ECON 2010 Study Guide - Final Guide: Scientific Method, Inferior Good, Price Drop

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: All

Document Summary

Scientists: try to explain the world, try to use data and math as much as we can to attempt to explain what"s happening in the world. Policy advisor: try to improve it, uses data and opinions to advise policy. Economists employ the scientific method, the dispassionate development of testing of theories about how the world works: know what is the truth, test our theories, don"t go after things with an agenda. Assumptions simplify the complex world, make it easier to understand. Simplify the world down into a more manageable piece of information. > unrealistic, but simple to learn and gives useful insights about the real world. ~ model: highly simplified representation of a more complicated reality. ~ circular-flow diagram: a visual model of the economy, shows how dollars flow through markets among households and firms. Markets: market for goods and services & market for factors of production (labor market)