Microeconomics Economic Methodology

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  • - Economic Methodology
    • Economics studies social behaviour which guides the allocation of scarce resources to meet the unlimited wants & needs of society.
      • It is considered a social science as it uses scientific methods to build theories to explain human & organisations behaviour
    • MARKETS (capitalism): Allocates items to those who can afford it (limited resources - high costs)
      • GOVERNMENT (communism):Allocates items to those who need it (e.g. children)
        • NEEDS: Goods & Services required for human survival. These are often finite
      • WANTS: Things desired by society & the culture people live in. These are often infinite
      • POSITIVE: Can be tested against facts to determine whether it is true or false
        • e.g. "University tuition fees increase up to a maximum of £9000 yearly"
      • NORMATIVE: Is opinion based
        • e.g. "Higher university fees are unfair to students from low income families"
    • % Change = [(new number - old number) ÷ old number] x 100


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