ECO2013 Chapter Notes - Chapter 2: Exogeny, Opportunity Cost, Scientific Method
Document Summary
Chapter 2 model building and gains from trade. How do economist study the economy: economics is a social science that use the scientific method. Use economic models on specific relations of economics. Use simplified assumptions: they use the scientific method to answer questions about observable phenomena to explain how the world works, steps: Conclude with verifying, revising, or refuting hypothesis: typically gather historical evidence or real-world events rather than experiments. Positive and normative analysis: economics approach objectively. Economist use positive analysis: a positive statement can be tested and validated. Each statement can be thought of as a description of what is . Because this statement can be tested by gathering data: normative statements cannot be tested or validated. What ought to be theoretical or moral: economics approach situations with positive analysis, policy makers, voters, philosophers approach situations with normative statements. Ask whether the change in a variable had a positive or a negative impact.
