<1.2 ECONOMIC METHODOLOGY>

-1.2.1 "IS ECONOMICS A SOCIAL SCIENCE?"-

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"A SOCIAL SCIENCE is defined as any branch of academic study or science that deals with HUMAN BEHAVIOUR in its social and cultural aspects."

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"...so what?"

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"...well in unit 1.1, we learned that scarcity impacts the behaviour of the owners of scarce resources as they must make choices and decisions regarding how they allocate these resources to satisfy the three economic questions; therefore, we can conclude that ECONOMICS IS A SOCIAL SCIENCE."

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--TASK--

"Go to the article about economics below (no need to read it all!) and Ctrl+F the words 'decision' and 'agents,' then briefly explain why these words are so common."

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--1.2.2 POSITIVE VS NORMATIVE--

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--POSITIVE STATEMENTS--

(the "What is")

"A positive statement is an OBJECTIVE statement that CAN BE PROVEN TRUE OR FALSE using factual evidence."

"It IS NOT BASED ON A VALUE JUDGEMENT, OPINION or BELIEF it is about HOW THE WORLD ACTUALLY IS."

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--NORMATIVE STATEMENTS--

(the "What ought to be")

"A normative statement is a SUBJECTIVE statement that CAN'T BE PROVEN TRUE OR FALSE using factual evidence."

"It IS BASED ON A VALUE JUDGEMENT, OPINION or BELIEF about HOW THE WORLD SHOULD BE."

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--TASK--

"Read the article below & highlight the 'positive' and 'normative' statements." ("search for the words 'should', 'ought to', 'better', 'worse', 'fair', 'unfair', 'good', or 'bad', to identify normative.")

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--TASK--

"Decide which statement is positive and which is normative?"

--1.2.3 CETERIS PARIBUS--

--THINK AHEAD--

"It's common to accept that a higher price will lead to a fall in quantity demanded right? "So what's going on here then?"

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"That's right, there is another important factor in play, that being the weather, so in order to isolate the impact price has on the quantity demanded for umbrellas we need to keep the weather conditions fixed/constant.

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"Therefore, for the relationship to be tested we must make it clear from the start that a higher price will lead to a fall in quantity demanded assuming all other variable stay the same."

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"But just to be fancy, instead of using the phrase 'assuming all other variable stay the same' we use the Latin phrase...."

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"CETERIS PARIBUS" meaning...

["Holding all other factors constant."]

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"so the original relationship is now written as 'a higher price will lead to a fall in quantity demanded ceteris paribus."

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--TASK--

"Use the infographic below to create a paragraph explaining the purpose of the ceteris paribus condition."

"....or..."

--TASK--

"Use the infographic to create a paragraph explaining the purpose of the ceteris paribus condition."

--1.2.4 SHORT-RUN vs LONG-RUN--

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