ECON 101 Chapter Notes -Equation, Exogeny, Economic Model
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ECON 101 Full Course Notes
Verified Note
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Document Summary
Economic theories: theories: constructed to explain things, variables: the basic element of any theory -> a well-defined item (price/quantity that can take on diff possible values) // any well-defined item that cam take on various specific values. Endogenous variable (dependent variable): value is determined w/i theory. Exogenous variable (independent variable): influences endogenous variable but is: assumption: concerns motive, directions of causation, conditions under which the theory is determined outside theory. Motives: individuals assumed to strive to maximize utility and firms assumed to try to meant to apply maximize profits. Direction of causation: casual link that relates one variables to another: economic model: used to illustrate idea to help organize thinking + gain crucial insights but not designed to generate testable prediction. Cycle: definitions + assumptions about behavior, process of logical deduction, predictions, empirical observation + testing of theory, conclusion whether theory in conflict w/ evidence or it provides a better explanation of the facts than alternative competing theories.
