Micro-Basic economic problem: social science Flashcards
What is the basic economic problem created by?
- Resources are scarce ( finite)
- Wants are infinite
What is the study of ecomics fundimentally about?
Allocation of resources. We make choices about how to allocate finite resources between competing uses
Why do econmoists build models?
To understand how we humans should slove the **ecomics probelems and allocate resoures **( slove the basic ecomic probelme)
Why must we make assumptions?
Humans behavour is vey comples, assumtion are needed to make models
Assumtions
What is the assumptiona that- all things being constant/equal
Ceteris paribus
Why is Ceteris paribus used?
There are many factors effecting the thng in question e.g spending however we are only intersted on alising on things effect on anouther e.g. income and spending igonring job security ect
Why isn’t economics considered a hard science?
- Complexity of human behaviour and the** number of assumption whic must be made** it cann’t be a hard science
- we cann’t conduct exprement on how one variable would effect anouther
Define social science
The scientific study of societies and social interaction.
What do economists do to understand the economy?
Economists make assumptions to help them create models.
Why is it useful to understand why economists make assumptions?
It helps simplify their analysis and serves as an evaluative tool.
What is the PPF and how is it useful?
The PPF simplifies two products to illustrate maximum productive potential, opportunity costs, and efficiency.
What does ‘ceteris paribus’ mean?
‘Ceteris paribus’ means assuming other variables remain constant.
Why is the assumption of ceteris paribus important for economists?
It simplifies the analysis of the relationships between different variables.
How do scientists prove relationships between variables?
Scientists conduct experiments.
How do economists determine the impact of changes, like a VAT increase?
Economists create simplified models of the economy instead of conducting experiments.
