GMS 402 Lecture 12: GMS 402 FINAL

210 views30 pages

Document Summary

The purpose of theory is to predict and explain. A theory is a hypothesis that has been successfully tested. Hypothesis is tested based on accuracy of prediction, and that outcome is based on the assumptions. Based on observation if the price of cut meat increases, we buy less of it. Based o(cid:374) the o(cid:271)se(cid:396)(cid:448)atio(cid:374), (cid:449)e (cid:272)a(cid:374) (cid:272)o(cid:374)st(cid:396)u(cid:272)t a h(cid:455)pothesis (cid:862)if the p(cid:396)i(cid:272)e of a (cid:272)o(cid:373)(cid:373)odit(cid:455) rises, then the quantity demanded of the (cid:272)o(cid:373)(cid:373)odit(cid:455) de(cid:272)li(cid:374)es(cid:863). A theory after the hypothesis has been tested. Scarce is associated with word limited or economic as opposed to unlimited or free. Economic resources are of various types - labour, capital, land and entrepreneurship. Since these resources are scarce, production is limited. Because of scarce resources, societies face the problem: what to produce, how to produce, for whom to produce, how to ration the commodity over time, how to ensure sustainable growth. These problems are resolved through price mechanism in a free economy.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents