1.1.1 & 1.1.2 - Positive, Normative Statements and Economic Methodology

Question 1

Distinction between natural science and social science?

what is economics?

Answer 1

natural science is when scientists observe aspects of the universe and make theories based on these observations. where as social science is observations of human bahaviour and theories are based on those observations

= economics is a social science - study of human behaviour and human choices,
science because economists test all all theories

Question 2

how do economist come out with a theory ?

Answer 2

context of demand theory
1. observe consumer behaviour
2. for hypothesis of how consumers spend
3. make precise predictions from hypothesis
4. use evidence to test predictions

Question 3

positive statements?

Answer 3

when it can be tested against evidence, facts that can be collected
can be backed up or falsified

Question 4

normative statements?

Answer 4

Statements that cannot be tested to be true or false – they are value judgments