• Sports  different positions (attack, defense)
• Academia  different subjects and professors
• Medicine  different diseases and specialists
• Electronics, software development, internet… can you think of one person doing it all?
• More technology comes w/ more specialization

• You pay the pencil with money
• You get the money by working just a few minutes
• Stores split this money to pay suppliers and other related business
• These suppliers and other business also use their money to get other services (yours perhaps!)
• Markets economies are like barter economies: money is just like any other commodity, except that all exchanges have to be carried with money

• Prices transmit information throughout the economy without any need of additional communication
• Prices  “traffic light system”
• Friedman is a staunch supporter of free markets and liberalism (classical)
• He opposes socialism/communism, but also
Keynesianism
• That is, all kinds of interventionism (?) / Austrians

• A lawyer can also work as a secretary, but he or she will earn more if focusing on what he/she does best
(even if he/she is still better than most secretaries)
• Society benefits too (e.g. doctors and nurses)
• The underlying economic concept is comparative advantage (e.g. young and old castaways)
• Division of labor and capitalism
• Efficiency / development / improved quality of life

• In general, positive sciences are those involving measuring, calculations, etc.
• Find relations among these quantities
• Normative sciences are applied to discovering what is just, good, and better
• Only positive sciences are ‘true sciences’. No scientific method in normative sciences
• Scientific method / Milton Friedman

• You are visiting Paris and decide to go to a museum.
• You will have to answer 3 questions:
1. Where are we now?
2. What museum to visit?
3. How to get there?
4. Questions 1. and 3. are positive, but 2. is clearly normative

It can be made positive:
• Why do we want to go to the museum?
– We feel conformists: Let’s go to the Louvre
– We don’t want to pay for commuting: Let’s go to the nearest one
– We want to get a glance at impressionist painters: Let’s go to d’Orsay museum
– We want to meet people: Let’s go to the most fashionable these days
• The problem is not yet solved; we still have to decide which is more important
• These questions can be easier (or not) to answer than the original

• Economics: make positive some complex questions
• Among other alternatives, this matter can be turned to a superior authority (moral code, religious authorities, parents, etc.)
• In the end, almost every real-life problem has both a positive and a normative component

• Positive economics: determines what it is and what it might be
• Normative economics: determines which one of the alternatives to choose
• Positive economics helps in dissecting a normative question into more simpler ones
• Normative questions only have answer in the context of a certain code of values (do values/rights evolve?)