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Assignment 1: Positive Vs Normative Economics

This document analyzes a case study of the brick industry using positive and normative economics. Positive economics statements describe factual relationships, such as how brick prices are set based on production costs and how the industry increases air pollution and health problems. Normative economics statements make judgments about what should be done, such as the government imposing taxes to reflect the true social costs or subsidizing healthcare to reduce pollution-related health issues.

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Ashish Tamang
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81 views

Assignment 1: Positive Vs Normative Economics

This document analyzes a case study of the brick industry using positive and normative economics. Positive economics statements describe factual relationships, such as how brick prices are set based on production costs and how the industry increases air pollution and health problems. Normative economics statements make judgments about what should be done, such as the government imposing taxes to reflect the true social costs or subsidizing healthcare to reduce pollution-related health issues.

Uploaded by

Ashish Tamang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment 1: Positive Vs Normative Economics

Name: Ashish Tamang


Class Roll No:- 1
Section: Eklavya

In above case study of Brick Industry, we can derive following statement that supports positive
economics and normative economics
Positive Economics
Following statements are related to positive economics which are factual on nature, which tells
good or bad rather judgmental. This explains cause and effect relationship.
1. Setting the price of brick considering its cost of productions and some margins for the
profits. It answers question of how price of Bricks are sets.
2. Brick industry increases dust and air pollution that increases health problems. This
statement supports positive economics by answering questions of what is the effect of brick
industry to the environment. It explains factual i.e. bad or good rather judgmental.
3. Social cost arises from brick industry may water problem, destruction of harvesting land
etc.
Hence, stated statements derived from cases are factual in nature which describes good or bad.
And that establishes cause and relationship.
Normative Economics
Following statements supports what should be and what should do rather what is and factual.
Normative economics are
1. Government to impose the tax so as to increase the price so that it reflects true social cost
and compensate to the effected society. This statement supports normative economics which
supports what should be done
2. Government should subsidize medication for the effected society to reduce health problem
related to dust and air pollution. It clearly tells what should do by government to
compensate to affected society.
The above statement explains normative economics aspect of the case that explains what should
do and what should be that is judgmental in nature.

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