Thinking like an economist and Factors of Production

Thinking like an economist and Factors of Production -...

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Chapter Thinking Like an Economist 2
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The Economist as a Scientist Economics = science Economists = scientists Create theories Collect data Analyze these data Verify or refute their theories 2
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The Economist as a Scientist The scientific method: observation, theory, and more observation Observation Theory Conducting experiments Difficult / impossible Observation Close attention to natural experiments - history 3
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The Economist as a Scientist The role of assumptions Assumptions Can simplify the complex world Make it easier to understand Focus our thinking - essence of the problem Example: To study international trade, assume two countries and two goods. Unrealistic, but simple to learn and gives useful insights about the real world. 4
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The Economist as a Scientist Economic models Omit many details Allow us to see what’s truly important Built with assumptions Simplify reality to improve our understanding of it 5
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This note was uploaded on 10/14/2011 for the course ECON 2023 taught by Professor Unknown during the Fall '05 term at Arkansas.

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Thinking like an economist and Factors of Production -...

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