Module 1 - Case INTRODUCTION TO ECONOMICS

Case Assignment on Introduction to Economics Student’ Name Institutional Affiliation Case Assignment on Introduction to Economics Understanding the fundamental economic concepts is a critical step in exploring the complex aspects of the field of economics. Individuals who intend to make better professional and personal decisions or those who want to assess economic policy critically must begin with an exploration of the concepts. That is because the concepts outline key learning insights into personal financial literacy, global market awareness, economic policy analysis, and interpretation, as well as steering informed decisions. In this analysis, emphasis will be put on exploring some of the fundamental concepts in economics. The analysis will be vital both in understanding prospects such as positive and normative economics as well as public goods and how the concepts are linked to specific real-life examples. 1 The difference between positive and normative economics Economics is conventionally divided into two branches with each branch serving a unique purpose in shaping the economic policy. Principal among the branches is positive economics. Positive economics is the branch of economics that focuses on factual and objective analysis of various economic phenomena (Sikdar, 2020). The primary aim of positive economics is to explain how an economy works objectively without making value judgments. As such, analysts focusing on positive economics rely on cause-and-effect relationships, data, and facts. In public discourse, positive economics offers a platform on which people can explore the economic language. There are multiple areas and examples where positive economics is applied extensively. One such area is in analyzing supply and demand trends. In assessing price and demand, economists explore the relationships between the two variables. That is, if all other factors are equal or ceteris peribus, the demand for a good or service decreases if the price of that same good or service increases (Sikdar, 2020). The above concept of demand and supply falls within the confines of positive economics because it is objective and can be tested empirically. The other example of where positive economics is applied is in assessing inflation and unemployment rates. The Philips curve is an example of a positive economics tool that showcases a relationship between various policy concepts, inflation, and unemployment in this context (Sanders, 2020). That is, there is an inverse relationship between unemployment and the rate of inflation. Using economic data, such a relationship can be measured, tested, and analyzed. Other examples of areas in which positive economics is applied include understanding economic growth and investment, trade and economic welfare, as well as government spending and economic activity. All the above elements of positive economics rely on facts and can be proven objectively. Conversely, normative economics is the branch that fosters value judgments. In most cases, normative economics emphasize “what should be” rather than “what is” (Sanders, 2020). Hence, normative economics constitutes subjective opinions concerning economic policies and the probable out...