1.1.1 Economics as a social science

Economics as a social science: 1.1.1

 Economics is a study of people and how they work in society, this is called a social science. However it is not possible to set up experiments to test hypotheses as there are too many variables to control. As it is a study of people and real life, we are unable to control any variables in experiments. 

 We overcome this by assuming ceteris paribus, which essentially means "everything else stays the same". This allows economists to build economics models as they can assume that all of the external variables are being controlled.

Popular posts from this blog

1.1.4 Production Possibility Frontiers

Image
Production Possibility Frontiers The PPF shows the maximum output combinations an economy can achieve when all resources are fully and efficiently employed. Factor Mobility refers to the ability to move factors of production out of one production into another. Opportunity cost increases because not all our factor inputs can produce both goods equally a well. Most economies have some degree of specialisation, some of their factor inputs are more suited to a particular industry so factor immobility exists. If resources are moved to another industry then they are done so at an increasing opportunity cost. A PPF will shift outwards if there is an increase in the quality or quantity of resources. PPFs can also shift inwards if there are wars, natural disasters or epidemics. This shows constant opportunity cost Economic growth - an increase in the real or potential output, this is shown by an outward shift in the PPF. Factor Immobility - occurs when it is difficult for fact...
Read more