Business Economics- Positive and Normative

1. Positive and Normative Eco-
nomics

2. Positive Economics
 A positive science explains the causes and consequences of things.
 Positive science is one which merely explores and explain.
 It makes a critical analysis.
 It makes a critical analysis of the existing facts and draws
conclusions.
Economics is also a positive science. Because it studies not only
causes of various things but also the consequences.
Eg: It studies the causes of inequality of income, unemployment,
poverty etc. and their effects on society.

3. Normative Economics
 A normative science discuss the rightness or wrongness of
things.
 A normative science not only explores and explains but also
prescribes rules of conduct.
 Economics is a normative science because ,it not only explains
the causes and consequences of inequality of income , poverty etc
but also tells that they are socially not justified.

4.  Many economists are of the opinion that economics is
both positive and normative science.
 Positive and Normative approaches of economics should
go together.
 The duty of economist is not only to observe and analyze
but also to give advises.
 Economics is both a positive and normative science

5. Significance of Business Economics
1. To integrate economic theory with business practice.
2. To apply economic concepts and principles to solve practical business problems in real life.
3. To provide simple solutions to business problems.
4. To employ the most modern instruments and tools to find solutions to business problems.
5. To make optimum use of scares resources of a firm to maximize profit.
6. To help in achieving other objectives of a firm like attaining industry leadership, expansion of
market share etc.
7. To help the manager to understand the intricacies of business problems and to make right decisions
at the right time.
8. To give guidance for identification of key variables in business decisions making process.
9. To provide necessary skills and inputs in furtherance of business goals and functions.
10. To help in making overall development of a firm.