normative statements are based on correct answers value judgements and cannot be settled by recourse to facts (personal options about about what the world ought to be like as opposed to what is actually is)
positive statements are correct answers statements about matters of fact, can apeal to ev...
Econ 208 chapter 2.1 - 2.2 || QUESTIONS WITH
VERIFIED ANSWERS!!
normative statements are based on correct answers value judgements and cannot be settled by
recourse to facts (personal options about about what the world ought to be like as opposed to
what is actually is)
positive statements are correct answers statements about matters of fact, can apeal to
evidence
postive and normative statements correct answers 2.1 redo redo redo
Why is the scientific approach central to the study of economics correct answers - Empirical
observations lead to the construction of theories
- Thus theories generate specific predictions
- and the predictions are tested by more detailed empirical observation
Why must economics take care when testing predictions to distinguish between correlation
and causality? correct answers - correlation can establish that the data are consistant with the
theory but they are not direct evidence of a causal relationship
- establishing the likelihood of causality usually requires advanced statistical techniques
causal relationship from x to y correct answers changes in x is predicted to cause a change in
y
x and y are positively correlated correct answers when x rises, y also tends to rise
Why is correlation consistent with the theory that x causes y, BUT it is NOT direct evidence
of this causal relationship correct answers A) the causality might be the opposite direction
b) they may have no direct causal relationship
c) they instead might be joined by some third variable ie. Z
variables correct answers a well defined item such as price or quantity that can take on
different possible values
endogenouse variables correct answers value is determined with a theory
exogenouse variables correct answers A) value is determined outside the theory
b) may influence the endogenous variable
C) may also be called an independant variable
d) may also be called an autonomous variable
assumptions when (testing economic theories) concern .. correct answers concern motives,
direction of causation, the condition under which the theory is meant to apply
motives (testing economic theories) correct answers - everyone pursues his or her own self
interest for economic decisions
- individuals strive to maximize utility
- firms strive to maximize profit
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