Summary International A level Edexcel Economics Unit 1 Notes

Summary International A level Edexcel Economics Unit 1 Notes TOPIC 1 – INTRODUCTORY CONCEPTS What is economics? • Economics is the concerned with the ways by which societies organise scarce resources in order to satisfy wants. Economics as a social science • Economics is a social science which concerns the study of human behaviour • As a result, economists cannot conduct scientific laboratory experiments like in natural sciences • They typically examine what has already occurred in order to test their theories Theories and models • Economists develop models or theories, which are simplified representations of the world The use of assumptions in building models • When building models, economists use the “ceteris paribus” assumption which means “other things being equal” Positive and normative statements • Positive statements are objective statements • They are based on facts that can be tested as true or false by investigating the evidence • Example: EU farm subsidies increase the supply of agricultural commodities • Normative statements are subjective statements • They are based on value judgements that cannot be tested as true or false by investigating the evidence • Example: Subsidies paid to farmers in the EU are unfair to farmers in Ghana • These may include key words such as should, fair, unfair, too high, too low etc. TOPIC 2 – THE ECONOMIC PROBLEM