economics as a social science 1.1.1

Question 1

General definition of economics

Answer 1

-Study of how societies allocate scarce resources to meet unlimited wants

-Use models to simplify and analyse complex economic situations

Question 2

Role of assumptions

Answer 2

-Simplifications to focus on and isolate key variables so assumptions are more manageable

Question 3

Advantages and limitations of economic models

Answer 3

-Framework for understanding economic phenomena
-Can predict, test theories, guide policy

-Simplifications so cannot capture all complexities
-sometimes unrealistic

Question 4

Ceteris paribus

Answer 4

-All else being equal
-Isolate effect of one variable while holding all other things constant
-simplifies complex economic relationships

-Challenging in real world
-Changes in one variable often leads to changes in another
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Question 5

Inability to make scientific experiments in economics

Answer 5

-Dealing with complex, dynamic human behaviour influenced by numerous variables
-Uncontrolled - unable to isolate multiple variables
-Often rely on natural experiments - RWEs