ECON 1 Lecture Notes - Lecture 2: Political Philosophy, Opportunity Cost, Scientific Method
Document Summary
2 roles of an economist: scientist and policy advisor. Devise theories, collect data, analyze data in an attempt to verify or refute their theories. Solution: they pay close attention to natural experiments offered by history. Insight to economy of the past allows us to illustrate and evaluate economic theories of the present. Assumptions simplify the complex world and make it easier to understand. i. e only studying 2 countries and 2 goods to understand the effects of international trade. Econ models emit many details to allow us to see what"s truly important. All models are built with assumptions and they simplify reality to improve our understanding. Explains how econ works, how it"s organized and how the participants in the econ interact with one another. In this model, the econ is simplkified to have 2 types of decision makers: firms and households.
