Economics As A Social Science

Question 1

Why do economists build models

Answer 1

• The complexities within society means that build models to us to better understand certain interactions.
• a model is a simplified version of reality
• all models make a range of assumptions eg generalisation about behaviour, choices and likely outcomes

Question 2

Why is it important for economist to make assumptions?

Answer 2

• These assumptions are necessary so as to account for complex human behaviour and constantly changing variables

Question 3

How do you think like an economist?

Answer 3

• involves identifying which variables will be studied and which ones will be excluded
• considers the type of relationship between variables (causal or correlation)

Question 4

What is ceteris paribus

Answer 4

• when you assume all other variables remain constant
• It allows economists to simplify and explain causes and effects
• The analysis is conducted ceteris paribus. All the other variables remain constant, even when they are highly likely to have changed