Micro 14 15 assumptions theories and models

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: ve to simplify the world Complexity is by far the biggest problem economists face Therefore, critical first step involves simplifying so that we focus on only those aspects critical to the particular problem Often a subjective process, which can lead to disagreements between economists Common economics assumptions: 16 Assumptions, theories and models (cont) Theories: generalized causal relationships between variables Often based on simple observation when variable A increases, I notice that variable B decreases; hmmmm… Theories attempt to: explain past occurences or phenomenon predict future occurrences 17 Assumptions, theories and models (cont) Models: quantitative representations of the problem being analyzed Could be households or people, firms, governments, markets, etc. Models allow quantitative predictions Example: When Pbeer by 5%, Qbeer by 10% ECONOMICS: WH...
View Full Document

This note was uploaded on 02/19/2013 for the course ECON 201 taught by Professor Baker during the Spring '07 term at University of Tennessee.

Ask a homework question - tutors are online