BIOCH498 Lecture Notes - Lecture 5: Monetarism, Correlation And Dependence, Correlation Does Not Imply Causation
13 Jun 2015
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Document Summary
Economics: study of choices people make and actions they take in order to make the best use of scarce resources in meeting their wants and needs. Policy: reduce the speed limit of the highway from edmonton to calgary by 10km/hr. Economics is a social science that seeks to explain how people act. Like any other science, uses models, theories, and assumptions to describe how people behave. Model - simplified description of how things work. It is not a complete description of every detail, but a simple description that covers wide range of possibilities. Models & theories - provide an understanding and explanation, also useful in predicting behavior. Assumptions are made in the formulation of all models. A theory"s assumption concern motives, physical relations, direction of causation and conditions of application. The true test of a model is not the realism of the assumptions it uses but rather the ability of the model to explain and predict behavior.
