ECON 1B03 Lecture Notes - Lecture 2: Beach Ball, Scientific Modelling, Microeconomics

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Shadab Qaiser

Document Summary

Observations that confirm one"s theory brings stronger confidence to it. However, experiments are hard to conduct in economics, instead hypothesis have to be made with what data is collected or natural experiments offered by history. One assumption will not work for all cases. Often times, assumptions have to account for the duration (long-term or short-term) of the study of interest, which may have different results. Solving for the time it takes a marble to reach the floor may neglect the insignificant force of friction. However, it may be critical to account for friction if a beach ball were to fall (larger surface area) An efficient outcome: is the economy is getting all it can from the scarce resources (when the economy is on the line) Microeconomics: the study of how households and firms make decisions and how they interact in markets. Macroeconomics: the study of economy-wide phenomena, including inflation, unemployment, and economic growth.