Chapter 1 (section 4)

Theory & Law

theory - A hypothesis that has not been rejected after widespread testing and that wins general acceptance. law - A theory that has been subjected to even more testing and that has won virtually universal acceptance.

Model

A model is a set of simplifying assumptions about some aspect of the real world.

Positive Statement

A statement of fact or a hypothesis is a positive statement.

Variable & Constant

A variable is something whose value can change. A constant is something whose value does not change.

Ceteris Paribus

Ceteris paribus is a Latin phrase that means "all other things unchanged."

Takeaway

Economists try to employ the scientific method in their research.

Takeaway

Economists, like other social scientists and scientists, use models to assist them in their analyses.

Fallacy of False Cause

Fallacy of False cause The incorrect assumption that one event causes another because the two events tend to occur together.

Takeaway

Positive statements are factual and can be tested. Normative statements are value judgments that cannot be tested. Many of the disagreements among economists stem from differences in values.

Scientific method & Hypothesis

Research is generally conducted within a framework called the scientific method, a systematic set of procedures through which knowledge is created. A hypothesis is an assertion of a relationship between two or more variables that could be proven to be false.

Takeaway

Scientists cannot prove a hypothesis to be true; they can only fail to prove it false.

Takeaway

Two problems inherent in tests of hypotheses in economics are the all-other-things-unchanged problem and the fallacy of false cause

Dependent Variable & Independent Variable

dependent variable; A variable that responds to change. independent variable; A variable that induces a change.