**Unformatted text preview: **n of how the
economy or part of the economy
works
» Simplified representation of real world
Simplified
(unrealistic?)
» A good model can be very useful for
good
understanding, analysis and predictions Model: a simplified
Model:
representation of real world Economic Models
Economic
Come in many forms:
Numerical tables
Numerical
Graphs
Graphs
Algebraic equations
Algebraic
Verbal descriptions
Verbal Economic Models Ceteris Paribus
Ceteris
All other things being equal
or
holding all other variables
constant when one variable
is changed Technical Note: Slopes of
Technical
Curves
Suppose we have two variables X and Y,
and that Y is function of X
This relationship can be represented
graphically as a curve in the X-Y plane
The slope of a curve tells us by how much
Y changes when X changes by 1 unit
Slope = (Change in Y) ÷ (Change in X) Technical Note 1: Slopes of
Technical
Curves Technical Note 1: Slopes of
Technical
Curves End of Lecture 1
End...

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