ECON 1BB3 Study Guide - Midterm Guide: Demand Curve, Green Economy, Negative Income Tax
8 Feb 2013
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ECON 1BB3 Full Course Notes
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Chapter 2: thinking like an economist 1/8/2013 11:17:00 am. Economists try to address their subject with a scientist"s objectivity. They approach the study of the economy with the scientific method. The scientific method: observation, theory, and more observation. Obstacles: experiments are often difficult in economics, usually have to make do with whatever data the world happens to give them. To find substitute for lab experiments, economists pay close attention to the natural experiments offered by history. Economist make assumptions to simplify the complex world and make it easier to understand. Uses different assumptions to answer different questions. For studying the short-run effects of the policy, we may assume that prices do not change much. For studying long-run effects of the policy, we assume that all prices are completely flexible. Economists use models to learn about the world which most often composed of diagrams and equations: does not include every feature of the economy.
