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Lecture 9

ECON 103 Lecture Notes - Lecture 9: Toronto Stock Exchange, Ronald Coase, Scatter Plot


Department
Economics
Course Code
ECON 103
Professor
ahmadi
Lecture
9

Page:
of 13
9/9/2013
1
Chapter 2:
Economic Theories,
Data, and Graphs
Copyright © 2014 Pearson Canada Inc.
Chapter Outline/Learning Objectives
Section Learning Objectives
After studying this chapter, you will be able to
2.1 Positive and
Normative Statements
1. distinguish between positive and normative
statements.
2.2 Building and Testing
Economic Theories
2. explain why and how economists use theories to
help them understand the economy.
3. understand the interaction between economic theories
and empirical observation.
2.3 Economic Data 4. identify several types of economic data, including
index numbers, time‐series and cross‐sectional data,
and scatter diagrams.
2.4 Graphing Economic
Theories
5. see that the slope of a line on a graph relating two
variables shows how one responds to a small change
in the other.
Copyright © 2014 Pearson Canada Inc. Chapter 2, Slide
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2.1 Positive and Normative Statements
Normative statements depend on value judgments and opinions
they cannot be settled by recourse to facts.
Positive statements do not involve value judgments. They are
statements about what is, was, or will be.
Copyright © 2014 Pearson Canada Inc. 3
Chapter 2, Slide
Disagreements Among Economists
Economists often disagree with each other in public discussions
often because of poor communication or failure to acknowledge
the full state of their ignorance.
Perhaps the biggest source of public disagreement is based on the
positive/normative distinction.
Economists must differentiate normative proffered advice from
positive facts.
Copyright © 2014 Pearson Canada Inc.
APPLYING ECONOMIC CONCEPTS 2-1
Where Economists Work
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2.2 Building and Testing Economic Theories
Theories
A theory consists of:
a set of definitions about variables;
a set of assumptions;
a set of predictions (or hypotheses).
Copyright © 2014 Pearson Canada Inc. 5
Chapter 2, Slide
Testing Theories
A theory is tested by confronting its predictions with evidence.
If a theory is in conflict with facts, it will usually be amended to
make it consistent with those facts, or it will be discarded to be
replaced by a superior theory.
The scientific approach is central to the study of economics.
Copyright © 2014 Pearson Canada Inc. 6
Chapter 2, Slide