1.1 nature of economics 1.1.1

Question 1

how is economics a social science

Answer 1

it is a social science as it studies society and relationships between people.

Question 2

why do economist develop models?

Answer 2

Economists develop models to explain how the economy works

Question 3

example of making models?

Answer 3

theories of supply and demand are developed by putting forward a model by gathering evidence then accepting or changing the model.

Question 4

why are assumptions made?

Answer 4

there are many variables that change in an economic model so assumptions must be made.

Question 5

what does ceteris paribus mean?

example of it

Answer 5

Holding other things constant

its used to isolate the effect of a specific variable.

when there is a change in income demand shifts.

Question 6

how is ceteris paribus assumptions used in making models

Answer 6

it will help to understand the relationships between variables

Question 7

pros of assumptions

Answer 7

simplifies complex economic relationships and makes them more understandable.

Question 8

cons of assumptions

Answer 8

could be unrealistic

Question 9

name the economic agents

Answer 9

individuals (get satisfaction)
workers (maximize gains from working)
firms (typical objective maximise firms)
government (maximize welfare of citizens)