Economics Methodology and Economic Resources Flashcards
Why is economics a social science
Economics is concerned with the behaviour of people and groups.
Economics studies how people make decisions
It is all about human behaviour
Similarities of Economics as a social science to natural science
Both natural science and economics rely on observations and experiences to gather data.
They both analyse data to identify patterns.
They both use mathematical models.
Difference of Economics as a social science to natural science
Natural sciences have controlled experiments however in economics controlled experiments are rare and economists rely on observational data due to practical constraints.
Natural sciences have a higher level of predictability since human behaviour can be quite unpredictable.
Ceteris Paribus
It is used to isolate the affects of one change on the economy. Allows economists to make judgements on how specific factors can influence the economy without outside influences.
Law of Demand
Is an example of ceteris paribus.
States that when the price of a good decreases, quantity demanded increases, but when the price of a good increases the quantity demanded decreases.
What are positive statements
Positive statements are objective statements that can be tested
and evaluated based on empirical evidence.
They describe how the world is, without expressing value
judgement or opinions.
What are normative statements?
They involve personal beliefs, moral considerations, or policy
preferences. Normative statements are not testable through
empirical analysis alone.
What are the main economic resources?
Also known as factors of production.
Land – the stock of natural resources
Labour – the human input into production
Capital & Technology – including hardware and software
Entrepreneurship / Enterprise – taking risks and organising production
Renewable resources
Natural resources that can be replenished over time.
Renewables can be replaced at an equivalent rate to which they are used up.
Non-renewable resources
Have a finite supply.
Will run out if you continue to use them at the current rate.
Resource depletion
The decline in stock available for resources. This is because there is a degradation of resources.
Resource depreciation
This happens when the productivity of resources diminishes with age and with repeated use when producing goods and services. For example, older computer software may slow.
What are common pool resources?
They are resources used by a group of people.
For example : Fisheries, Public parks, air quality.
Threats to common pool resources
People tend to overuse resources.
People may not consider the long term consequences of their actions.
This can lead to the depletion or destruction of the resource.
What is sustainable growth?
Sustainable economic growth seeks to achieve long-term prosperity while also considering the well-being of current and future generations, as well as the health of the environment.
sustainable economic growth aims to balance economic progress with social equity and environmental stewardship.
