Microeconomics/Macroeconomics Chapter 1 Questions and Answers
The Art and Science of Economic Analysis
THIS CHAPTER HAS TWO PURPOSES: TO INTRODUCE STUDENTS TO SOME OF THE BASIC LANGUAGE OF ECONOMICS AND TO STIMULATE STUDENT INTEREST IN THE SUBJECT. IT CONVEYS TO STUDENTS THAT ECONOMICS IS NOT ONLY FOUND IN THE FINANCIAL SECTION OF THE NEWSPAPER, BUT ALSO IS VERY MUCH A PART OF THEIR EVERYDAY LIVES. BEGINNING WITH THE ECONOMIC PROBLEM OF SCARCE RESOURCES BUT UNLIMITED WANTS, THIS CHAPTER PROVIDES AN OVERVIEW OF THE FIELD AND THE ANALYTICAL TECHNIQUES USED. CONCEPTS INTRODUCED INCLUDE: RESOURCES, GOODS AND SERVICES, THE ECONOMIC ACTORS IN THE ECONOMY, AND MARGINAL ANALYSIS. TWO MODELS FOR ANALYSIS, THE CIRCULAR FLOW MODEL AND STEPS OF THE SCIENTIFIC METHOD, ARE …show more content…
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Normative vs. Positive • A positive economic statement concerns what is; it can be supported or rejected by reference to facts. • A normative economic statement concerns what should be; it reflects an opinion and cannot be shown to be true or false by reference to the facts.
Economists Tell Stories
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CaseStudy: A Yen for Vending Machines
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Predicting Average Behavior: The task of an economic theory is to predict the impact of an economic event on economic choices and, in turn, the effect of these choices on particular markets or on the economy as a whole. Economists focus on the average, or typical, behavior of people in groups.
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