EC120 Lecture Notes - Lecture 2: Political Philosophy, Department Of Finance Canada, Opportunity Cost
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
E(cid:272)o(cid:374)o(cid:373)ists try to address their su(cid:271)je(cid:272)t (cid:449)ith a s(cid:272)ie(cid:374)tist"s o(cid:271)je(cid:272)ti(cid:448)ity. The scientific method involves observation, theory, and more observation. Economists face an obstacle since in economics it is hard to conduct experiments. Middle eastern war blocked oil foil , which increased its prices. Assumptions can simplify the complex world and make it easier to understand. The art in scientific thinking is deciding which assumptions to make. Changing the number of dollars in circulation: short-ru(cid:374) assu(cid:373)e pri(cid:272)es (cid:449)o(cid:374)"t (cid:272)ha(cid:374)ge, lo(cid:374)g-run assume all prices are flexible. Economists also use models to learn about the world that are most often composed of diagrams and equations. Economic models omit many details to allow us to see what is truly important. All the models are built with assumptions. Circular-flow diagram: a visual model of the economy that shows how dollars flow through markets among households and firms.
