ECON 208 Chapter Notes - Chapter 2: Equation, Profit Maximization, Scatter Plot
16 Apr 2013
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ECON 208 Full Course Notes
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Distinguishing what is actually true from what we would like to be true requires distinguishing between positive and normative statements. Is the statement only about actual or alleged facts -> positive: are value judgements necessary to assess the truth of the statement ->normative. Due to: poor communication: don"t define their terms or point of reference clearly, failure to acknowledge the full state of their ignorance (when evidence is far from conclusive, positive/normative distinction: different values for each economist. Agreement on aspects of how the economy works and what happens when govts intervene to alter its workings ( and on mostly positive rather than normative statements) Constructed to explain things; theories of demand and supply, distinguished by their variables, assumptions, and predictions. Variable: any well defined item, such as the price or the quantity of a commodity, that can take on various specific values. Endogenous variable: a variable that is explained within a theory.
