Economics As A Social Science

Question 1

Why do economists use models?

Answer 1

Economists often use models to develop theories of behaviour. These models are usually based on assumptions from which certain deductions may be made.

Question 2

What is the ceteris paribus assumption?

Answer 2

Ceteris paribus means that when the effect of a change in one variable is considered, it is assumed that all other variables are held constant.

Question 3

Why is the ceteris Paribus assumption necessary when building economic models?

Answer 3

It implies that other variables are being held constant. Therefore, it enables predictions to be made on the basis of the model assuming nothing else changes.

Question 4

Why can we not make scientific experiments in economics?

Answer 4

It is impossible for economists to conduct laboratory experiments because economics is a social science involving people. Consequently,economic policies that may have been effective at one time in one country may not have the same impact at another time or in another country.