ECON 105 Chapter Notes - Chapter 2: Wright Brothers, Brain Surgeons, Opportunity Cost
Document Summary
Economic theory mainly consists of a collection of simple models that help us to understand economic issues. Economists try to create or find real world economies to analyze or they can use a computer to assess the current issue or situation with an economy. Models can be simple but yield tons of useful information. The text uses a story of how the wright brothers used a small scale wind tunnel model to get more information on how to fly! One important thing about models is to remember that other things equal assumptions. This means that the things left out of the model would ultimately be an assumption. This is where our hypothesis comes into play. One model that greatly helps economists is the production possibility frontier, which suggests that a simplified economy that produces only 2 goods so we can put it into a graph for better understanding of the economic concept.
