Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Judging whether the outcome of a mechanism is desirable for the economy is a part of normative economic analysis.
Reason (R): Different mechanisms are likely to give rise to different distributions of the final mix of goods and services.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Both (A) and (R) are true but (R) is not the correct explanation of (A).
Assertion (A): Judging whether the outcome of a mechanism is desirable for the economy is a part of normative economic analysis. — True. Asking whether an outcome is desirable is a judgement, and judging is normative analysis.
Reason (R): Different mechanisms are likely to give rise to different distributions of the final mix of goods and services. — True. The market and central planning solve the central problems in different ways, so they share out the goods differently.
Why R does not explain A?
R only says the two mechanisms give different results. That tells us why comparing them is worthwhile. It does not tell us why the study is normative.
A is true because the study judges whether an outcome is desirable. Normative economics tries to understand whether the mechanisms are desirable or not, while positive analysis only studies how they work.
NCERT (2026-27): “1.4 Positive and Normative Economics It was mentioned earlier that in principle there are more than one ways of solving the central problems of an economy. These different mechanisms in general are likely to give rise to different solutions to those problems, thereby resulting in different allocations of the resources and also different distributions of the final mix of goods and services produced in the economy. Therefore, it is important to understand which of these alternative mechanisms is more desirable for the economy as a whole. …” “Often a distinction is made between positive economic analysis and normative economic analysis depending on whether we are trying to figure out how a particular mechanism functions or we are trying to evaluate it. In positive economic analysis, we study how the different mechanisms function, and in normative economics, we try to understand whether these mechanisms are desirable or not. …” |