ECON 110 Chapter Notes - Chapter 2: Equation

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

Normative statements: a statement about what ought to be: this depends on value judgements, it is not evaluated solely by a resource of facts. Positive statements: a statement about what actually is (was, or will be: this does not involve value judgements, the statements are about facts. High rates of income tax encourage people to evade paying taxes. Governments should arrange taxes so that people cannot avaid paying them. Lowering the price of cigarettes leads people to smoke less. The government should raise the tax on cigarettes to discourage people from smoking. Economists develop theories to better understand regularities in data: these can help explain events that have already happened and predict ones that will happen. All theories are distinguished by their variables, assumptions, and predictions. Variables: any well-defined item that can take on various specific values: these are the basic elements of any theory. Variables are grouped into two broad categories: endogenous variable (dependent)