Ecn 401 (MICRO ECONOMICS). THE NATURE OF ECONOMICS
INTRODUCTION. Economic s is the study of human allocates his limited resources among other alternatives used in other to satisfy his wants or desires. Economics is a social science that studies individual economic behaviour,economic phenomena as well as how individual agents such as consumer firm and government agencies make trade off choice that allocate limited resources among competing users. Man desire a lot of things goods and services but resources are less than efficient to satisfy all his wants.These resources can be classified into two ie Economic resources such as land,labour and capital and free resources such as air.The free resources command no price and are readily available while economic resources are relatively scarce therefore economics comes into play in order for the economic unit to allocate these resources in order of importance to satisfy his want. ECONOMICS IS BOTH A POSITIVE AND A NORMATIVE SCIENCE Economics is both normative and positive science,it is the study of facts as well as ideal theories and principles explained as follows: A) POSITIVE ECONOMICS: Positive economics is a branch of economics that focuses on description and explanation of phenomena as well as their casual relationship.It focuses primaryly on facts,and cause and effect behavioural relationship including developing and testing economic theories .As a science,positive economics value judgments for example positive economic theory would describe how money supply growth impacts inflation but it does not provide any guidance on what policy should be followed.Economics as a positive science is the study of facts or flings in reality or existing. B) NORMATIVE ECONOMICS: Normative economics is a branch of economics that expresses values or normative judgement about economic fairness.An example of normative economic statement...
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