Introduction to Business EconomicsMTP Apr 19Question 658 of 209
All Questions

Which of the following statements is correct?

Options

AIn normative science, Economics involves value judgments
BRobbins has made economics as a form of welfare economics
CThe Law of Demand is always true
DNone of the above
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Correct Answer

✅ Option a — In normative science, Economics involves value judgments

All Options:

  • AIn normative science, Economics involves value judgments
  • BRobbins has made economics as a form of welfare economics
  • CThe Law of Demand is always true
  • DNone of the above

Detailed Solution & Explanation

• The correct statement is (A) because normative economics deals with "what ought to be" and involves subjective value judgments and opinions. For example, a statement like "the government should increase taxes on the rich" is a normative statement because it expresses an opinion about what is desirable. • Option (B) is incorrect. Lionel Robbins defined economics as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." This definition is often associated with positive economics, focusing on objective analysis rather than welfare. It was Alfred Marshall who is more closely associated with welfare economics. • Option (C) is incorrect. The Law of Demand states that, other things being equal, as the price of a good increases, the quantity demanded decreases. While generally true, there are exceptions like Giffen goods and Veblen goods, where the law does not hold. Therefore, it is not "always true."

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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