1.1.1 Flashcards
What kind of science is economics
A social science.
What is the definition of a social science?
A science that looks at the way in which people interact and how they behave with each other.
Give 2 differences between Natural and social sciences
Natural sciences only use scientific methods while social includes other methods as well. Natural sciences revolve around the physical world while social sciences revolve around human society and social relationships.
What is the basic economic problem?
Human wants are unlimited but resources are scarce.
Translate Ceteris Paribus
All other things remain the same.
What is the use of Ceteris Paribus
Allows us to identify the impact of changes to one variable.
Give an example of Ceteris Paribus
‘Ceteris Paribus, an increase in the price of bananas would lead to a decrease in their demand.’
What are positive statements?
Objective, impartial, factually based comments that can be tested and are not influenced by the opinions or prejudices of people.
What are Normative statements?
Subjective, biased, debatable comments, that are difficult to test and are influenced by the opinions or prejudices of people.
What do Normative statements require?
A value Judgement.
What is a value Judgement?
An opinion that has been put forward by an individual but cannot be verified factually.
Give an example of a value Judgement.
The government should increase taxation on the rich to reduce inequality.
What kind of decision has an opportunity cost?
Every decision.
What is opportunity cost?
The value for the benefit forgone of the next best alternative.
Do you have to make choices that will lead to uncertain outcomes and if not so why?
You do have to because the future is uncertain.
What can influence people’s views concerning the best option?
The positive consequences of different decisions as well as moral and political Judgements.
