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14 Cards in this Set
- Front
- Back
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Oikonomia (Greek) |
householdmanagement
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WHAT IS ECONOMICS? |
A social science that deals withthe allocation of scarce resources tosatisfies unlimited human wants
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Key words
WHAT IS ECONOMICS? |
Science
Social science Scarcity |
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Economics as a science
Science |
Systematic observation of natural events andconditions in order to formulate laws and principles
Systematic body of knowledge |
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Methodology of science (…and economics!)
Scientific method: |
seeks to explain events in areproducible way, and to use these reproductions tomake useful predictions
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Methodology of science (…and economics!) |
Hypothesis/questions
Procedure: experimentation or observation Assumptions, models, statistical techniques Formulate conclusions |
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Economics as a social science
Fields of science |
Natural science – focuses on naturalphenomena, including biological life
Social science – focuses on human behaviorand societies Sociology, psychology, political science,anthropology, history, economics, etc |
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Scarcity
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-Easier to understand scarcity by recognizingthe unlimited human wants
-and human wants evolve over time -Scarcity exists because our resources arenot enough to satisfy all human wants |
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MAIN BRANCHES OF ECONOMICS
Microeconomics |
- studies behavior of individual economic units
- households, firms, markets |
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MAIN BRANCHES OF ECONOMICS
Macroeconomics |
- Focus is on the whole/aggregate economy
- Examples of indicators: GNP, GDP, inflation,unemployment |
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Positive Economics
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Answers the question: “What is?”
The price of gasoline is about Php 60/liter. The population growth rate is 2.3% 11 million Filipinos live on $1 a day. |
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Normative Economics
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Answers the question: “What should be?”
The price of gasoline should be Php 20.0/liter The population growth rate must only be at 2 %. Filipinos ought to live on at least $5 a day |
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ECONOMICS AND MODELS
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-Economists use models in conductinganalyses
-Models: A model is a simplifiedrepresentation of realityOften represented by mathematical equationsand/or diagrams |
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Why use models?
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-Allows us to organize our thoughts
-Allows us to focus on the essential elements ofan economic relationship |
