Question

Under which of the following is the price determination of goods by demand and supply studied?

• A. Positive economics
• B. Microeconomics
• C. Normative economics
• D. Both (A) and (B)

Hint:

Microeconomics examines individual markets and how supply and demand determine prices.

Answer 1

The Correct Option is B

Step 1: Understanding the concept of price determination.
Price determination of goods through demand and supply is a fundamental concept in Microeconomics. Microeconomics deals with the behavior of individual markets, firms, and consumers, focusing on how prices are set based on supply and demand dynamics.

Step 2: Analyzing the options.
(A) Positive economics: Positive economics deals with objective analysis and facts but does not focus directly on the determination of prices through demand and supply.
(B) Microeconomics: Correct. Microeconomics specifically studies the behavior of individual markets, including price determination based on supply and demand.
(C) Normative economics: Incorrect. Normative economics focuses on what ought to be, involving value judgments and policy recommendations, rather than the analysis of market prices.
(D) Both (A) and (B): Incorrect, as only microeconomics directly focuses on price determination.

Step 3: Conclusion.
The study of price determination through demand and supply falls under Microeconomics.