Introduction to Business EconomicsMODULEQuestion 752 of 209
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The difference between positive and normative Economics is:

Options

APositive Economics explains the performance of the economy while normative Economics finds out the reasons for poor performance.
BPositive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
CNormative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people
DPositive Economics prescribes while normative Economics describes.
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Correct Answer

✅ Option b — Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.

All Options:

  • APositive Economics explains the performance of the economy while normative Economics finds out the reasons for poor performance.
  • BPositive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
  • CNormative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people
  • DPositive Economics prescribes while normative Economics describes.

Detailed Solution & Explanation

To understand the difference between positive and normative Economics, let's break it down: • Positive Economics deals with the description and analysis of economic facts, without making any value judgments. It focuses on what is, rather than what should be. • Normative Economics, on the other hand, involves evaluating economic facts and making judgments about whether they are good or bad for the welfare of the people. It deals with what should be, based on certain values or goals. The correct answer is right because it accurately reflects the distinction between positive Economics as a descriptive science and normative Economics as a prescriptive science. Some options are incorrect because they either reverse the roles of positive and normative Economics, or misrepresent their functions. For example, positive Economics does not involve evaluating or prescribing, and normative Economics does not just describe facts.

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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