Thinking Like Scientist

Economics trains you to. . . .

• Think in terms of alternatives.
• Evaluate the cost of individual and social choices.
• Examine and understand how certain events and issues are related.

THE ECONOMIST AS A SCIENTIST

The economic way of thinking . . .

• Involves thinking analytically and objectively.
• Makes use of the scientific method.
• Uses abstract models to help explain how a complex, real world operates.
• Develops theories, collects and analyzes data to evaluate the theories.

Ten Principles of Economics

The word Economy comes from the Greek word oikonomos, which means “one who manages a household.”

A household and an economy face many decisions:

• Who will work?
• What goods and how many of them should be produced?
• What resources should be used in production?
• At what price should the goods be sold?

The household decide which members of the household do which task and what each members gets in return. In short, the household must allocate its scarce resources among its various members, taking into account each member’s abilities, efforts, and desire. This explanation also goes for the society.

• Society and Scarce Resources:
• The management of  society’s resources is important because resources are scarce.
• Scarcity. . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.