- Economy is a social research about individual and society attitude to contribute and distributed the limited factor of production to produce the unlimited demand of good and services .
- Scarcity : The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. it takes that society that insufficient productive resources to fulfill all human wants and needs.
- Choice : Choose involves a rational decision to be made due to scarcity of resources in order to satisfy unlimited human wants.
- Opportunity cost : The second best alternative foregone when choice is made.
Positive Statements
Positive statements are objective statements that can be tested, amended or rejected by referring to the available evidence. Positive economics deals with objective explanation and the testing and rejection of theories. For example:
- A fall in incomes will lead to a rise in demand for own-label supermarket foods
- A rise in average temperatures will increase the demand for sun screen products.
- Higher interest rates will reduce house prices
- Cut-price alcohol has increased the demand for alcohol among teenage
Normative statements are subjective statements rather than objective statements – i.e. they carry value judgements. For example:
- Pollution is the most serious economic problem
- Unemployment is more harmful than inflation
- The government should increases the minimum wage to RM12 per hour to reduce poverty
- Resources are best allocated by allowing the market mechanism to work freely.
- The fundamental economic questions facing any economy are What, How and For Whom to produce goods.
- The What question asks exactly which goods are to be produced and in what quantities.
- The How To Produce is about how the goods will produce, firm make decision for Labor Intensive or Capital Intensive
- The For Whom problem concerns the division of output among society's citizens.
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