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Canada (161,680)
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ECON 110 (199)
Chapter 2

Chapter 2

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ECON 110
Ian James Cromb

Chapter 2: How Economists Work Positive versus Normative Positive statements: • Statements of what “is” or “was” or “will be”. They are testable as to whether they are right or wrong. EXAMPLES: • Increasing the minimum wage increases youth unemployment • Taxing carbon emissions reduces carbon emissions Normative statements: • Statements of what “should be”.Avalue judgment is being made and so there is no right or wrong. You can use positive analysis to base decisions that are normative in nature. EXAMPLES: • We should decrease the minimum wage • We should tax carbon In this course, we will focus primarily on positive analysis but when we discuss policy issues normative aspects will come into play. Disagreements in Economics • Can be based on the positive • Is this the right model to analyze the phenomenon/question being studied? • Does the empirical analysis really test the positive proposition? • But also on the normative • Differences in value judgments over the relative importance of various (possibly competing) policy goals Economic Theories • Economics is a social science • As such it adheres to the scientific method • Theories are proposed, tested, and modified or discarded as indicated – continual process • Given the
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