Economic methodology Flashcards
Define mAcroeconomics
The study of an economy or a group of economies
Define mIcroeconomics
The study of individual markets (households and firms)
Why is economics a social science?
Science: Define problem to be investigated > Put forward a theory > Investigate the theory > Accept or reject the theory
Social: Looks at human behaviour
Define Positive Statements:
Statement that is based on facts or actual evidence
Define Normative Statements:
Statement that is based on economist’s opinion or value added judgement and which cannot be proven
What is ceteris paribus?
Ceteris paribus is the Latin phrase meaning other things equal or all other things held constant or unchanged.
It is used to help consider the effects of one change at a time
Define short run
Time period when a firm can change at least one but not all factors of production eg. labour
Define long run
Time period when all factors of production are changed
Define very long run
Time period when all key inputs into production are variable, such as technology, government regulation and social concerns