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Econ 545 Week 2 Assignment

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1. NORMATIVE ECONOMICS—REPUBLICANS VERSUS DEMOCRATS Visit both the Republicans’ www.rnc.org and the Democrats’ www.democrats.org Web sites. Both parties address Healthcare and both address Energy policy, for example. (Democrats under “Issues”, Republicans under “Our Party”.) Compare and contrast their views on two such issues. Generally speaking, how much of the disagreement is based on normative economics compared to positive economics? Give an example of loaded terminology from each site.

Answer:
The republican energy policy focuses on less regulation and puts the responsibility of energy independence on American business. The belief is corporations will spend more on drilling, alternate fuels and research and development and do so in a responsible manner. In the process more jobs will be created and energy costs to the consumer will lower. The democrats focus on a balanced approach with environmental protection driving future development. They propose taking subsidies from “bad” oil companies and using the money to incentivize companies to develop new technologies and pursue existing sources in an environmentally sound way. Both parties view energy with a normative economic viewpoint. But this is clearly evident with the republican view of “ less regulation should encourage investment, lower prices, and create jobs here at home”.

Now we come to healthcare and the current stalemate in Congress. The democrats believe “ accessible, affordable, high quality healthcare is part of the American promise and no one should go broke because they get sick”. On the other hand republicans think everyone should have the opportunity to pick and choose their healthcare policy needs. In modern politics I believe normative economics can describe both parties.

2. Assume that a business firm finds that its profit is greatest when it produces $40 worth of

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