Positive + Normative Statements

• Economists make a distinction between a natural science and a social science, where natural science is when scientists observe aspects of the universe and form theories around their observations, and a social science is when observations are made of human behavior and theories are then made around those observations.
• Economics is a study of human behavior and choices that humans make, and theories are made based on the observations that economists will see in the real world.
• Economics is a social science, not a natural science, because it studies human behavior.
• Economics is a science because it tests all of its observations and theories.
• Demand theory is an actual theory that can come about through a process of observation of consumer behavior, hypothesis formation, evidence collection, and theory testing.
• Economists generally notice that when prices are lower consumers spend more, which is an interesting pattern of behavior.
• An economist will form a hypothesis that when prices are low consumers spend more money.
• Economists make predictions that can be clearly tested against evidence.
• Predictions could be that when prices fall consumers spend more, and when prices rise consumers spend less.
• Economics is a science because it collects evidence to test its predictions and theories.
• Evidence collected from real world observations will either back up the predictions made or falsify the predictions made.
• There are no chinks in the theory of law of demand, as there can be sub-theories or exceptions to the theory.
• Veblen good theory suggests that there are certain real luxurious goods that consumers only want to buy when prices are really high because they're in a status whereby they feel great because they are the only people that have an income that can afford these really ostentatious or luxurious goods.
• Giffen goods and Veblen goods can only be observed when the basic idea of demand theory is further tested.
• Economics is a science where all theories, observations, hypotheses, predictions are tested against evidence collected from the real world.
• Normative statements in economics are opinionated things, often statements which have the words like should or ought to or it's fair.
• Giffen good theory suggests that when prices go up, consumers buy more because they switch their income away from buying other things towards buying this good or service.
• Normative statements in economics cannot be tested against real world evidence and are often statements which cannot be backed up or falsified.
• Positive statements in economics are statements that can be backed up or falsified from evidence.
• Economics is a positive science where all theories can be tested against real world evidence.
• If the evidence collected backs up the predictions, the hypothesis becomes a theory and that becomes the law of demand, Demand Theory.
• Demand Theory gets tested even more and more to make sure it holds up.