The essay argues that economics as science should be free of normative judgments for it to be respected as objective and to inform normative economics for example whether to raise the minimum wage. Normative judgments frequently involve implicit predictions about the consequences of different policies. The essay suggests that such differences in principle could be narrowed by progress in positive economics , p.
The essay argues that a useful economic theory should not be judged primarily by its tautological completeness, however important in providing a consistent system for classifying elements of the theory and validly deriving implications therefrom. Rather a theory or hypothesis must be judged by its:. Because such hypotheses and descriptions extract only those crucial elements sufficient to yield relatively precise, valid predictions, omitting a welter of predictively irrelevant details.
Of course descriptive unrealism by itself does not ensure a "significant theory" pp. From such Friedman rejects testing a theory by the realism of its assumptions.
Rather simplicity and fruitfulness incline toward such assumptions and postulates as utility maximization , profit maximization , and ideal types —not merely to describe which may be beside the point but to predict economic behavior and to provide an engine of analysis pp.
On profit maximization, for example, firms are posited to push each line of action to the point of equating the relevant marginal revenue and marginal cost. Yet, answers of businessmen to questions about the factors affecting their decisions may show no such calculation. Still, if firms act as if they are trying to maximize profits, that is the relevant test of the associated hypothesis pp.
Friedman is acknowledged as a pivotal figure in the Chicago school of economics. The essay can be read as a manifesto for that school. The second economic principle is the cost.
Considering the awareness the public has in relation to social responsibility, then, organizations are aligning their activities in an approach that will realize environmental, social and financial performance.
Notably, the organizations are making decisions, which will help them achieve a good reputation from the society, and although the financial gain might not come immediately, a comparison of costs and benefits shows that the organization will realize financial profitability in the future. As such, organizations are giving up their traditional ways of thinking in respect to the costs incurred to minimize pollution and such a cost is known as an opportunity cost.
In the same context of pollution, some governments have become innovative. In fact, the governments are helping the organizations to step up or minimize pollution through the provision of innovative products and strategies. Such governments are going further to offer the organizations incentives, in that; they may exempt them from taxes.
The move is common in countries with high rates of pollution, and alternatives to pollution are expensive. As such, the tax exemptions can cater for the costs of employing other innovative strategies to curb pollution.
Each of essay sections should be well defined and written clearly. This means you should know what details to include while minimizing the amount needed.
You may need to rewrite each section more than once before settling on your final copy. You should also remember to proofread, edit, and revise as these elements help make your structure more solid. Think about your details in how you want readers to view it from your perspective.
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Economics Q & A - 1) The current recession is the longest since the Great Depression in the 's. We are still far from a recovery with unemployment at about % and weekly new jobless claims at ,+.
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Essay # Subject Matter of Economics. Broadly speaking, the formulation of a definition is a precise procedure of explaining the subject matter. The majority of economic thinkers from Adam Smith to Pigou have defined the subject matter of economics as the study of the causes of material welfare or as the science of wealth. 10 Economics Essay Topics That Will Improve Your Bottom Line. I’ve included a broad list of topic ideas with suggestions on how you might develop the topic into a specific type of paper, such as an argument, compare and contrast, or pros and cons essay.