Explanation
Lionel Robbins was a British economist who proposed a scientifically positive definition on economics where he emphasized on making choices by the study of human behaviour from various alternative uses of the scarce resources in order to maximize the satisfaction of most of the unlimited wants in the economy by setting up an effective relationship between these wants and scarce means.
The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and (4) resources are used in a technically efficient way.
Hence option ‘c’ is true.
All the points that fall on a production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with the given resources and technology which are to be fully utilized. Any point beyond and below the curve indicates over-utilization and under-utilization of resources respectively. Therefore, points A, B and C represents productively efficient level of output.
Normative economics deals with what ought to be or how the economic problems should be solved.It discusses what the desirable things are and how they should be realized. Thus it is suggestive in nature.
Microeconomic behaviour cannot be added-up to drive macroeconomic behaviour.
The phenomenon in Microeconomics cannot be generalized for all the units in the economy on an aggregate level.
For example the theory of an individual firm cannot be universally applied to the whole industrial sector in an economy. The theory of individual consumer behaviour is different from the behaviour of the whole economy’s behaviour at the aggregate level. The demand of a single person may not always match with the economy’s aggregate demand.
Positive statements study the facts of life i.e. it deals with 'things as they are'. It deals with what are the economic problems and how are they actually solved. It explains the cause and effect relationship and avoids giving suggestions.Both the statements (ii) and (iii) are giving suggestions but (i) and (iv) are stating a fact and it not suggesting anything. Thus option (i) and (iv) are positive statements.
Positive economics: It studies the fact of life i.e it deals with 'things as they are'. It deals with what are the economic problems and how are they actually solved. It explains the cause and effect relationship and avoids giving suggestions. Thus it remains neutral towards ends.
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