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Micro economics is a social study that mainly deals with individual’s earnings, different business and manufacturers and their behavior. It also focuses on regional markets its customers, several manufactured product and their costing and pricing process. Its other objectives are to follow behavior of buyers and sellers towards several products that are supplied in the market and the demands of the customer for those goods in a market.
Microeconomics goes through lots of analytical researches to examine and evaluate above studies to establish a perfect economic structure in the society for an overall welfare of common people. This process of analysis is distinctly divided into two categories such as:
- Positive analysis
This process is based on cause and effect of an economic issue.
- Normative analysis
It is done on the basis of moral and ethical side of an economic issue.
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Positive economics is termed as descriptive economics, and it believes in an objective analysis on the basis of facts. It analyzes different relevant data to explain the relation between several economic variables and cause and effect of several economic issues and shows an actual way of analysis on the basis ofreal fact and evidences. Hence,it needs to be proved.
For example, if you take an economic statement that – ‘State gives an adequate amount of financial support for child education.’ No doubt it is a positive statement with a definite meaning. There is no other option to think it differently. Economics can only analyze different relevant data to prove that is the statement is true or not. State, genuinely provides that support or not.
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On the other hand, normative process is a subjective analysis to analyze an issue to show how it should be. It examines the issue on the basis of judgment, beliefs, value, option, etc. Normative statement is always optional hence, cannot be proved as right or wrong. For example, if it is said that – ‘state should give adequate amount of financial support for child education.’This is not a definite statement it is just a suggestion hence, needless to prove.
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