ch 2 Book Notes

ch 2 Book Notes - Book Notes Tuesday, January 11, 2011 4:16...

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They devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories The essence of science, however, is the scientific method the dispassionate development and testing of theories about how the world works. Although economists use theory and observation like other scientists, they face an obstacle that makes their task especially challenging: In economics, conducting experiments is often difficult and sometimes impossible i. Economics use natural disasters and wars to study the effects of a key natural resource on the world's economies ii. The Scientific Method: Observation, Theory, and More Observation a. Many prices in the economy change infrequently i. For studying the short-run effects of the policy, we may assume that prices do not change much. We may even make the extreme and artificial assumption that all prices are completely fixed. ii.
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ch 2 Book Notes - Book Notes Tuesday, January 11, 2011 4:16...

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