Exam One Review Sheet

Exam One Review Sheet - Exam One Review Sheet Adam Smith...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Exam One Review Sheet Adam Smith Micro v. macro Microeconomics the study of decision making undertaken by individuals (or households) and by firms. Macroeconomics – the study of the behavior of the economy as a whole, including such economy-wide phenomena as changes in unemployment, the general price level, and national income. Perfection Too time consuming to achieve Thinking like an economist There is no such thing as a free lunch Decision-makers chose purposefully and rationally (people do not intentionally make decisions that would leave them worse off) Thinking at the margin Considering secondary effects Values are subjective Normative v. positive economics Normative Economics Analysis involving value judgments about economic policies; relates to whether things are good or bad. A state of what ought to be . (subjective) Positive Economics – Analysis that is strictly limited to making either purely descriptive statements or scientific predictions. A statement of what is . (objective) Pitfalls to avoid Violating Ceteris Paribus ( the assumption that nothing changes except the factor or factors being studied) Association is not necessarily causation. The fallacy of composition – what is true for the individual may not be true for the group. Scarcity
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/04/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Spring '08 term at Penn State.

Page1 / 4

Exam One Review Sheet - Exam One Review Sheet Adam Smith...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online