1.1.1 Economics as a social science

Question 1

What does Economics investigate?

Answer 1

Economics investigates how scarce resources are allocated to provide for unlimited wants

Question 2

Why is Economics considered a social science?

Answer 2

Because it looks at the behaviour of humans either as individuals or as part of organisations, and their use of scarce resources

Question 3

How is Economics similar to the methodology used by scientists in natural and other sciences?

Answer 3

• Develop theories and create economic models to explain phenomena
• Use simplifying assumptions to limit the number of variables in an investigation
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• Test theories and models against relevant known fact
• Use empirical data to improve and revise their economic models
• Use economic models to make predictions

Question 4

What does Ceteris Paribus mean?

Answer 4

Latin for “All other things remaining equal”

Question 5

What does Ceteris Paribus actually do?

Answer 5

It gets around the problem of the existence of multiple variables in an economy. Ceteris Paribus is an assumption.

Question 6

How is economics unlike natural science?

Answer 6

Economists can’t conduct controlled laboratory experiments where only one variable is changed at a time

Question 7

Give an example of how economics is unlike natural science

Answer 7

If an economist examines the impact of price on the demand for cheese, they can’t keep consumers income constant - because in the real world income won’t remain constant.