L2 - Thinking like an economist Flashcards
1
Q
What do economists focus on?
A
How individuals,firms and households interact
2
Q
What is Theoretical Economics?
A
Making predictions
3
Q
What is Practical Economics?
A
Test Predictions
4
Q
What are the 2 requirements of a good economic theory
A
- Accurately explain evidence
- Make predictions that can be tested
5
Q
What is a Normative Statement?
A
Embody value judgements. Describe how world should be
6
Q
What is a Positive Statement?
A
Describe Cause and effect. Describe how world is
7
Q
What is an opportunity cost?
A
Cost of forgoing the next best alternative that could’ve been chosen.
