Questions and Answers
What is the definition of economics?
Economics is the allocation of scarce resources to provide for unlimited human wants.
Why is economics considered a social science?
Economics is the study of people and the decisions they do and don't make, therefore it studies human behavior.
What do economists use to explain human behavior?
They develop models which simplify and improve our understanding of how consumers and producers behave.
Models include ___________.
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Economic models are judged upon their _______________________________________ consumer and producer behavior - even if assumptions are ____________!
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What does ceteris paribus mean?
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Why is ceteris paribus important?
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Study Notes
Definition of Economics
- Economics involves the allocation of limited resources to satisfy infinite human demands.
Economics as a Social Science
- It examines human behavior, focusing on the decisions individuals and groups make regarding resource use.
Economists and Human Behavior
- Economists create models to better understand consumer and producer actions, enhancing comprehension of economic interactions.
Economic Models
- Economic models rely on assumptions to simplify complex reality.
- They are evaluated based on their capacity to explain and predict behaviors of consumers and producers.
- Assumptions made in models may not always be realistic but are essential for analysis.
Ceteris Paribus
- The term ceteris paribus translates to "all other things being equal," signifying that only one variable is changed while others remain constant in analysis.
Importance of Ceteris Paribus
- This assumption is crucial because it allows economists to create hypotheses and test models without the constraints of controlled lab environments.
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Description
Test your knowledge of the fundamentals of economics with these flashcards. Learn definitions, concepts, and the reasoning behind economics as a social science. Perfect for students wanting to solidify their understanding of how economics relates to human behavior.
