ch 2 Class Notes

ch 2 Class Notes - Scientists try to explain the world a...

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

View Full Document Right Arrow Icon

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

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

Unformatted text preview: Scientists: try to explain the world a. Policy advisors: try to improve it b. Economists play two roles: 1) In the first, economists employ the scientific method: the dispassionate development and testing of theories about how the world works 2) The Economist as Scientist A. Assumptions simplify the complex world, make it easier to understand 1) Ex: to study international trade, assume two countries and to goods 2) Unrealistic, but simple to learn and gives useful insights about the real world 3) Model: a highly simplified representation of a more complicate reality 4) Economists use models to study economic issues 5) The circular- flow diagram: a visual model of the economy, shows how dollars flow through markets among households and firms i. Households (supplier and demander) a) Firms (supplier and demander) b) Two types of "actors": ii. The market for goods and services a) The market for "factors of production" (or inputs) b) Two markets: iii. The Circular- Flow Diagram a. Factors of production [input] : land, labor and capital [buildings and machines used in production plus intellectual capital/ideas/ knowledge]: the resources the economy uses to produce goods and services b....
View Full Document

This note was uploaded on 05/05/2011 for the course ECON 102 taught by Professor Yotsubo during the Spring '08 term at Rutgers.

Page1 / 3

ch 2 Class Notes - Scientists try to explain the world a...

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