Positive and Normative Statements How to respond to questions in Economics

A normative statement is a value judgement and states what someone thinks ‘ought to be’. Normative statements are subjective and influenced by personal biases, background, personal politics To clean up air quality and cut down carbon emissions by 25%, 4 x 4 vehicles should only be sold to farmers and those living in rough terrain areas. An example of a normative statement:

Economists must always use positive statements when making responses, not normative. A positive statement is one that is objective and can be backed up by evidence. An example of a positive statement: If carbon emissions were cut by 25%, air quality would improve and the number of people diagnosed with asthma would decrease significantly.

Politicians and members of the general public use normative statements. As Economists, you must learn to use positive statements. This does not mean you can’t have your own opinions on issues but when writing essays and in assessments – use only positive statements – those that can be justified by evidence.

Identifying Question Types by Recognising Command Words

‘Identify’ and ‘State’ Questions These questions don’t require any detail and can be answered by naming, listing or using bullet points Normally one mark is allocated per item named An example of an ‘identify’ question: Identify the 4 factors of production. (4 marks) Land/1 Labour/1 Capital/1 Enterprise/1 4/44/4

‘Suggest’ Questions Require more than just naming. State your ideas or proposals in sentences. Can be linked to ‘give reasons for your suggestions’, ie ‘justify your answer’. When answering ‘suggest’ questions: the suggestions must fit the situation must be realistic may have to be justified Normally one mark is allocated to the suggestion and one for a good, linked justification.

An example of a good ‘suggest’ answer: Suggest ways in which land can be made more ‘mobile’ giving reasons why this may be desirable. (4 marks) Vacant land can be treated with fertilisers to make it suitable for growing crops. This would make the country more self-sufficient and less dependent on imports. SUGGESTION /1 Land can be reclaimed from the sea to build an airport runway SUGGESTION /1 taking noise and pollution away from built up areas. /1 REASON /1 REASON 4/44/4

An example of a bad ‘suggest’ answer: Suggest ways in which land can be made more ‘mobile’ giving reasons why this may be desirable. (4 marks) Reclaim land from the sea and use fertilisers. 0/40/4 2 perfectly good suggestions have been named but this is not a ‘name’ question and there are no reasons why these are good suggestions so, no marks can be given.

‘Explain’ Questions These are the most common types of questions in Economics and are designed to test your knowledge and your powers of analysis. When answering ‘explain’ questions: demonstrate your knowledge by making a point then expand the point with more detail or example show linkage or connections between factors assume you are explaining to someone with no knowledge of the subject structure your answer in a logical sequence

An example of an excellent ‘explain’ answer: Explain the difference between scarcity and shortage. (8mks) In economics scarcity has a different meaning from the normal usage. Scarcity means finite ie there is an end to supply whereas shortage implies a more temporary situation where more is demanded than supplied The 4 economic factors of production (land, labour, capital and enterprise) are always scarce but they are not always in a state of shortage because they are mobile between alternative uses. The mobility of factors can overcome shortages but not scarcity. By shifting resources from one use to another we can overcome shortages. A shortage of land for housing can be resolved by using brown belt land ie old industrial sites like the former Ravenscraig site. POINT EXP/ DEFINITION POINT EXP/REASON POINT EXP/EXAMPLE EXP/REASON //2 //8 //4 //6

‘Describe’ Questions This type of question tests the depth of your knowledge so your answers must show expansion of any points made If you simply make points, you have not described When answering ‘describe’ questions: make a point expand on it by giving clarification or extra information give an example to illustrate the point made

An example of a good ‘describe’ answer Describe the effects of scarcity on individuals. (6 marks) Scarcity forces individuals to make choices. All resources have alternative uses but are finite so individuals with infinite wants, must choose how to use their resources./1 This is the basis of economic theory – the allocation of scarce resources to infinite wants./1 Money is an example of a finite resource that has many alternative uses. An individual may have saved enough money either to buy a car or to go on holiday but not both./1 If the choice is the car, then the holiday has to be done without and the individual has experienced opportunity cost./1 The holiday is the opportunity cost of choosing the car./1 Opportunity cost is defined as the loss of the next best alternative./1

‘Discuss’ Questions You can only get full marks if you demonstrate a well-organised, well-argued, convincing argument When answering ‘discuss’ questions: clearly communicate relevant information arrange your answer in a logical sequence use examples and/or diagrams for illustration debate both sides of the argument impartially draw conclusions based on your argument

An example of a ‘discuss’ question Discuss advantages and disadvantages of a free market economy. (10 mks) A free market economy is one in which resources are privately owned and acquired via the price system, therefore those with the spending power acquire the resources./1 Individuals are able to set up enterprises supplying goods or services for profit./2 High earners can choose from a wide variety of goods and services/3 and can achieve a high standard of living./4 So there are real incentives to work for reward under a free market system./5 On the other hand, low earners are unable to access the choices open to others/6and there tends to be a wider gap between rich and poor than under other systems./7Only goods and services that return a profit are supplied,/8the others – public goods - tend to be provided by the state and paid for by taxing the better off which is not always popular./9 More countries are moving towards increasing free market opportunities and therefore the free market approach would appear to be the model most favoured as it tends to deliver the most individual opportunities and prosperity./10

‘Compare’ Questions Also ‘compare and contrast’. This type of question requires you to describe the similarities and/or differences between alternatives. When answering ‘compare’ questions: find aspects by which to compare for each aspect, describe each alternative use the words ‘whereas’, ‘while’, ‘on the other hand’

An example of a ‘compare’ question Compare a free market system and a fully planned system as a means of allocating resources.(6 marks) In a free market system resources are privately owned and allocated by means of the price system so no single body allocates resources. Under a fully planned system, on the other hand, the state (govt) owns all the resources//2 and decides who gets resources, how many and for what purpose.//4 The free market price systems means that anyone with the means can acquire resources to use as they wish while in the fully planned system only those the government chooses is allocated resources and must use them for the purpose the state decides.//6

Other Terminology Used Consequences Implications Feature Effective - the initial effects, the immediate results - in the long term, far-reaching effects - a point of distinction - successful, productive One feature of a mixed economy is it has both a public and a private sector. A production possibility chart can effectively demonstrate opportunity cost. The consequences of changing from a command economy to a free market system can be an unstable economy and hardship for many individuals. The implications of changing from a command to a free market economy are greater access to resources and an increased standard of living for the majority of individuals.