The scientific method Observation Theory ● And more obseryation
The Scientific Method: • Observation • Theory • And More Observation
The Scientific method Theoretical Analysis: Explain how real world operates Logic Empirical Analysis: Analyze data to test the theor ry Proof
The Scientific Method • Theoretical Analysis: Explain how real world operates Logic Proof • Empirical Analysis: Analyze data to test the theory
The role of Assumptions Economists make assumptions in order to make the world easier to understand The art in scientific thinking is deciding which assumptions to make o Economists use different assumptions to answer different questions
The Role of Assumptions • Economists make assumptions in order to make the world easier to understand. • The art in scientific thinking is deciding which assumptions to make. • Economists use different assumptions to answer different questions
The economic models o Economists use models to simplify reality in order to improve our understanding of the world o Economic models omit many details to allow us to see what is truly important All models are built with assumptions Two of the most basic models The circular-Flow Model The production possibilities frontier
The Economic Models • Economists use models to simplify reality in order to improve our understanding of the world. • Economic models omit many details to allow us to see what is truly important. • All models are built with assumptions • Two of the Most Basic Models ➢ The Circular-Flow Model ➢ The Production Possibilities Frontier