ECON 1B03 Chapter Notes - Chapter 2: Positive Statement, Scientific Method, Opportunity Cost
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ECON 1B03 Full Course Notes
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Ideas in economics are expressed via language, equations, diagrams and graphs. Economics is a social science; it is concerned with people and employs the scientific method (observe, theorize, and test theory) When economists are trying to explain the world, they are scientists. When economists are trying to change the world, they are policy advisors. Positive statement attempt to describe the world as it is (e. g. minimum-wage laws cause unemployment); descriptive statements. Normative statements attempt to describe how the world should be (e. g. the government should raise the minimum wage); prescriptive statements. 2 reasons why economists disagree: differences in scientific judgments (disagree about positive theories about how the world works, differences in values (disagree about normative views and what policies should try to accomplish) A visual model of the economy that shows how dollars flow through markets among households and firms. In this model, the economy has 2 decision makers: households and firms.