VALUE STATEMENTS
A PPC shows the different combinations of output an economy can produce when it uses its resources efficiently. This suggests that economies face opportunity cost decisions when they allocate their resources.
Any choices made will mean debate and argument about how resources should be used.
Positive statements:
statements which can be proved to be true or false
eg the public sector uses 40% of the UK's resources
Normative statements:
statements which are value laden because they are opinions
eg the public sector is too big in the UK
Positive economic statements can be shown to be right or wrong by looking at the facts.
Normative economic statements cannot be shown to be right or wrong, because they individual views. These views can be debated and discussed and given validity by using economic data to back up the arguments.
Normative economics is important because it opens up economics to different theories on how resources should be used in economies, eg Free market theories suggest that the best way to run the economy is with little government interference, whilst interventionist theories suggest the government control is needed to get the best use of scarce resources.