Theme 1 Economics

Question 1

Distinguish between positive and normative statements.

Answer 1

A Positive statement is one that can be tested and verified and is not based on a value judgment. For example, stating that the current level of unemployment is 4.1% is positive because it can be tested and either verified or falsified.

Normative economics focuses on the value of economic fairness, or what the economy “should be” or “ought to be.

Question 2

What Is Opportunity Cost

Answer 2

the loss of other alternatives when one alternative is chosen. For example 100million pounds spent on road building is 100million that cant be spent on the NHS