Practise economic methodology by distinguishing positive and normative statements, applying ceteris paribus and choosing short-run or long-run reasoning for behavioural models.
What is a common criticism of economics?
It fails to establish theories of economic behaviour.
It is unable to construct models of how an economy might work.
It lacks the ability to use and apply mathematics.
It is very difficult to undertake laboratory experiments in economics.
D
Governments in market economies give different reasons for intervening in the operation of an economy.
Which reason given is a normative statement?
Average incomes have failed to keep pace with price rises during the past year.
Energy prices have increased by more than 50 % during the past year.
The distribution of incomes has become more unfair during the past year.
The poorest 10 % of households have suffered the greatest fall in average real income during the past year.
C
The demand for a product is inversely related to its price, ceteris paribus.
What does ceteris paribus mean in this context?
Factors affecting demand other than price are held constant.
Factors affecting price other than demand are held constant.
Price changes result from changes in demand.
Price falls result in increased quantity demanded.
A