4.1.1 economic methodology

Question 1

what is economics

Answer 1

the study of how the worlds scarce recourses are allocated to satisfy society’s wants

Question 2

what type of science is economics

Answer 2

a social science

Question 3

what is scientific methodology

Answer 3

objectively establishing facts through testing and experiments

Question 4

how does a social science differ from a natural science (bio, chem, phys)

Answer 4

-no control over experiments
-difficult to repeat
-must assume ceteris paribus
-less certainty over results

Question 5

what is ceteris paribus

Answer 5

-all other factors remain constant, effects of a change in one variable are investigated whilst other remain constant

Question 6

what is a positive statement

Answer 6

objective statements that can be tested against fact and either be proved false or correct

Question 7

what are normative statements

Answer 7

subject, cannot be tested against facts, they concern views about what individuals, firms and govt should do. they are opinion based

Question 8

what is the similarity between social and natural science

Answer 8

they both use scientific methodology

Question 9

what is economic activity

Answer 9

economic activity describes how well firms, the government and consumers interact with each other

Question 10

what is the central purpose of economic activity?

Answer 10

its said that the central purpose is the production of goods and services to satisfy changing needs.

Question 11

what do we hope to happen if we satisfy peoples needs and wants

Answer 11

their economic welfare will improve

Question 12

what is economic welfare

Answer 12

standard of living

Question 13

what is meant by the term production

Answer 13

describes the process that converts inputs into outputs ( of goods and services)

Question 14

what are the inputs and outputs of production

Answer 14

inputs:
- the economic resources
- firms carry out production activities.
outputs:
- goods or services