University:
California State University, Northridge
Course:
ECON 101 | Economics for Everyday Life
Academic year:

2023
Views:

261

Pages:

2
Author:

Mahmoud M.

Economics notes Economists must make assumptions. An important assumption made is to assume that results are ceteris paribus. The assumption is that other things stay or stay the same, so nothing changes. Economists cannot conduct scientific experiments as in natural sciences, so models are created. Economists then use real-life situations to develop models and make assumptions based on them. In current situations it is important to separate fact from fiction. Good statements are objective. They can be tested against real evidence and rejected or accepted. Search for words like "will", "is". For example, "An increase in the tax on alcohol causes a decrease in the demand for alcohol and a decrease in the profit of the tavern" is a good statement. "Hot weather will increase the demand for sunscreen" and good advice. The important thing here is that these statements can be checked, the results can be checked and then the statement can be rejected or accepted. Key terms are based on value judgments. These are all details and is based on speculation rather than actual evidence. Look for words like "must", there are expressions that indicate one character is more religious than another. For example, the statement "Free trade is the best way to allocate resources" is because it is logical and indicates that ways of allocating resources are fine elsewhere. "Government should increase alcohol taxes" is another explanation. Value decisions can influence financial decisions and policies. Different researchers may draw different conclusions from the same statistical data. For example, inflation rates can lead to different results. People's thoughts about the best options are affected by the positive consequences of different decisions, including moral and political decisions. Nature and purpose of business The purpose of business is to produce products and services that satisfy customer needs and wants. This includes the use of resources (inputs in the production structure) to produce outputs (goods and services) Economists must decide how limited resources will be used: What to build? The state and private sector are faced with this decision. They also need to consider how much of each product they will produce. Because of the risks they involve, they need to be handled with care. What to do? This takes into account how goods and services are distributed. The production of units was taken into account. The company's goal is to reduce costs and maximize profits, so production must be efficient. They consider how much each aspect of production costs and how well their product is produced. This will help them choose between labor-intensive production and resource-intensive production. Who will benefit from the developed products and services? Consumers with purchasing power benefit from the products and services produced. The person who is willing and able to pay for the goods or services will receive the goods or services.