1.1 Nature of Economics (1.1.1 - 1.1.6)

Why do economists develop models?

to explain how the economy works , for example theories of supply and demand or the circular flow of income

How are developing models made?

by putting forward a model, gathering evidence and then accepting, changing or disregarding the model.

How are theories often expressed?

In words

How are models often expressed

expressed in mathematical terms as they require greater precision

What is the purpose of theories and models?

They explain why something is as it is and and are simplified to make them more useful.

What do you call theories and models that gain universal acceptance.

Laws

What does ceteris paribus mean

all other things remain equal

Why may economists be unable to set up scientific experiments

It is difficult to set up experiments to test hypothesis as economists gather data in the everyday world, resulting in variables always changing so it difficult to decide whether or not evidence supports or disagrees with a hypothesis.

Therefore, economists tend to come up with very different conclusions for a particular set of data.

What is a positive statement

a statement which is objective and made without any obvious value judgements or emotions. They can be tested to be proven or disproven and they are often expressed in the form of a hypothesis.

What is a normative statement

A statement which is subjective and based on opinion, so cannot be proven or disproven. It often includes words such as ought, maybe, unwise, should etc. or says that one action is better than another.