ECN 340 Study Guide - Midterm Guide: Greedy Reductionism, Demand Curve, Root Beer
17 Oct 2018
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Economist tries to understand the behavior of others given their own values. Positive economics- objective (stick to this in this course): analysis of facts to establish cause-and-effect relationship (cid:498)what is(cid:499) vs. when you say (cid:498)its hot today(cid:499) what hot today might not be hot for me. Ex (cid:498)there should not be any poor people in canada(cid:499)- an assertion that cant be tested. Normative economics- subjective: involves value judgments about what the economy ought to be ex. the temperature is 24 degrees-an assertion that can be tested. Economics use theory to explain the social world around them. Ex. when the price of a product falls, generally, more of it is purchased. Acceptability: we accept those theories that explain and predict. Human naturally generalize but must avoid using (cid:498)greedy reductionism(cid:499)- generalizing based on a few observations- trying to put (cid:498)order(cid:499) to the world.
