ECON 1BB3 Lecture Notes - Lecture 2: Scientific Method

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

In economics you express ideas in three ways: algebra/equations, diagram/graph. You must be able to translate between each form of communication: economics is a social science. Science = use scientific method: observe, theorize, test theory, microeconomics vs. macroeconomics. Microeconomics: individual households &firms and how they interact. Macroeconomics: economy-wide phenomena such as interest rates, unemployment, money and growth: efficiency vs. equity. Efficiency is the size of the pie. Equity is how the pie is divided: positive vs. normative analysis. Positive: the world as it is": you are able to collect data to come to a conclustion, eg. The world is flat" is a positive statement. Normative: the world as it should be": value judgement (have to think about how you feel about something i. e. agree or disagree, model = simplification. We want to use the simplest model possible. Map of a city (only shows main streets: classify variables.