1.1.1-1.1.2 Economics as a social science; positive and normative statements: Practice Questions

• a.

  Economists cannot construct mathematical or theoretical models

• b.

  Economic data cannot be quantified or represented numerically

• c.

  Human behaviour is variable and other external factors cannot easily be held constant in a controlled environment

• d.

  Normative statements prevent the objective testing of any economic hypotheses

• a.Economic theories are based on mathematical models rather than empirical observation.
• b.Economists cannot conduct controlled laboratory experiments where all variables are kept constant.
• c.Economics does not use the scientific method to test hypotheses or build models.
• d.Human behavior is entirely predictable and follows universal laws like gravity.

• a.

  Economic hypotheses cannot be formulated mathematically, whereas natural sciences rely exclusively on quantitative and mathematical laws

• b.

  Natural scientists do not make simplifying assumptions when building models, whereas economists must make assumptions about human rationality

• c.

  It is generally not feasible to conduct controlled laboratory experiments holding all other variables constant, requiring economists to rely on the ceteris paribus assumption and empirical observation

• d.

  Economic models are entirely normative and subjective, meaning they cannot be tested against real-world data or empirical observations

• a.It ensures that all consumers and firms always act with perfect rationality in every model.
• b.Economists cannot isolate variables in the real world, so they must assume other factors remain constant to build models.
• c.It allows economists to conduct controlled laboratory experiments to prove their theories.
• d.It provides a mathematical proof that economic models are always accurate in predicting future trends.

• a.

  The inability to conduct controlled laboratory experiments where all variables except one are held constant.

• b.

  The total absence of empirical data, which forces economists to rely solely on normative value judgements.

• c.

  The fact that economic models are simplified representations of reality and therefore cannot be expressed mathematically.

• d.

  The reliance on the ceteris paribus assumption, which is never used in the physical or natural sciences.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.