Normative economic analysis refers to the analysis in which we study whether a particular mechanism is desirable or not. In this analysis, we study what ought to be the desired situation or in what ways the economic problems should be solved. It suggests aims and objectives for the economy and points out what ought to be done to achieve these aims and objectives. In normative economic analysis we come across normative statements that cannot be tested as they involve personal value judgments. It deals with idealistic situations and is based on ethics. An example of a normative statement could be, ‘Central government should not stop providing minimum support price to the farmers’. Economists like Marshall, Pigou etc. regard economics as a normative science.
