Economists are _______ scientists
social
Science is primarily concerned with…
positive statements
normative statements
claims that attempt to describe the world as it is
These are testable statements of cause and effect which can be evaluated using evidence.
positive statements
“gray shirts reflect heat better than black shirts” is a _______ statement
positive statement
the social aspect of economics indicates that much of the reason to study economics is to…..
understand what a decision-maker should do in a certain situation
claims describing the way the world should be
not testable
normative statements
“gray shirts are better than black shirts; black shirts suck” is a _______ statement
normative statement
A person’s __________ statements are often based on _______ statements.
“gray shirts are better than black shirts because you get too hot in black shirts”
normative statements are often based on positive statements
Normative = Positive + ________
Values
Normative statements often disagree because people have __________ _______
different values
dispassionate development and testing of theories about how the world works. Basis of science.
the scientific method
a simplified description of something, in this case, of some part of the economy
model
From the scientific method, you first observe, then formulate hypothesis embedded in a _______
model
The workhorse of economics is the model where….
the hypothesis is formed, so it is ready for testing
to develop testable hypotheses proposing cause and effect relationships between variables
the goal of modeling
when is a hypothesis hard to justify
when it is not testable
simplest possible description of a problem that still captures a meaningful relationship between variables
a good model
who said, “Everything should be made as simple as possible, but not simpler.”
Albert Einstein
(1) allow us to see relationships more clearly by eliminating clutter.
The world is complex and hard to understand;
(2) models expose hidden patterns if they are as simple as possible.
pros of models
what is omitted may be crucial to the problem-if it is too simple.
cons of models
a testable prediction of people’s behavior under specified conditions
hypothesis
Some oil companies/gas stations charge high prices, and may be making large profits. President Bush has referred to this as price gouging. If we define price gouging as profits larger than typical, then we have ……
a testable hypothesis.
(a) experiments
(b) observation
(c) historical episodes
can use these to test hypothesis
We need to find a way to allow _____________ variables to change, then see if the _____________ variable changes consistent with the hypothesis
We need to find a way to allow INDEPENDENT variables to change, then see if the DEPENDENT variable changes consistent with the hypothesis
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1.1 & 1.2 Economic Principles39
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2.1 Scientific Method28
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2.2 & 2.3 Graphs and Diagrams4
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2.4 Production Possibilities Frontier1
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3.1 Trade, Case 12
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3.2 Trade, Case 21
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3.3 Trade, Case 30
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4.0 Markets3
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4.1 Demand0
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4.2 Demand Curve Shifts0
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4.3 Supply0
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4.4 Supply Curve Shifts0
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4.5 Equilibrium0
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4.6 Equilibrium Shifts0
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5.1 Price Elasticity of Demand0
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5.2 How might a Firm use PED?0
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5.3 Elastic vs Inelastic0
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5.4 Why don't most of us live on farms?0
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5.5 Income Elasticity of Demand0
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5.6 Cross-Price Elasticity of Demand0
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5.7 Elasticity of Supply0
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5.8 Why haven't we won the War on Drugs?0
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QUIZ 120
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QUIZ 21
