Economic Methodology (Week 1) Flashcards
What is scientific method based on
The possibility of falsification or refutation of a hypothesis
What does ‘watering down’ mean
Demand theory predicts that in most, but not all cases, consumers respond to price cuts by demanding more of a good.
What is a positive statement
A statement of fact that can be scientifically tested to see if it is correct or incorrect
What is a normative statement
A statement that includes a value judgement (opinion or view) and cannot be refuted just by looking at evidence
What is a value judgement
Its about whether something is desirable or not
How should the government make decisions on economic policies
Value based judgements, although economists often argue that its not
How are governments affected by the impact of moral and political judgements
Governments often claim they have a moral right to make such decisions.
What is ‘economics’
Studies the economic behaviour of both individuals and groups of people, and the economic relationships between individuals and groups
What is the central purpose of economic activity
The production of goods and services to satisfy people’s needs and wants
What is economic welfare
The economic well being of an individual, or group within society, or an economy eg satisfying people’s needs and wants (human happiness)
What is capital goods
A good which is used in the production of other goods or services. Also known as a producer good.
What are entrepreneurs
People who decide what to produce, how to produce it and for whom to produce it.
What is entrepreneurial profit
The profit left over after the cost of employing the other factors of production is deducted from the sales revenue gained.
What are the three environmental resources
Physical, gases and abstract
