Theories and models a Microeconomic Analysis ● Evolving the Theory Testing and refining theories is central to the development of the science of economIcs Chapter 1: Preliminaries Slide 16
Chapter 1: Preliminaries Slide 16 Theories and Models ◼ Microeconomic Analysis ⚫ Evolving the Theory ◆Testing and refining theories is central to the development of the science of economics
Positive versus Normative Analysis a Positive Analysis o Positive analysis is the use of theories and models to predict the impact of a choice For example ◆ What wil‖ be the impact of an import quota on foreign cars? ◆ What wil‖ be the impact of an increase in the gasoline excise tax? Chapter 1: Preliminaries Slide 17
Chapter 1: Preliminaries Slide 17 Positive Versus Normative Analysis ◼ Positive Analysis ⚫ Positive analysis is the use of theories and models to predict the impact of a choice. ⚫ For example: ◆What will be the impact of an import quota on foreign cars? ◆What will be the impact of an increase in the gasoline excise tax?