Year 12 AS EconomicsMs Haron

08/05/20232

Start of lesson drills1. Planner on the desk2. Pen/stationary available3. Folder/Exercise book on the desk4. Date and title copied

1.1.2 Positive and normative economic statements

5. Ready to learn

Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

Theme 11.1 – The nature of Economics1.1.2 Positive and normative economic statementsa) Distinction between positive and normative economic statements b) The role of value judgements in influencing economic decision making and policy

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Last lesson we covered: a) Thinking like an economist: the process

of developing models in economics, including the need to make assumptions

b) The use of the ceteris paribus assumption in building models

c) The inability in economics to make scientific experiments

https://www.youtube.com/watch?v=lYHy2XLa4u0

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Positive vs Normative - Refresh https://

www.youtube.com/watch?v=AV_p_QntywA

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Positive and Normative economicsPositive economics Normative economics

The scientific or objective study of the subject

The study or presentation of public policy

Statements can be supported or refuted (proven true or false) by evidence

Statements can’t be supported or refuted because they are values

e.g. The service sector will grow by 30% in size over the next 5 years

Ultimately they are opinions about how economies and markets should work

Economists will wait 5 years to support/refute the statement but it can be proved/disproved

e.g. the government should increase the state pension

Quick question – what does

refute mean?

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Value judgments A value judgement is a subjective statement of opinion

rather than a fact that can be tested by looking at the available evidence

Normative statements are subjective statements – i.e. they carry value judgments. For example: Unemployment is more harmful than inflation The government is right to introduce a ban on smoking in public

places. Resources are best allocated by allowing the market mechanism to

work freely Focusing on the evidence is called adopting an empirical approach –

evidence-based work is becoming more and more important in shaping different government policies and how much funding to give to each.

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Positive and Normative economics

When economists want to influence policy debates, they use both normative and positive economics because they use positive economics to back up a normative statement.

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Diamond nine Sort the following statements between

Normative and Positive

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1. Pollution is the most serious economic problem

2. A fall in incomes will lead to a rise in demand for own-label supermarket foods

3. If the government raises the tax on beer, this will lead to a fall in profits of the brewers

4. The congestion charge for drivers of petrol-guzzling cars should increase to £25

5. The government should increase the minimum wage to £7 per hour to reduce poverty

6. The rising price of crude oil on world markets will lead to an increase in cycling to work

7. The retirement age should be raised to 70 to combat the effects of our ageing population

8. The government should enforce minimum prices for beers and lagers sold in supermarkets and off-licences in a bid to control alcohol consumption

9. A reduction in income tax will improve the incentives of the unemployed to find work

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Positive 2. A fall in incomes will lead to a rise in

demand for own-label supermarket foods 3. If the government raises the tax on beer,

this will lead to a fall in profits of the brewers 6. The rising price of crude oil on world

markets will lead to an increase in cycling to work

9. A reduction in income tax will improve the incentives of the unemployed to find work

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Normative 1. Pollution is the most serious economic problem 4. The congestion charge for drivers of petrol-

guzzling cars should increase to £25 5. The government should increase the minimum

wage to £7 per hour to reduce poverty. 7. The retirement age should be raised to 70 to

combat the effects of our ageing population. 8. The government should enforce minimum prices

for beers and lagers sold in supermarkets and off-licences in a bid to control alcohol consumption

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In the news today – P or N?

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In the news today – P or N?

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Quick activity Go onto the BBC news website and try

to find an article which contains a Positive economic statement and one that contains a Normative economic statement

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Today we have covered1.1.2 Positive and normative economic statementsa) Distinction between positive and

normative economic statements b) The role of value judgements in

influencing economic decision making and policy

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Theme 1 – Microeconomics - 1.1.2 Positive and normative economic statements

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Supported homework You now have in class time to

individually complete the net migration questions on the hand out

I have some spare net migration sheets

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Homework – No new HW today! Reminder: To complete the two Net

migration questions on the hand out that was given to you yesterday

Due Tuesday 15th September - Period 2

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Expectations