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In contrast, “normative” statements are judgments about whether something is good or bad. People should not watch as much television or smoke cigarettes. That is a normative statement. People should pray more. That is also a normative statement.
In contrast, “normative” statements are judgments about whether something is good or bad. People should not watch as much television or smoke cigarettes. That is a normative statement. People should pray more. That is also a normative statement.
Sometimes we use the word “net”, as in “net benefits.” What that means is the total benefit minus the total cost. For example, the net benefit of working at McDonalds is your salary minus your taxes and expenses in getting there and back each day.
Sometimes we use the word “net”, as in “net benefits.” What that means is the total benefit minus the total cost. For example, the net benefit of working at McDonald's is your salary minus your taxes and expenses in getting there and back each day.
We will also use the word “rational”, as in “rational choice.” That means the choice or decision that maximizes the net benefit. A rational action, in economic terms, would be to accept the job with the highest net benefit (salary minus taxes and expenses). You may not actually want that job for other reasons, such as working for a company that profits from addiction (e.g., a casino in Atlantic City). But those reasons would have to be translated into economic terms to be counted as part of your economically rational decision.
We will also use the word “rational”, as in “rational choice.” That means the choice or decision that maximizes the net benefit. A rational action, in economic terms, would be to accept the job with the highest net benefit (salary minus taxes and expenses). You may not actually want that job for other reasons, such as working for a company that profits from addiction (e.g., a casino in Atlantic City). But those reasons would have to be translated into economic terms to be counted as part of your economically rational decision.