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Introduction
Positive economics deals with the things as they are (i.e., actuals) not what is desirable. It helps to know the cause and effect relationship of a particular activity. Normative economics deals with the things as they should be. It passes moral judgements. Thus it deals with idealistic situation instead of actual situation. Normative statements being ideal in nature can not be verified.
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Briefly state meaning of the following terms as used in economics.
1. Economy (D 2010 C), 2. Goods, 3. Services, 4. Wants, 5. Resources,
6. Households, 7. Firms, 8. Commodities, 9. Production, 10. Consumption
Explain central problems with the help of PP curve. How does PP curve help in explaining the central problems?
(i) Why is PP curve downward sloping from left to right? (D 2006C)
(ii) Why does PP curve look concave to the origin?
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