Econ 104 - 3

Econ 104 - 3 - The Economist as Scientist Economists play...

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The Economist as Scientist Economists play two roles: 1. Scientists: try to explain the world 2. Policy advisors: try to improve it
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Why do some economists disagree? The answer lies in understanding the difference between positive and normative economics
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The Economist as Policy Advisor As scientists, economists make positive statements , which attempt to describe the world as it is. As policy advisors, economists make normative statements , which attempt to prescribe how the world should be. Positive statements can be confirmed or refuted, normative statements cannot. Govt. employs many economists for policy advice. 3
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The Production Possibilities Model Assumptions: full employment & productive efficiency fixed resources fixed technology two goods pizzas symbolize consumer goods industrial robots symbolize capital goods
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Pizzas (00,000s) Robots (000s) The Production Possibilities Curve Production Possibilities 0 2 4 6 8 10 12 0 1 2 3 4 5 Pizzas (hundred thousands) Robots (thousands) A C E B D
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Pizzas (00,000s) 0 1 2 3 4 Robots (000s) 10 9 7 4 0 0 2 4 6 8 10 12 0 1 2 3 4 5 Robots (thousands) Pizzas (hundred thousands) Production Possibilities production possibilities curve The Production Possibilities Curve
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0 2 4 6 8 10 12 0 1 2 3 4 5 Robots (thousands) Pizzas (hundred thousands)
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This note was uploaded on 11/29/2011 for the course ECON 104 taught by Professor Staff during the Fall '10 term at Penn State.

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Econ 104 - 3 - The Economist as Scientist Economists play...

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