Chapter 2 Notes

Chapter 2 Notes - Chapter 2 Thinking Like an Economist The...

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Chapter 2 Thinking Like an Economist The Economist as Scientists The Scientific Method: Observation, Theory, and More Observations Economist, like scientists, make an observation, create a theory, research for an answer, and see  if there is correlation from the data to the theory They do run into problems; they can’t set up experiments, they can only study the past, and  variables are hard to control The Role of Assumption Assumptions are made to reduce the uncontrollable variables Economic Models: Economists use diagrams and equations (with assumptions) to improve our understanding 1 st  Model, the Circular Flow Diagram 2 nd  Model, The PPC
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Point inside curve = not producing at maximum ability Point outside curve = not enough resources to produce Point on curve = efficient allocation of resources
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Chapter 2 Notes - Chapter 2 Thinking Like an Economist The...

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