns.
  • Health economics focuses on the following topics:
  • Health policies can have positive long-run effects on not only human capital, but also economic growth as a whole.
  • This graph shows the positive relationship between education and per capita GDP of a country.

• Positive Externalities

  • Positive externalities are benefits caused by activities that affect an otherwise uninvolved party who did not choose to incur that benefit.
  • Externalities occur all the time because economic events do not occur within a vacuum.
  • In the case of positive externalities, a transaction has positive side effects for non-related parties.
  • The homeowner's neighbors benefit from a positive externality.
  • Use an example to discuss the concept of a positive externality