Introduction to Business EconomicsMTP May 24Question 687 of 209
All Questions

Positive economics means:

Options

ADoes not depend on market interactions.
Bonly looks at the best parts of the economy
CExamines how economy works (as opposed to how it should work)
Dis very subjective.
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Correct Answer

✅ Option c — Examines how economy works (as opposed to how it should work)

All Options:

  • ADoes not depend on market interactions.
  • Bonly looks at the best parts of the economy
  • CExamines how economy works (as opposed to how it should work)
  • Dis very subjective.

Detailed Solution & Explanation

• Positive economics is a branch of economics that focuses on describing and explaining economic phenomena as they are, without making value judgments or prescribing what ought to be. It deals with "what is" or "what was" and aims to establish cause-and-effect relationships. • Option (C) is correct because it accurately defines positive economics. It examines how the economy actually works, based on observable facts and data, rather than offering opinions on how it should work. For example, a positive economic statement would be "An increase in the price of petrol leads to a decrease in its demand." This statement can be tested and verified. • Option (D) is incorrect because positive economics strives to be objective and fact-based. It relies on empirical evidence and scientific methods to analyze economic behavior and outcomes. Subjectivity is characteristic of normative economics, which deals with value judgments and opinions. • Option (A) is incorrect because positive economics often analyzes market interactions, such as supply and demand, pricing mechanisms, and consumer behavior, to understand how the economy functions. • Option (B) is incorrect as positive economics analyzes all aspects of the economy, both good and bad, to understand its mechanisms and outcomes. It doesn't selectively focus only on the "best parts."

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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