Cambridge International as and a level Economics Ebook

The margin and change: 
Decision making by individuals, 
firms and governments is based on choices at the margin; 
that is, once behaviour has been optimised, any change 
will be detrimental as long as conditions remain the same. 
This concept – like the first one, scarcity and choice – can 
be applied in many diff erent situations that are studied by 
economists.
KEY CONCEPT LINK
Positive and normative 
statements in economics
It is useful now to make a distinction between positive 
and normative economics. Economics is a social science. 
As such it has developed through using positive analysis 
that is devoid of any value judgements. Typical positive 
statements include the following:
■
A fall in supply of petrol
 will
lead to an increase in its price…
■
An increase in tourist numbers in the Maldives 
will
create 
more employment…
■
An increase in taxation on cars 
will 
result in fewer cars 
being sold…
Th
ese are statements of what will happen, based on 
empirical evidence, and are referred to as 
positive 
statements
.
 
No value judgements are involved. When 
values or opinions come into the analysis, then this is 
Short run: 
time period when a firm can only change some 
and not all factor inputs.
Long run: 
time period when all factors of production are 
variable.
KEY TERMS
Positive statement: 
one that is based on empirical or 
actual evidence.
KEY TERM
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Cambridge International AS Level Economics

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the realm of normative economics. Here an opinion or 
value judgement is being made. Th
e above statements can 
become