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An example of a normative economic statement is as follows: The price of milk should be $6 a gallon to give dairy farmers a higher standard of living. This is a normative statement, because it reflects value judgments; this specific statement makes the judgment that the benefits of the policy outweigh its costs.
Normative has specialized meanings in different academic disciplines such as philosophy, social sciences, and law. In most contexts, normative means 'relating to an evaluation or value judgment.' Normative propositions tend to evaluate some object or some course of action. Normative content differs from descriptive content. [3]
In any technical subject, words commonly used in everyday life acquire very specific technical meanings, and confusion can arise when someone is uncertain of the intended meaning of a word. This article explains the differences in meaning between some technical terms used in economics and the corresponding terms in everyday usage.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
The fact–value distinction is a fundamental epistemological distinction described between: [1]. Statements of fact (positive or descriptive statements), which are based upon reason and observation, and examined via the empirical method.
In economics, a normal good is a type of a good which experiences an increase in demand due to an increase in income, unlike inferior goods, for which the opposite is observed. When there is an increase in a person's income, for example due to a wage rise, a good for which the demand rises due to the wage increase, is referred as a normal good.
For example, involuntary events like digestion and earthquakes can have a positive or negative value even if they are not right or wrong in a strict sense. [20] Despite the distinction, evaluative and normative concepts are closely related. For example, the value of the consequences of an action may affect whether this action is right or wrong ...
Ecological rationality challenges rational choice theory (RCT) as a normative account of rationality. According to rational choice theory, an action is considered rational if the action follows from preferences and expectations that satisfy a set of axioms, or principles. These principles are often justified based on consistency considerations ...