1.2 Economic methodology

Question 1

Why is economics considered a social science?

Answer 1

• The study of how decisions are made by individuals, firms and the government
• Decisions on what to buy, sell, produce

Question 2

What are the two types of economic statements?

Answer 2

• Positive Statement
• Normative Statement

Question 3

What is a positive statement?

Answer 3

A statement that is verifiable by proven data, facts that you can test whether they are true of false

Question 4

What is a normative statement?

Answer 4

A statement that expresses an opinion or judgement. They cannot be proven and do not contain facts

Question 5

What is the definition of ceteris paribus?

Answer 5

All else remains constant

Question 6

What are the 4 time frames in economics?

Answer 6

• very short run
• short run
• long run
• very long run

Question 7

What is the very short run?

Answer 7

All factors of production are fixed and nothing can be changed

Question 8

What is the short run?

Answer 8

1 factors of production is fixed

Question 9

What is the long run?

Answer 9

all factors of production are variable

Question 10

What is the very long run?

Answer 10

All factors of production are variable, including technology, political institutions and social change etc.