ECON 1000 Chapter Notes - Chapter 2: Microeconomics
29 Jul 2015
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The scientific method: observation, theory, and more observation. Isaac newton allegedly became intrigued one day when he saw an apple fall from an apple tree. This observation motivated newton to develop a theory of gravity, which is still used today to explain observation. Although economists use theory and observation like other scientists, they face an obstacle of experiments, as it is hard to conduct one in the economy. To find a substitute for lab experiments, economists pay close attention to the natural experiments offered by nature. E. g. if you ask a physicist how long it would take for a marble to fall from the top of a ten-storey b building, she will answer the question by assuming that the marble falls in a vacuum. In fact, the building is surrounded by air, which exerts friction on the falling marble and slows it down. Assuming that the marble falls in a vacuum greatly simplifies the problem without affecting the answer.
