Lesson 1: Economics As A Social Science

Question 1

What is the scientific method?

Answer 1

• A theory is put forward which is capable of being refuted (e.g the earth is flat)
• The theory is backed up with evidence or refuted by evidence (data gives evidence that the earth isn’t flat)
• accepts, modifies or refutes the theory (the earth is not flat)
• Theories that can universal acceptance are often called Laws ( the law of gravity), in economics it is the law of supply and demand.

Question 2

Why is it harder to use scientific method in economics?

Answer 2

This is due to the fact that in economics you can’t set up experiments for hypothesis or conduct tests which allow one factor to be varied and another to be constant. Economists have to gather data in the everyday world where variable can change at any given period. This can alter evidence which supports an hypothesis.

Question 3

What is purpose of theories and models?

Answer 3

• it is so we know why something is as it is. We use theories and models in deciding how we act. Theories can be expressed in words but economic models require greater precision and are often express in mathematical terms.

Question 4

What is the use of simplification?

Answer 4

• it implies that some factors have been included in the model and some have been unmentioned. E.g a road map in the UK will not have every village or show the geological formation of the area.

Question 5

What does ceteris paribus mean?

Answer 5

All other things being equal

Question 6

Ceteris Paribus explained more detail

Answer 6

Making assumptions allows scientist to simplify a problem to make it manageable to solve. E.g dropping a feather and a cannonball from a building, both would fall at equal speed if there was no air resistance.
- ECONOMIC EXAMPLE: how the price affects the amount demanded by a buyers of a good. They assume all other factors that affect demand ( income or price of other goods) remain unchanged.

Question 7

What are positive statements?

Answer 7

They are statements about economics which can be proven to be true or false. They can be refuted or supported by evidence. Even statements for the future can be positive statements but economists will have to wait for the certain amount of time to have proof which supports or refutes the statement.

Question 8

What is a normative statement?

Answer 8

It is a statement which cannot be supported or refuted. It is close to an opinion. However normative statements can be back up with positive statements, allowing economists to debate using facts and evidence.