Positive Economics and Normative Economics

Positive economics is the study of the facts of life. It means that it deals with the real life economic problems as they are and how these problems are solved.

However, normative economics deals with finding out solutions to economic problems. Simply put, it answers the question ‘what ought to be done.’ 

Microeconomics is a branch of economics studying the behavior of an individual economic unit. Adam Smith is known as the father of economics and microeconomics. Microeconomics help in contemplating the attributes of different decision-makers in an economy like individuals, enterprises, and households. In simple terms, microeconomics help in understanding why and how different goods have different values, how individuals make certain decisions, and how do they cooperate with each other. 

Economy is a system providing individuals with the means to work and earn a living to satisfy their needs and wants. They can do so through the process of manufacturing, consumption, investment, and exchange.