Ch01 - Intro (done) - Chapter1 TheEconomicWayofThinking

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Chapter 1 The Economic Way of Thinking
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2 The Economic Way of Thinking What is it? John Keynes: The Theory of Economics does not furnish a body of  settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of  the mind, a technique of thinking which helps its  possessor to draw correct conclusions. In other words, Economics is an approach , rather  than a set of conclusions.
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3 The Economic Way of Thinking Economics trains you to. . . .  Think in terms of alternatives. Evaluate the cost of individual and social choices. Examine and understand how certain events and issues  are related.
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4 The Economic Way of Thinking Every field of study has its own terminology Mathematics integrals   axioms   vector spaces Marketing Marketing mix    branding   channels Economics Demand   supply   opportunity cost   elasticity    consumer surplus    comparative advantage   deadweight  loss
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5 Economist as a Scientist The economic way of thinking . . . Involves thinking analytically and objectively. Makes use of the scientific method .
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6 The Scientific Method: Observation,  Theory, and More Observation Uses abstract models  to help explain how a  complex, real world operates. Develops theories, collects, and analyzes data to  evaluate the theories.
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7 The Role of Assumptions Economists make assumptions in order to make  the world easier to understand. The art in scientific thinking is deciding which  assumptions to make. Models are used to simplify the reality in order to  improve our understanding of the world. In other words, we are always “wrong” to some  extent.
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8 The Role of Assumptions One assumption that we always come across is  “ceteris paribus , meaning “all other things  being equal”. For example, a model may look like: 
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Ch01 - Intro (done) - Chapter1 TheEconomicWayofThinking

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