Exam 1- Terms to know - What is economics The study of how people make decisions or choices when faced with scarcity Steps to an Economic Scientific

Exam 1- Terms to know - What is economics The study of how...

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What is economics? 1) We have a question we want to answer 2) We must engage in hypothesis and observation of the world around us 3) We need to test our hypothesis 4) We may need to go back and revise our original hypothesis based on results Normal good Goods that people buy more of when they experience an increase in income Inferior good Goods that people buy less of when they experience an increase in income Behavioral Economics Combines psychology and brain imaging with economics in an attempt to better understand this decision-making process and better improve our rules equations and the predictive ability of our models Positive Statement One, which is testable and provable Normative Statement One that is not potentially testable or provable. It is a statement that is subjective. It is a statement of what we thing should be, ought to be, would be good, would be bad, etc.

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