Explanation
Higher indifference curve denotes a higher level of satisfaction. Higher indifference curve represents large bundle of goods, which means more utility because of monotonic preference. In the image we see, that IC2 gives more satisfaction than IC1 and IC3 gives more satisfaction than both IC1 and IC2.
The budget line is the graphical representations of all possible combinations of two goods which can be purchased with given income and prices such that the cost of each of these combinations is equal to the money income of the consumer. Budget line is therefore called the price line, price opportunity line and consumption possibility curve as well.
The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope.
An increase in the number professionally qualified persons, the production possibility frontier will shift outward. Where there is advancement of technology or increase in availability of resources or introduction of a production method with improved efficiency in respect to both the goods, then PPF will shift to the right, i.e. outwards. This is because the more of both are goods are being produced due to the above factors.
'A government deficit will reduce unemployment and an increase in prices.' This statement is positive.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. Since the statement is not giving any suggestions. Thus it is a positive statement.
The production possibility frontier will shift outward when there is and increase in the productive resources. Where there is advancement of technology or increase in availability of resources or introduction of a production method with improved efficiency in respect to both the goods, then PPF will shift to the right, i.e. outwards. This is because the more of both are goods are being produced due to the above factors.
The statements of both Ram and Shyam shows the positive aspect of economics and are therefore Positive statements.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.
In a socialist economy, both private as well as government organisations utilize resources and distribute them for personal as well as social welfare. Society is given more importance as government handles all central problems of the economy. So usually in socialist economy, private property are abolished for social welfare and to bring in equality in the social and economic status of the people.
A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. Therefore, 'Changing level of interest rate is a better way of managing the economy' is just a belief that change in interest rate will bring effectiveness in the economy.
Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given resources and technology which are to be fully utilized. So any point inside production possibility curve indicates that the resources are not fully utilized and are being wasted.
Normative science explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. Both Alfred Marshall and Pigou described economics as a study where human and social welfare could be achieved by the means of various economic activities which were economically fair for the society and was based on economic judgement.
A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. Therefore, availability of the goods at a reasonable rate in the economy is a valued judgement based on the belief that it will bring economic welfare.
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