1.1 - Economics as a social science

Question 1

Economics is the study of…

Answer 1

Economics is the study of how societies allocate scarce resources to meet unlimited wants.

Question 2

Economists use models to…

Answer 2

Economists use models to simplify and analyse complex economic situations.

Question 3

The role of assumptions in economic models…

Answer 3

• Assumptions are simplifications made in economic models to focus on key variables.
• Assumptions help isolate the relationship between variables and make analysis manageable.

Question 4

Advantages of economic models

Answer 4

• Models provide a framework for understanding economic phenomena.
• They allow economists to make predictions, test theories, and guide policy.

Question 5

Limitations of economic models…

Answer 5

• Models are simplifications of reality and may not capture all complexities.
• Assumptions can be unrealistic, leading to inaccurate predictions.

Question 6

What does ‘Ceteris paribus’ mean?

Answer 6

All other variables remain constant

Question 7

What does Ceteris paribus allow

Answer 7

• It’s an assumption that allows economists to isolate the effect of one variable while holding others constant.
• so economists can simplify and explain causes and effects, even if explanation is somewhat limited by the assumptions

Question 8

Critiques of ceteris paribus

Answer 8

Critics argue that in the real world, it’s challenging to hold all variables constant.
Changes in one variable often lead to changes in others, making isolation difficult.

Question 9

What do scientific experiments involve?

Answer 9

Controlled conditions, manipulation of variables, and replication.

Question 10

Challenges in economics that mean there is an inability to make scientific experiments

Answer 10

• Economics deals with complex, dynamic human behaviour influenced by numerous variables.
• Economic experiments are often uncontrolled, making it difficult to isolate variables.

Question 11

Use of natural experiments

Answer 11

Economists often rely on natural experiments (real-world events) to analyse economic phenomena.

Question 12

Importance of Empirical Analysis

Answer 12

Economists use statistical analysis and data to draw conclusions.
Empirical studies help identify patterns and relationships in economic data.

Question 13

How are economic models developed

Answer 13

Economic models are developed by economists once a hypothesis has been repeatedly proven or rejected in different circumstances.

Question 14

How is empirical research collected?

Answer 14

• Empirical research is collected through observations, surveys, opinion polls etc.

Question 15

The results of the same hypothesis can vary significantly when…

Answer 15

The results of the same hypothesis can vary significantly when conducted by different researchers at different time periods and between different places and cultures